| ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On March 27, 2024, Oncor Electric Delivery Company LLC (“Oncor”) entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with the purchasers named therein, which provides for the issuance by Oncor of certain senior secured notes. Pursuant to the Note Purchase Agreement, on or about April 24, 2024, Oncor intends, subject to the satisfaction of the certain customary closing conditions specified therein, to issue $100,000,000 aggregate principal amount of 5.00% Senior Secured Notes, Series F, due May 1, 2029 (the “Series F Notes”) and $50,000,000 aggregate principal amount of 5.49% Senior Secured Notes, Series G, due May 1, 2054 (together with the Series F Notes, the “Notes”).
The Notes will be sold under Section 4(a)(2) of the Securities Act of 1933, as amended. This current report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the Notes.
Oncor’s obligations under the Notes will be 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 Note Purchase Agreement provides for optional prepayment and in certain situations make-whole payments with respect to each series of the Notes. The Note Purchase Agreement also contains customary covenants, restricting, subject to certain exceptions, Oncor from, among other things, entering into mergers and consolidations, and sales of substantial assets. In addition, the Note Purchase 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 Note Purchase Agreement contains customary events of default, including the failure to pay principal or interest on the Notes when due, among others. If any such event of default occurs and is continuing, among other remedies provided in the Note Purchase Agreement, the outstanding principal of the Notes may be declared due and payable.
A copy of the Deed of Trust was filed by Oncor as an exhibit to its Form 10-Q filed May 15, 2008, the First Amendment to the Deed of Trust, dated March 2, 2009, between Oncor and the Collateral Agent was filed by Oncor as an exhibit to its Form 10-K filed March 3, 2009, the Second Amendment to the Deed of Trust, dated September 3, 2010, between Oncor and the Collateral Agent was filed by Oncor as an exhibit to its Form 8-K filed September 3, 2010, and the Third Amendment to the Deed of Trust, dated November 10, 2011, between Oncor and the Collateral Agent was filed by Oncor as an exhibit to its Form 8-K filed November 15, 2011, which are incorporated by reference herein. The Note Purchase Agreement is attached as Exhibit 10.1 to this current report on Form 8-K and is incorporated herein by reference. The above descriptions of the Deed of Trust, as amended, and the Note Purchase Agreement are qualified in their entirety by reference to the Deed of Trust and Note Purchase Agreement, respectively. Certain of the purchasers of the Notes and their respective affiliates have, from time to time, performed various commercial banking services for Oncor and certain of its affiliates for which they have received customary fees and expenses.
| 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 February 21, 2024, Oncor entered into an unsecured revolving credit agreement (the “Credit Agreement”) among Oncor, as borrower, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent for the lenders. The Credit Agreement, which matures on February 21, 2027, provides for an unsecured revolving credit facility in an aggregate principal amount of up to $500 million. Oncor previously borrowed $220 million on February 28, 2024 under the Credit Agreement.
On March 28, 2024, Oncor borrowed $280 million aggregate principal amount under the Credit Agreement. As a result of this March borrowing, Oncor has $500 million aggregate principal amount outstanding under the Credit Agreement. Oncor used the proceeds from the borrowing for general corporate purposes, including repayment of outstanding commercial paper notes issued under Oncor’s commercial paper program.
These borrowings under the Credit Agreement bear interest at a per annum rate equal to the term secured overnight financing rate for the interest period relevant to such borrowing, plus an adjustment of 0.10%, plus an applicable margin of between 0.875% and 1.50%, depending on certain credit ratings assigned to Oncor’s debt.
Additional details regarding the Credit 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 February 21, 2024 (“Prior 8-K”) and are incorporated herein by reference. The foregoing discussion of the terms of the Credit Agreement is not complete and is subject to, and qualified in its entirety by reference to, the Credit Agreement filed as Exhibit 10.1 to the Prior 8-K.
