ITEM 2.02. | RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
On February 25, 2022, Oncor Electric Delivery Company LLC (“Oncor”) issued a press release discussing its financial results for the year and fiscal quarter ended December 31, 2021. The press release is furnished herewith as Exhibit 99.1.
ITEM 2.03. | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. |
As previously reported, on January 28, 2022, Oncor entered into a Term Loan Credit Agreement (the “Term Loan Agreement”) among Oncor, as borrower, the lenders listed therein (the “Lenders”), PNC Bank, National Association (“PNC”), as administrative agent for the Lenders and as a Lender, and the other financial institutions party thereto. The Term Loan Agreement, which matures on April 29, 2023, provides for a term loan credit facility in an aggregate principal amount of $1.3 billion. Oncor may borrow up to the full amount of the term loan credit facility in up to four borrowings, which may be made, at Oncor’s option, at any time before April 28, 2022. Oncor borrowed $400 million on January 28, 2022 under the Term Loan Agreement.
On February 23, 2022, Oncor submitted an irrevocable notice under the Term Loan Agreement for a $600 million borrowing to be made on February 28, 2022. Oncor intends to use the proceeds from the borrowing for general corporate purposes, including to repay outstanding commercial paper notes and redeem on March 1, 2022, $400 million aggregate principal amount outstanding of its 4.10% Senior Secured Notes due 2022, plus accrued and unpaid interest to, but not including, March 1, 2022. Loans under the Term Loan Agreement bear interest, at Oncor’s option, at either (i) an adjusted term secured overnight financing rate (“SOFR”) (calculated based on one-month term SOFR as of a specified date, plus an adjustment of 0.10% (the “SOFR Adjustment”)) plus a spread of 0.575%, (ii) an adjusted daily simple SOFR (calculated based on daily simple SOFR as of a specified date, plus the SOFR Adjustment) plus a spread of 0.575%, or (iii) for any day, at a rate equal to the greatest of: (1) the prime rate publicly announced by PNC on such date, (2) the federal funds effective rate on such date plus 0.50%, and (3) daily simple SOFR on such date, plus 1%.
Additional details regarding the Term Loan Agreement are contained in Item 1.01 and Item 2.03 of Oncor’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 28, 2022 (“Prior 8-K”) and are incorporated herein by reference. The foregoing discussion of the terms of the Term Loan Agreement is not complete and is subject to, and qualified in its entirety by reference to, the Term Loan Agreement filed as Exhibit 10.1 to the Prior 8-K.
ITEM 5.02. | DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS. |
Oncor Salary Deferral Program, as Amended and Restated
On February 18, 2022, the board of directors (the “Board”) of Oncor approved the Oncor Salary Deferral Program as amended and restated effective as of December 31, 2021 (the “Amended Salary Deferral Program”). The Amended Salary Deferral Program amends and restates the Oncor Salary Deferral Program as amended and restated effective as of December 1, 2020 (the “Original Salary Deferral Program”). Employees who meet a specified salary threshold level or other criteria established by the program administrator are eligible to participate in the Amended Salary Deferral Program, including executive officers.
The Original Salary Deferral Program provided that the participant’s accounts under the Original Salary Deferral Program become fully vested and not subject to forfeiture upon death, disability, retirement at age 62 or later or termination without cause. The Amended Salary Deferral Program provides that participant’s accounts under the Amended Salary Deferral Program become fully vested and not subject to forfeiture upon termination for good reason following a change in control, as well as upon death, disability, retirement at age 62 or later or termination without cause. The Original Salary Deferral Program included a definition of “cause” that was limited to Oncor. The Amended Salary Deferral Program modifies the definition of “cause” to include references to the Surviving Entity (as defined below). The definitions of “cause”, “change in control” and “good reason” from the Amended Salary Deferral Program are included below.