| ITEM 1.01. | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On January 29, 2021, Oncor Electric Delivery Company LLC, a Delaware limited liability company (“Oncor”), entered into a Term Loan Credit Agreement (the “Term Loan Agreement”) between Oncor, as borrower, and U.S. Bank National Association (“Lender”), as lender.
The Term Loan Agreement provides for a term loan credit facility in an aggregate principal amount of $300 million (the “Term Loan Facility”). The Term Loan Agreement has a maturity date of February 28, 2022. Oncor may borrow up to the full amount of the Term Loan Facility in up to three borrowings which may be made, at Oncor’s option, at any time before March 15, 2021. Upon the earlier to occur of the third borrowing under the Term Loan Agreement and March 15, 2021, any unused commitments of Lender to make term loans under the Term Loan Agreement shall terminate.
Loans under the Term Loan Agreement bear interest at per annum rates equal to, at Oncor’s option, (i) London Interbank Offered Rate (“LIBOR”) plus 0.675%, or (ii) an alternate base rate (the highest of (1) the prime rate of Lender, (2) the federal funds effective rate plus 0.50%, and (3) daily one-month LIBOR plus 1%). In certain instances, Lender may approve a comparable or successor reference rate.
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 Lender 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 AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. |
On January 29, 2021, Oncor borrowed $160 million under the Term Loan Agreement and intends to apply the proceeds for general corporate purposes. The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
