BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-K
EXHIBIT 4(c)
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EXECUTION COPY
THIRD AMENDMENT, dated as of November 20, 1997 (this "AMENDMENT"),
to the CREDIT AGREEMENT, dated as of June 30, 1995, as amended by the First
Amendment thereto dated as of October 2, 1995 and the Second Amendment
thereto dated as of June 6, 1997 (as further amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among Bangor
Hydro-Electric Company, a Maine corporation (the "COMPANY"), the several
banks from time to time parties to the Credit Agreement (individually, a
"BANK" and collectively, the "BANKS"), The Chase Manhattan Bank (formerly
known as Chemical Bank), as administrative agent for the Banks, and Fleet
Bank of Maine and The First National Bank of Boston, as co-agents (in such
capacity, the "CO-AGENTS"). Terms defined in the Credit Agreement shall be
used in this Amendment with their defined meanings unless otherwise defined
herein.
W I T N E S S E T H :
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WHEREAS, pursuant to Waivers with respect to the Credit Agreement,
dated as of September 30, 1997 and November 13, 1997, respectively, the Banks
parties thereto temporarily waived compliance by the Company with Section 6.8
of the Credit Agreement for the period of four consecutive fiscal quarters
ended September 30, 1997; and
WHEREAS, the Company has requested the Banks to (i) permanently
waive, subject to certain conditions, compliance by the Company with Section
6.8 of the Credit Agreement and the other financial covenants contained in
the Credit Agreement for the periods of four consecutive fiscal quarters
ended September 30, 1997 and December 31, 1997, (ii) provide for the
restructuring of the PERC Contract as further described below, (iii) permit
the UNITIL Contract to be monetized as further described below and (iv) to
make certain other changes to the Credit Agreement on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
I. AMENDMENTS.
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1. The definition of "Applicable Base Rate Margin" contained in
Section 1.1 of the Credit Agreement is hereby amended by adding a new column
at the end thereof as follows:
Level VI
STATUS
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2.50%
2. The definition of "Applicable Eurodollar Margin" contained in
Section 1.1 of the Credit Agreement is hereby amended by adding a new column
at the end thereof as follows:
Level VI
STATUS
3.50%
3. The definition of "Commitment Fee Rate" contained in Section
1.1 of the Credit Agreement is hereby amended by adding a new row at the end
thereof as follows:
Level VI Status 0.75%
4. Each of the definitions contained in Section 1.1 of the Credit
Agreement and set forth below is hereby amended and restated in its entirety
as follows:
"LEVEL V STATUS": exists at any date if, at such date, neither
Level I Status, Level II Status, Level III Status nor Level IV Status
exists and the Company has a long-term senior secured debt rating
(whether or not published) of BB- or better by S&P AND, unless the
Company is then unrated by Moody's, Ba3 or better by Moody's.
"STATUS": the existence of Level I Status, Level II Status, Level
III Status, Level IV Status, Level V Status or Level VI Status, as the
case may be.
5. The following new definitions are hereby added to Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
"LEVEL VI STATUS": exists at any date if, at such date, none of
Level I Status, Level II Status, Level III Status, Level IV Status or
Level V Status exists.
"PERC": Penobscot Energy Recovery Company.
"PERC CONTRACT RESTRUCTURING": a series of transactions involving
the Company, the Municipal Review Committee, Inc., Energy National,
Inc., PERC Management Company, The Prudential Insurance Company of
America and PERC, regarding the restructuring of an Agreement dated as
of June 21, 1984 between the Company and PERC and amended on March 24,
1986. The transactions are substantially outlined in a letter from PERC
dated June 30, 1997, attached as Annex A to the Third Amendment to this
Agreement, and include provisions for periodic payments to the Company
out of the net profits from operations of PERC (the "PERC Rebates").
"PERC REBATES": as defined in the definition of "PERC Contract
Restructuring".
"UNITIL MONETIZATION": a transaction, consummated on or prior to
January 15, 1998, pursuant to which (a) the UNITIL Contract will be
transferred to a special purpose Subsidiary of the Company that will
hold no other assets (the "UNITIL SPC"), (b) the UNITIL SPC will incur
Debt (the "UNITIL SPC Debt") secured by the UNITIL Contract and
distribute the proceeds thereof to the Company and (c) the Company shall
receive net cash proceeds therefrom of at least $25,000,000.
"UNITIL MONETIZATION DATE": the date of consummation of the UNITIL
Monetization.
"UNITIL SPC": as defined in the definition of "UNITIL
Monetization".
"UNITIL SPC Debt": as defined in the definition of "UNITIL
Monetization".
