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| ITEM 2.03 | | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. |
On May 11, 2023, Oncor Electric Delivery Company LLC (“Oncor”) completed a sale of $600 million aggregate principal amount of its 4.30% Senior Secured Notes due 2028 (the “2028 Notes”) and $400 million aggregate principal amount of its 4.95% Senior Secured Notes due 2052 (the “2052 Notes” and, together with the 2028 Notes, the “Notes”). The 2052 Notes constitute an additional issuance of Oncor’s 4.95% Senior Secured Notes due 2052, $500 million of which Oncor previously issued on September 8, 2022 and are currently outstanding (the “Outstanding 2052 Notes”).
Oncor used the proceeds (net of the initial purchasers’ discount, fees, expenses, and accrued interest) of approximately $969.9 million from the sale of the Notes for general corporate purposes, including to repay on May 11, 2023, the full amount of $625 million outstanding under our unsecured term loan credit agreement dated January 24, 2023 (the “January 2023 Term Loan Agreement”), the full amount of $150 million outstanding under our unsecured term loan credit agreement dated March 22, 2023 (the “March 2023 Term Loan Agreement”), and the full amount of $100 million outstanding under our revolving accounts receivable securitization facility (the “AR Facility”). As a result of the repayment of the January 2023 Term Loan Agreement and the March 2023 Term Loan Agreement, no borrowings remain outstanding under the respective agreements and neither agreement is in effect. As a result of the repayment of $100 million under the AR Facility, no borrowings remain outstanding under the AR Facility. The AR Facility remains in place and future borrowings may be made up to the lesser of the facility limit and the borrowing base.
The Notes were issued pursuant to the provisions of an Indenture, dated as of August 1, 2002, between Oncor and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, formerly The Bank of New York), as trustee (the “Trustee”) (as amended and supplemented, the “Indenture”), supplemented by an Officer’s Certificate, dated May 11, 2023 (the “2028 Officer’s Certificate”), and further supplemented in the case of the 2052 Notes by an Officer’s Certificate, dated September 8, 2022 (the “2052 Officer’s Certificate”). The Indenture and each of the 2028 Officer’s Certificate and the 2052 Officer’s Certificate relating to the applicable Notes establish the terms of the Notes. The 2052 Notes were issued as part of the same series as the Outstanding 2052 Notes and will be treated as a single class for all purposes under the Indenture. The 2028 Notes constitute a separate series of notes under the Indenture, but will be treated together with Oncor’s other outstanding debt securities issued under the Indenture, including the 2052 Notes and the Outstanding 2052 Notes, for amendments and waivers and for taking certain other actions.
Oncor’s obligations under the Notes are secured by a lien on all property acquired or constructed by Oncor for the transmission and distribution of electric energy, mortgaged as described under the Deed of Trust, Security Agreement and Fixture Filing (as amended, the “Deed of Trust”), dated as of May 15, 2008, from Oncor to The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, formerly The Bank of New York), as collateral agent (the “Collateral Agent”).
The 2028 Notes bear interest at a rate of 4.30% per annum and mature on May 15, 2028. The 2052 Notes bear interest at a rate of 4.95% per annum and mature on September 15, 2052. Interest on the 2028 Notes will accrue from the date of the original issuance and will be payable semi-annually on May 15 and November 15 of each year, beginning on November 15, 2023. Interest on the 2052 Notes will accrue from March 15, 2023, and will be payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2023. Prior to April 15, 2028 in the case of the 2028 Notes and March 15, 2052 in the case of the 2052 Notes, Oncor may redeem such Notes at any time, in whole or in part, at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a “make-whole” premium. On and after April 15, 2028 in the case of the 2028 Notes and March 15, 2052 in the case of the 2052 Notes, Oncor may redeem such Notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of such Notes, plus accrued and unpaid interest. The Notes, the Indenture and the Deed of Trust also contain customary events of default, including failure to pay principal or interest on the Notes when due, among others. If any such event of default occurs and is continuing, the outstanding principal of the Notes may be declared due and payable, among other remedies as provided in the Indenture.
