Vectren 2012 Annual Report Download - page 99

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Utility Holdings 2011 Debt Issuance
On November 30, 2011, Utility Holdings closed a financing under a private placement note purchase agreement pursuant to
which various institutional investors purchased the following tranches of notes: (i)$55 million of 4.67 percent Senior Guaranteed
Notes, due November 30, 2021, (ii) $60 million of 5.02 percent Senior Guaranteed Notes, due November 30, 2026, and (iii) $35
million of 5.99 percent Senior Guaranteed Notes, due December 2, 2041. These senior notes are unsecured and jointly and
severally guaranteed by Utility Holdings’ regulated utility subsidiaries, SIGECO, Indiana Gas, and VEDO. The proceeds from
the sale of the notes, net of issuance costs, totaled approximately $149 million. These notes have no sinking fund requirements
and interest payments are due semi-annually. These notes contain customary representations, warranties and covenants,
including a leverage covenant consistent with leverage covenants contained in other Utility Holdings’ borrowing arrangements.
Vectren Capital Corp. 2010 Debt Issuance
On December 15, 2010, the Company and Vectren Capital closed a financing under a private placement note purchase
agreement pursuant to which various institutional investors agreed to purchase the following tranches of notes from Vectren
Capital: (i) $75 million 3.48 percent Senior Notes, Series A due December 15, 2017, and (ii) $50 million 4.53 percent Senior
Notes, Series B due December 15, 2025. These Senior Notes are unconditionally guaranteed by Vectren. The proceeds from
the issuance replaced $48 million debt maturities due in December 2010 and provided long-term financing for some nonutility
investments originally financed with short-term borrowings. These notes have no sinking fund requirements and interest
payments are due semi-annually. The proceeds from the sale of the notes, net of issuance costs, totaled approximately $124
million. These notes contain customary representations, warranties and covenants, including a leverage covenant consistent
with leverage covenants contained in other Vectren Capital borrowing arrangements.
Long-Term Debt Puts & Calls
Certain long-term debt issues contain put and call provisions that can be exercised on various dates before maturity. As an
example, certain instruments can be put to the Company upon the death of the holder (death puts) or at specific dates. During
2012, the Company repaid an insignificant amount related to death puts. During 2011 and 2010, the Company repaid
approximately $0.8 million and $1.8 million, respectively, related to death puts. On February 4, 2013, the Company notified
holders of Utility Holdings $121.6 million 6.25 percent senior unsecured notes due 2039, which contained both a put and call
provision, of its intent to call the debt at par on April 1, 2013. These notes are the only issue outstanding at December 31, 2012
with a put provision.
On October 21, 2011, the Company notified holders of Utility Holdings $96.2 million 5.95 percent senior notes due 2036, of its
intent to call those notes. This call option was exercised at par on November 21, 2011.
Letters of Credit Supporting Long-Term Debt
As of December 31, 2012, Utility Holdings has letters of credit outstanding in support of two SIGECO tax exempt adjustable rate
first mortgage bonds totaling $41.7 million. In the unlikely event the letters of credit were called, the Company could settle with
the financial institutions supporting these letters of credit with general assets or by drawing from its credit facility that expires in
September 2016. Due to the long-term nature of the credit agreement, such debt is classified as long-term at December 31,
2012.
Future Long-Term Debt Sinking Fund Requirements and Maturities
The annual sinking fund requirement of SIGECO's first mortgage bonds is 1 percent of the greatest amount of bonds
outstanding under the Mortgage Indenture. This requirement may be satisfied by certification to the Trustee of unfunded
property additions in the prescribed amount as provided in the Mortgage Indenture. SIGECO intends to meet the 2012 sinking
fund requirement by this means and, accordingly, the sinking fund requirement for 2012 is excluded from Current liabilities in the
Consolidated Balance Sheets. At December 31, 2012, $1.3 billion of SIGECO's utility plant remained unfunded under
SIGECO's Mortgage Indenture. SIGECO’s gross utility plant balance subject to the Mortgage Indenture approximated $2.8
billion at December 31, 2012.
Consolidated maturities of long-term debt during the five years following 2012 (in millions) are $106.4 in 2013, $30.0 in 2014,
$279.8 in 2015, $73.0 in 2016, $75.0 in 2017, and $1,095.6 thereafter.