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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
96
(LIBOR) plus 45 basis points and resets quarterly. We used
the net proceeds from the sale of these senior notes and
a combination of available cash and commercial paper
proceeds to retire the $800 million aggregate principal
amount of our 6.75% Senior Notes on March 1, 2006.
Pending the application of the proceeds described above,
we invested the net proceeds in short-term, interest-
bearing, investment-grade securities.
On November 27, 2006, Progress Energy redeemed the
entire outstanding $350 million principal amount of its
6.05% Senior Notes due April 15, 2007, and the entire
outstanding $400 million principal amount of its 5.85%
Senior Notes due October 30, 2008, at a make-whole
redemption price. The 6.05% Senior Notes were acquired
at 100.274 percent of par, or approximately $351 million,
plus accrued interest, and the 5.85% Senior Notes were
acquired at 101.610 percent of par, or approximately
$406 million, plus accrued interest. The redemptions were
funded with available cash on hand and no additional
debt was incurred in connection with the redemptions.
On December 6, 2006, Progress Energy repurchased,
pursuant to a tender offer, $550 million, or 53.0 percent, of
the outstanding aggregate principal amount of its 7.10%
Senior Notes due March 1, 2011, at 108.361 percent of
par, or $596 million, plus accrued interest. The redemption
was funded with available cash on hand and no additional
debt was incurred in connection with the redemption. See
Note 20 for a discussion of losses on debt redemptions.
At December 31, 2006 and 2005, we had committed lines of
credit used to support our commercial paper borrowings.
At December 31, 2006 and 2005, we had no outstanding
borrowings under our credit facilities. We are required
to pay minimal annual commitment fees to maintain our
credit facilities.
The following table summarizes our revolving
credit agreements (RCAs) and available capacity at
December 31, 2006:
In addition to the committed RCAs at December 31,
2005, we had an $800 million 364-day credit agreement,
which was restricted for the retirement of $800 million
of 6.75% Senior Notes due March 1, 2006. On March 1,
2006, Progress Energy, Inc. retired $800 million of its 6.75%
Senior Notes, thus effectively terminating the 364-day
credit agreement.
On May 3, 2006, Progress Energy restructured its existing
$1.13 billion five-year RCA with a syndication of financial
institutions. The new RCA replaced an existing $1.13 billion
five-year facility, which was terminated effective May 3, 2006.
The new RCA will continue to be used to provide liquidity
support for Progress Energy’s issuances of commercial
paper and other short-term obligations. The new RCA no
longer includes a material adverse change representation
for borrowings or a financial covenant for interest coverage.
Fees and interest rates under the new RCA will continue
to be determined based upon the credit rating of Progress
Energy’s long-term unsecured senior noncredit-enhanced
debt, currently rated as Baa2 by Moody’s Investors Service,
Inc. (Moody’s) and BBB- by S&P.
On May 3, 2006, PEC’s five-year $450 million RCA was
amended to take advantage of favorable market conditions
and reduce the pricing associated with the facility. Fees and
interest rates under the RCA will continue to be determined
based upon the credit rating of PEC’s long-term unsecured
senior noncredit-enhanced debt, currently rated as Baa1
by Moody’s and BBB- by S&P.
On May 3, 2006, PEF’s five-year $450 million RCA was
amended to take advantage of favorable market conditions
and reduce the pricing associated with the facility. Fees
and interest rates under the RCA will continue to be
determined based upon the credit rating of PEF’s long-term
unsecured senior noncredit-enhanced debt, currently
rated as A3 by Moody’s and BBB- by S&P.
(in millions) Description Total Outstanding Reserved(a) Available
Progress Energy, Inc. Five-year (expiring 5/3/11) $1,130 $ – $ (60) $1,070
PEC Five-year (expiring 6/28/10) 450 – – 450
PEF Five-year (expiring 3/28/10) 450 – – 450
Total credit facilities $2,030 $ – $(60) $1,970
(a) To the extent amounts are reserved for commercial paper or letters of credit outstanding, they are not available for additional borrowings. At December 31, 2006, Progress
Energy, Inc. had a total amount of $60 million of letters of credit issued, which were supported by the RCA.