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Progress Energy Annual Report 2007
101
The RCAs provide liquidity support for issuances of
commercial paper and other short-term obligations.
Fees and interest rates under Progress Energy’s RCA
are 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. Fees and interest rates
under PEC’s RCA are based upon the credit rating of
PEC’s long-term unsecured senior noncredit-enhanced
debt, currently rated as A3 by Moody’s and BBB by S&P.
Fees and interest rates under PEF’s RCA are 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.
Our outstanding commercial paper and other short-
term debt and related weighted-average interest rate
at December 31, 2007, was $201 million and 5.48%,
respectively.
We had no commercial paper outstanding or other short-
term debt at December 31, 2006.
The following table presents the aggregate maturities of
long-term debt at December 31, 2007:
B. Covenants and Default Provisions
FINANCIAL COVENANTS
Progress Energy, Inc.’s, PEC’s and PEF’s credit lines
contain various terms and conditions that could affect
the ability to borrow under these facilities. All of the
credit facilities include a defined maximum total debt to
total capital ratio (leverage). At December 31, 2007, the
maximum and calculated ratios, pursuant to the terms of
the agreements, were as follows:
CROSS-DEFAULT PROVISIONS
Each of these credit agreements contains cross-default
provisions for defaults of indebtedness in excess of the
following thresholds: $50 million for Progress Energy,
Inc. and $35 million each for PEC and PEF. Under these
provisions, if the applicable borrower or certain
subsidiaries of the borrower fail to pay various debt
obligations in excess of their respective cross-default
threshold, the lenders of that credit facility could
accelerate payment of any outstanding borrowing
and terminate their commitments to the credit facility.
Progress Energy, Inc.’s cross-default provision can be
triggered by Progress Energy, Inc. and its significant
subsidiaries, as defined in the credit agreement,
(i.e., PEC, Florida Progress, PEF, Progress Capital Holdings,
Inc. and PVI). PEC’s and PEF’s cross-default provisions
can only be triggered by defaults of indebtedness by PEC
and its subsidiaries and PEF, respectively, not each other
or other affiliates of PEC and PEF.
Additionally, certain of Progress Energy, Inc.’s long-term
debt indentures contain cross-default provisions for
defaults of indebtedness in excess of amounts ranging
from $25 million to $50 million; these provisions apply only
to other obligations of Progress Energy, Inc., primarily
commercial paper issued by the Parent, not its subsidiaries.
In the event that these indenture cross-default provisions
are triggered, the debt holders could accelerate payment
of approximately $2.6 billion in long-term debt. Certain
agreements underlying our indebtedness also limit our
ability to incur additional liens or engage in certain types
of sale and leaseback transactions.
(in millions) Description Total Outstanding Reserved(a) Available
Progress Energy, Inc. Five-year (expiring 5/3/11) $1,130 $ – $220 $910
PEC Five-year (expiring 6/28/10) 450 – – 450
PEF Five-year (expiring 3/28/10) 450 – – 450
Total credit facilities $2,030 $ – $220 $1,810
(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, 2007, Progress
Energy, Inc. had a total amount of $19 million of letters of credit issued, which were supported by the RCA.
(in millions)
2008 $877
2009 400
2010 406
2011 1,000
2012 950
Thereafter 6,035
Total $9,668
Company Maximum Ratio Actual Ratio(a)
Progress Energy, Inc. 68% 54.4%
PEC 65% 48.8%
PEF 65% 53.2%
(a) Indebtedness as defined by the bank agreements includes certain letters of credit
and guarantees that are not recorded on the Consolidated Balance Sheets.