6. Section 1.2 of the Credit Agreement is hereby amended by adding
the following paragraph to the end thereof:
"(c) Notwithstanding anything to the contrary in this
Agreement, if the Company is required to write off (the "Maine Yankee
Write-off") the unamortized "Deferred Maine Yankee Refueling Cost"
(those costs relating to the 1997 scheduled Maine Yankee refueling
outage which were deferred by the Company for future recovery in
electric rates and which are classified as "Deferred Maine Yankee
Refueling Cost" on the Company's financial records), then, for the
purposes of calculating the financial covenants contained in Sections
6.7, 6.8 and 6.9 as at any date during the Company's 1998 fiscal year,
(i) Consolidated Adjusted EBIT shall be increased (without duplication
of any other increase) to the extent the Maine Yankee Write-off is
reflected as a charge in the relevant statement of Consolidated Net
Income for the relevant period and (ii) any reduction in Consolidated
Net Worth or the amount described in clause (b) of the definition of
"Consolidated Total Capitalization" resulting from the Maine Yankee
Write-off shall be disregarded; PROVIDED, that in each case the amount
of any such adjustment shall not exceed $2,000,000."
7. The sentences added to paragraph (b) of Section 2.11 of the
Credit Agreement pursuant to the Second Amendment to the Credit Agreement are
hereby amended and restated in their entirety as follows:
"In addition, in the event that the UNITIL Monetization shall be
consummated, the Revolving Credit Commitments shall be automatically and
permanently reduced (a) on the date thereof, in the aggregate amount of
$19,000,000, and (b) on the earlier of (i) December 31, 1998 and (ii)
the date of consummation of the UNITIL Transfer, in the aggregate amount
of $6,000,000. In addition, in the event that the UNITIL Transfer shall
be consummated, the Revolving Credit Commitments shall be automatically
and permanently reduced on the first anniversary thereof in the
aggregate amount of 25% of the excess, if any, of the Net Cash Proceeds
of the UNITIL Transfer received by the Company or the UNITIL SPC OVER
the Base Amount (as defined below) and (c) on the second anniversary
thereof in the aggregate amount of 25% of the excess, if any, of the Net
Cash Proceeds of the UNITIL Transfer received by the Company or the
UNITIL SPC OVER the Base Amount. As used herein, "Base Amount" means,
as of any date, an amount equal to (i) $40,000,000 MINUS (ii) the
product of $300,000 TIMES the number of calendar months commencing after
September 30, 1997 and ending prior to such date. Each reduction in the
Revolving Credit Commitments pursuant to the preceding sentences shall
be accompanied by a prepayment of the Revolving Credit Loans in an
aggregate amount equal to the amount of such commitment reduction."
8. Section 6.3 of the Credit Agreement is hereby amended by
amending and restating paragraph (g) thereof, and adding new paragraphs (h)
and (i) to the end thereof, as follows:
"(g) Unsecured Debt incurred by the Company in connection with the
restructuring of the PERC Contract so long as the aggregate principal
amount of Debt incurred pursuant to this paragraph (g) does not exceed
$6,000,000;
(h) Guarantees of the Company of the UNITIL SPC Debt; and
(i) Guarantees of the Company of scheduled payments of principal
and interest (not to exceed $4,200,000 in the aggregate in any fiscal
year of the Company) in respect of Debt of PERC, but only on the
scheduled dates, and at the rates, as originally in effect (it being
understood that the making of such Guarantee shall be subject to prior
review by the Administrative Agent of the documentation in respect
thereof for the purpose of establishing compliance with the requirements
of this paragraph)."
9. Section 6.5 of the Credit Agreement is hereby amended by adding
a new paragraph (o) to the end thereof which shall read in its entirety as
follows:
"(o) Liens on the PERC Rebates securing Debt incurred pursuant to
Section 6.3(g), so long as such Debt is incurred on or prior to December
31, 1998"
10. Effective on the UNITIL Monetization Date, the tables set
forth in Sections 6.7, 6.8 and 6.9 shall automatically be replaced with the
following tables
SECTION 6.7:
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Period Ratio
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UNITIL Monetization Date - 6/30/98 0.73 to 1.0
7/1/98 - 12/31/98 0.72 to 1.0
1/1/99 to and including - 12/31/99 0.70 to 1.0
1/1/00 and thereafter 0.68 to 1.0
SECTION 6.8:
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Period Ratio
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UNITIL Monetization Date - 3/31/98 No test required
4/1/98 - 6/30/98 0.95 to 1.0
7/1/98 - 9/30/98 1.05 to 1.0
10/1/98 - 12/31/98 1.25 to 1.0
1/1/99 - 12/31/99 1.40 to 1.0
1/1/00 and thereafter 1.50 to 1.0
SECTION 6.9:
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Period Amount
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UNITIL Monetization Date - 3/31/98 $103,000,000
4/1/98 - 9/30/98 $104,000,000
10/1/98 - 12/31/98 $105,000,000
1/1/99 - 12/31/99 $107,000,000
1/1/00 and thereafter $110,000,000
11. The first sentence added to Section 6.12 of the Credit
Agreement pursuant to the Second Amendment thereto is hereby amended and
restated in its entirety as follows:
"Neither the Company nor any of its Subsidiaries shall sell, assign,
transfer or otherwise dispose of (other than pursuant to the Security
Agreement or the UNITIL Monetization) all or any part of its rights or
interests under the UNITIL Contract (the "UNITIL Transfer") unless (a)
the UNITIL Transfer is consummated after the UNITIL Monetization has
been consummated, (b) the consideration paid to the UNITIL SPC in
connection with the UNITIL Transfer is entirely in the form of cash and
(c) the Net Cash Proceeds of the UNITIL Transfer received by the Company
pursuant to Section 6.17(b) equal at least $6,000,000."
