| ITEM 1.01. | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On December 10, 2018, Oncor Electric Delivery Company LLC, a Delaware limited liability company (“Oncor”), entered into a Term Loan Credit Agreement (the “Term Loan Agreement”) among Oncor, as Borrower, the lenders listed therein (the “Lenders”), and Mizuho Bank, Ltd. (“Mizuho”), as administrative agent for the Lenders (in such capacity, the “Agent”).
The Term Loan Agreement provides for a term loan credit facility in an aggregate principal amount of $350 million. The Term Loan Agreement has a 12 month term, maturing on December 9, 2019, and may be extended at the Borrower’s option up to an additional six months, maturing no later than June 9, 2020, upon satisfaction of certain conditions.
Loans under the Term Loan Agreement bear interest at per annum rates equal to, at Oncor’s option, (i) LIBOR plus 0.55% until December 9, 2019, and LIBOR plus 0.60% on or after December 10, 2019, or (ii) an alternate base rate (the highest of (1) the prime rate of Mizuho, (2) the federal funds effective rate plus 0.50%, and (3) dailyone-month LIBOR plus 1%).
The Term Loan Agreement contains customary covenants for facilities of this type, restricting, subject to certain exceptions, Oncor and its subsidiaries from, among other things:
| | • | | incurring additional liens; |
| | • | | entering into mergers and consolidations; and |
| | • | | sales of substantial assets. |
In addition, the Term Loan Agreement requires that Oncor maintain a consolidated senior debt to capitalization ratio of no greater than 0.65 to 1.00 and observe certain customary reporting requirements and other affirmative covenants.
The Term Loan Agreement also contains customary events of default for facilities of this type the occurrence of which would allow the Lenders to accelerate all outstanding loans and terminate their commitments, including certain changes in control of Oncor that are not permitted transactions under the Term Loan Agreement and cross-default provisions in the event Oncor or any of its subsidiaries defaults on indebtedness in a principal amount in excess of $100 million or receives judgments for the payment of money in excess of $100 million that are not discharged within 60 days.
The foregoing description of the Term Loan Agreement is qualified in its entirety by reference to the complete terms of the Term Loan Agreement, which is attached hereto as Exhibit 10.1 and incorporated by reference herein.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER ANOFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On December 10, 2018, Oncor borrowed $350 million under the Term Loan Agreement and intends to apply the proceeds for general corporate purposes, including to repay notes, when due, under its commercial paper program. The information provided in Item 1.01 of this current report on Form8-K is incorporated by reference into this Item 2.03.
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
