| ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On March 22, 2023, 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 the borrower, and U.S. Bank National Association, as the lender (the “Lender”).
The Term Loan Agreement provides for a term loan credit facility in an aggregate principal amount of $150 million (the “Term Loan Facility”) with a maturity date of April 30, 2024.
On March 23, 2023, Oncor borrowed $150 million aggregate principal amount under the Term Loan Agreement which was the full amount of the Term Loan Facility. Oncor used the proceeds from the borrowing for general corporate purposes, including repayment of outstanding commercial paper notes issued under its commercial paper program.
Loans under the Term Loan Agreement may be, at Oncor’s option, in the form of a “Term SOFR Loan” or an “ABR Loan”, each as defined in the Term Loan Agreement. Term SOFR Loans bear interest at a rate per annum equal to the secured overnight financing rate (“SOFR”) calculated based on term SOFR for a one- or three- month interest period, as selected by Oncor, as of a specified date, plus 0.95%. ABR Loans bear interest, for any day, at a rate per annum equal to the greatest of: (1) the prime rate quoted by the Lender on such day, (2) the federal funds effective rate on such day plus 0.50%, and (3) term SOFR for a one-month interest period on such day 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 Lender to accelerate all outstanding loans and terminate its 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. The Lender is also a lender under Oncor’s revolving credit facility, and the Lender and its affiliates have, from time to time, performed various other financial advisory, issuer and paying agency, commercial banking, and investment banking services for Oncor and certain of its affiliates for which they have received customary fees and the payment of expenses.
| ITEM 2.03 | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. |
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
