| ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On January 24, 2023, 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 Toronto Dominion (Texas) LLC, as administrative agent for the Lenders.
The Term Loan Agreement provides for a term loan credit facility in an aggregate principal amount of $625 million (the “Term Loan Facility”) with a maturity date that is 366 days after the date on which the funding availability period ends. 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 on or before March 27, 2023. Upon the earlier to occur of the third borrowing under the Term Loan Agreement or March 27, 2023, any unused commitments of the Lenders to make term loans under the Term Loan Agreement shall terminate. Oncor intends to use the proceeds from any borrowings under the Term Loan Agreement for working capital and other general corporate purposes.
On January 27, 2023, Oncor made its initial borrowing under the Term Loan Agreement in the amount of $500 million. Oncor used the proceeds from the borrowing for general corporate purposes, including repayment of outstanding commercial paper notes. Such repaid commercial paper notes were issued by Oncor for general corporate purposes, including to repay in full on January 9, 2023 the then-outstanding borrowings of $100 million, plus accrued and unpaid interest, under Oncor’s Term Loan Credit Agreement, dated as of July 6, 2022, among Oncor, as borrower, the lenders listed therein, and Sumitomo Mitsui Banking Corporation, as administrative agent for the lenders and as a lender (the “July 2022 Term Loan Agreement”). As a result of the repayment of the July 2022 Term Loan Agreement, no borrowings remain outstanding under such agreement and such agreement is no longer in effect.
Loans under the Term Loan Agreement may be, at Oncor’s option, in the form of a “Term SOFR Loan”, “Daily Simple SOFR Loan” or “ABR Loan”, each as defined in the Term Loan Agreement. Term SOFR Loans bear interest at an adjusted term secured overnight financing rate (“SOFR”) (calculated based on term SOFR for a one-, three-, or six-month interest period, as selected by Oncor, as of a specified date, plus an adjustment of 0.10% (the “SOFR Adjustment”)) plus a spread of 0.85% (the “Applicable Margin”). Daily Simple SOFR Loans bear interest at an adjusted daily simple SOFR (calculated based on daily simple SOFR as of a specified date, plus the SOFR Adjustment) plus the Applicable Margin. ABR Loans bear interest, for any day, at a rate equal to the greatest of: (1) the prime rate quoted by The Wall Street Journal on such date, (2) the federal funds effective rate on such date, plus 0.50%, and (3) term SOFR for a one-month interest period on such date, plus the SOFR Adjustment, plus 1.00%.
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 consolidated total 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 an aggregate amount in excess of $100 million that are not discharged or stayed 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. Each of the Lenders is also a lender under Oncor’s revolving credit facility, and the Lenders and their respective