12. Article VI of the Credit Agreement is hereby amended by adding
a new Section 6.17 to the end thereof which shall read in its entirety as
follows:
"SECTION 6.17 UNITIL SPC DISTRIBUTIONS. The Company shall cause
the UNITIL SPC (a) on the last Business Day of each calendar month, to
dividend to the Company all proceeds of the UNITIL Contract not
otherwise required to pay principal and interest in respect of the
UNITIL SPC Debt (but, in each case, only on the original scheduled
dates, and at the rates, as initially in effect), or to fund a debt
reserve account (in an aggregate amount not to exceed $1,500,000 at any
one time) in respect of the UNITIL SPC Debt, during such month and (b)
in the event that the UNITIL SPC consummates the UNITIL Transfer, to
dividend to the Company on the date of the UNITIL Transfer all cash
proceeds thereof, net of the amount of such proceeds applied to repay
the UNITIL SPC Debt and pay related transaction costs (which net amount
shall, in any event, be sufficient to repay the amounts required to be
repaid by the Company pursuant to Section 2.11(b))."
II. WAIVER.
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The parties hereto hereby agree that, until but excluding January
15, 1998 (the "WAIVER EXPIRATION DATE"), no Default or Event of Default shall
be deemed to have occurred under the Credit Agreement as a result of any
default (a "FINANCIAL COVENANT DEFAULT") in the observance of the covenants
contained in Sections 6.7, 6.8 and 6.9 of the Credit Agreement for the
periods of four consecutive fiscal quarters ending September 30, 1997 and
December 31, 1997. It is understood that an Event of Default as a result of
any such Financial Covenant Default shall be deemed to have occurred and be
continuing from and after the Waiver Expiration Date unless (a) such Event of
Default shall have been waived by the Majority Banks in accordance with
Section 9.5 of the Credit Agreement or (b) the UNITIL Monetization Date shall
have occurred on or prior to the Waiver Expiration Date (in which case this
waiver shall become permanent).
II. MISCELLANEOUS.
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1. REPRESENTATIONS AND WARRANTIES. The Company hereby represents
and warrants as of the date hereof that, after giving effect to this
Amendment, (a) no Default or Event of Default has occurred and is continuing
and (b) all representations and warranties of the Company contained in the
Loan Documents are true and correct in all material respects with the same
effect as if made on and as of such date.
2. EXPENSES. The Company agrees to pay or reimburse the
Administrative Agent on demand for all its reasonable out-of-pocket costs and
expenses incurred in connection with the preparation and execution of this
Amendment, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent.
3. NO CHANGE. Except as expressly provided herein, no term or
provision of the Credit Agreement shall be amended, modified or supplemented,
and each term and provision of the Credit Agreement shall remain in full
force and effect.
4. EFFECTIVENESS. This Amendment shall become effective as of the
date hereof upon (a) receipt by the Administrative Agent of counterparts
hereof duly executed by the Company and the Banks, (b) receipt by the
Administrative Agent of an amended and restated Security Agreement in form
and substance satisfactory to it, which shall provide for (i) the release of
the security interest in the UNITIL Contract effective on the UNITIL
Monetization Date, (ii) a first priority assignment (subject only to any Lien
permitted by Section 6.5(o)) of the PERC Rebates, and (iii) a first priority
pledge of the Company's equity interest (including all dividends and other
proceeds in respect thereof) in the UNITIL SPC, and (c) receipt by the
Administrative Agent of an amendment fee in the aggregate amount of $125,000,
to be distributed by the Administrative Agent to the Banks PRO RATA based on
the amounts of their respective Revolving Credit Commitments and Term Loans.
5. COUNTERPARTS. This Amendment may be executed by the parties
hereto in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
BANGOR HYDRO-ELECTRIC COMPANY
By: /s/ Frederick S. Samp
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Title: Vice President
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Bank
By:________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:________________________________
Title:
THE BANK OF NEW YORK
By:________________________________
Title:
FLEET BANK OF MAINE
By:________________________________
Title:
KEY BANK
By:________________________________
Title:
THE TORONTO-DOMINION BANK
By:________________________________
Title: