UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 16, 2006
SEMCO Energy, Inc.
(Exact name of registrant as specified in its charter)
| | Michigan | | 001-15565 | | 38-2144267 | |
| | (State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) | |
1411 Third Street, Suite A, Port Huron, Michigan | 48060 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 810-987-2200
n/a
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
On November 16, 2006, SEMCO Energy, Inc. (the “Company”) established an unsecured $7.5 million discretionary line of credit with U.S. Bank National Association (the “Lender”), and, in connection therewith, executed a Revolving Note in the principal face amount of $7.5 million (the “Revolving Note”) and a Negative Pledge Agreement (the “Negative Pledge Agreement”).
The Revolving Note provides for maximum advances from the Lender of $7.5 million and expires on November 16, 2007. The Lender is not obligated to make any advances under the Revolving Note and may at any time, without notice, in its sole and absolute discretion, refuse to make advances to the Company under the Revolving Note without incurring any liability. The Revolving Note is unsecured, and there are no restrictions on the use of advances thereunder by the Company.
Advances made under the Revolving Note will generally bear interest at a rate equal to the applicable Bid Margin, which is the rate quoted by the Lender and accepted by the Company, plus the Quoted Rate, which is the one-month LIBOR rate quoted by Lender. The Repayment Date for advances will be as agreed by the Lender and the Company, but in no event later than November 16, 2007.
The Revolving Note provides for customary events of default, including, but not limited to, payment defaults, breaches of representations or warranties, cross-defaults to other indebtedness and bankruptcy events. If an event of default occurs, the Lender is permitted to declare any or all outstanding advances under the Revolving Note to be immediately due and payable.
Pursuant to the Negative Pledge Agreement pertaining to the Revolving Note, the Company has agreed that so long as it has any advances outstanding under the Revolving Note, it will not create, incur, assume or suffer to exist any mortgage, pledge, encumbrance, security interest, lien or charge of any kind upon any of its assets other than “Permitted Liens,” as such term is defined in the Negative Pledge Agreement and which includes the Permitted Liens as described in both the Company’s Second Amended and Restated Credited Agreement, dated as of September 15, 2005, and the Indenture dated as of May 21, 2003, among the Company and Fifth Third Bank, as trustee, related to the Company’s 7 1/8% Senior Notes due 2008.
Entry into the Revolving Note and Negative Pledge Agreement is part of the Company’s general financing plans, whereby the Company has entered, or intends to enter, into several similar unsecured discretionary lines of credit with different lenders to provide several alternative sources from which the Company may obtain discretionary short-term financing, depending on which source provides financing on terms that the Company evaluates as best under the circumstances. The Company anticipates that under these arrangements with various lenders, at any given time, its total outstanding advances under the Revolving Note and any such current or future similar financing arrangements, collectively, will not exceed $15 million. The Company is currently using amounts advanced under such arrangements, and intends to use future amounts advanced, primarily to finance the Company’s working capital needs. The advances under these arrangements may fluctuate materially, particularly given the seasonality of the Company’s business.
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The foregoing summary does not purport to be complete and is qualified in its entirety by the full text of each of the Revolving Note and Negative Pledge Agreement, which have been attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated by reference herein.
This Current Report on Form 8-K contains forward-looking statements regarding the anticipated levels of advances under the Company’s Revolving Note and current and future similar financing arrangements and the anticipated use of those funds. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements due to a number of factors, including, but not limited to, those discussed above and those described in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Readers are cautioned not to place undue reliance on forward-looking statements made in this Current Report on Form 8-K, since the statements speak only as of the date of this report. Except as may be otherwise required by law, the Company disclaims any obligation to publicly update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events. Readers are advised, however, to consult any further disclosures the Company may make on related subjects in its documents filed with or furnished to the Securities and Exchange Commission or in its other public disclosures.
Item 9.01 Financial Statements and Exhibits.
| 10.1 | Revolving Note between the Company and U.S. Bank National Association dated November 16, 2006. |
| 10.2 | Negative Pledge Agreement between the Company and U.S. Bank National Association dated November 16, 2006. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | SEMCO Energy, Inc. (Registrant) |
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| Date: November 20, 2006 | By: | /s/ Michael V. Palmeri |
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| | Michael V. Palmeri Senior Vice President, Chief Financial Officer and Treasurer |
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EXHIBIT INDEX
Form 8-K
November 16, 2006
| | | Filed |
| Exhibit No. | Description | Herewith | By Reference |
| | | | |
| 10.1 | | x | |
| 10.2 | | x | |
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