UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 22, 2005 (June 16, 2005)
Date of report (Date of earliest event reported)
ALLEGHENY ENERGY, INC.
(Exact name of registrant as specified in charter)
Maryland 1-267 13-5531602
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
800 Cabin Hill Drive
Greensburg, Pennsylvania 15601-1689
(Address of principal executive of offices) (Zip code)
Registrant's telephone number, including area code: (724) 837-3000
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:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] 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.
On June 16, 2005, Allegheny Energy, Inc. ("AYE" or the "Company") and
Allegheny Energy Supply Company, LLC ("AESC" and, together with the Company,
the "Borrowers") entered into a $700 million Credit Agreement (the "Credit
Agreement") with certain banks, financial institutions and other institutional
lenders, The Bank of Nova Scotia, as the initial issuing bank for the letters
of credit pursuant to the Credit Agreement, Joint Lead Arranger, Joint Book
Runner and Syndication Agent, Citigroup Global Markets Inc., as Joint Lead
Arranger and Joint Book Runner, Banc of America Securities LLC, as Joint Book
Runner, Bank of America, N.A., as Co-Documentation Agent, Credit Suisse,
Cayman Islands Branch, as Joint Book Runner and Co-Documentation Agent, PNC
Capital Markets, Inc., as Joint Book Runner, PNC Bank, National Association,
as Co-Documentation Agent, and Citicorp North America, Inc., as administrative
agent (collectively, the "Bank Parties").
The Credit Agreement provides for a $400 million senior unsecured
revolving credit facility (the "Revolving Facility") and a $300 million senior
unsecured term credit facility (the "Term Facility"), subject to the terms and
conditions described below and in the Credit Agreement.
The Revolving Facility (i) refinanced the aggregate principal amount
outstanding of approximately $122 million under the previous credit agreement,
as amended, dated as of March 8, 2004, among AYE, the Lenders (as defined
therein), the Issuing Banks (as defined therein) and Citicorp North America,
Inc., as Administrative Agent (as amended, the "Previous Credit Agreement")
(collectively, the "Prior Lenders"), (ii) continues the letters of credit
issued under the Previous Credit Agreement (approximately $11.5 million) and
(iii) provides working capital and letters of credit for AYE and, subject to
certain limitations, its subsidiaries. Under the Revolving Facility, the Bank
Parties are required to make revolving credit loans to, and issue letters of
credit at the request of, AYE. In addition, subject to certain limitations,
AESC may borrow up to $50 million under the Revolving Facility directly, and
AYE is permitted to request letters of credit in an amount not in excess of
$125 million on behalf of AESC and its subsidiaries. The Borrowers may borrow,
repay and re-borrow amounts under the Revolving Facility from time to time
until its maturity on June 16, 2010, subject to certain mandatory reductions
in the revolving commitment required under the Credit Agreement (provided that
the revolving commitments will never be mandatorily reduced to less than $250
million). AYE has agreed to be jointly and severally liable for all of the
obligations of AESC under the Credit Agreement.
Under the Term Facility, the Bank Parties are required to make a
single advance in an aggregate principal amount of up to $300 million to AYE
on or prior to August 1, 2005. AYE must repay the principal amount borrowed
under the Term Facility in consecutive quarterly installments equal to 0.25%
of the aggregate principal amount initially advanced to AYE under the Term
Facility, with the balance due in full at maturity on June 16, 2010. AYE may
not re-borrow any part of the Term Facility that it repays or prepays. The
proceeds of the Term Facility will be used to refinance the aggregate
principal outstanding amount under the Company's 7.75% Notes due August 1,
2005.
Loans under the Credit Agreement bear interest, depending on the type
of loan requested by the Borrowers, at a rate equal to either (i) the higher
of the rate announced publicly by Citibank in New York, from time to time, as
Citibank's base rate or half of 1% above the Federal Funds Rate (as defined in
the Credit Agreement) (the "Base Rate"), plus the applicable margin, which is
between 1.50% and 0.50% for Base Rate loans, or (ii) the Eurodollar Rate (as
defined in the Credit Agreement), plus the applicable margin, which is between
2.50% and 1.50% for Eurodollar Rate-based loans. The Eurodollar Rate is
determined by dividing LIBOR (as defined in the Credit Agreement) by a
percentage equal to 1.00 minus the Eurodollar Rate Reserve Percentage (as
defined in the Credit Agreement). With respect to each letter of credit, the
relevant Borrower is required to pay to the Administrative Agent a letter of
credit fee equal to the applicable margin, which ranges from 2.50% to 1.50%,
times the daily maximum amount available to be drawn under such letter of
credit. In each case of a Base Rate loan, Eurodollar Rate loan or letter of
credit, the applicable margin varies depending upon the Standard & Poor's and
Moody's Investors Service, Inc.'s ratings of certain of the Company's public
debt. The Borrowers' ability to request and maintain Eurodollar Rate loans is
subject to certain limitations.
The Credit Agreement contains affirmative, negative and financial
covenants including, among other things, limits on the incurrence of
additional debt and liens, a minimum limit on the ratio of AYE Funds Flow (as
defined in the Credit Agreement) to interest expense, a maximum limit on the
ratio of Debt for Borrowed Money of AYE (as defined in the Credit Agreement)
to AYE Funds Flow, restrictions on the payment of dividends and other
distributions, restrictions on sales of assets and investments, and certain
restrictions on the Company's subsidiaries. The events of default under the
Credit Agreement include, among other things, failure to pay under the Credit
Agreement or under any other debt of the Company or its subsidiaries having an
aggregate principal amount of $25 million, failure to perform or observe
covenants under the Credit Agreement (with customary grace periods, as
applicable), insolvency events and change of control events. The Credit
Agreement provides that, upon the occurrence of an event of default, payment
of all outstanding loans under the Credit Agreement may be accelerated and/or
the lenders' commitments may be terminated. In addition, upon the occurrence
of certain insolvency or bankruptcy related events of default, all amounts
payable under the Credit Agreement automatically become immediately due and
payable, and the lenders' commitments automatically terminate. The Credit
Agreement also provides for mandatory prepayment, to the extent specified in
the Credit Agreement, of borrowings under both the Term Facility and the
Revolving Facility upon the sale by the Company or certain of its subsidiaries
of certain of their assets.
The Previous Credit Agreement was terminated on June 16, 2005. No
early termination penalties were paid by the Company in respect of the
termination of the Previous Credit Agreement.
Some of the Bank Parties and Prior Lenders have or may have had
various relationships with the Company and its affiliates involving the
provision of a variety of financial services, including cash management,
investment banking, and the issuance of letters of credit.
The foregoing does not constitute a complete summary of the terms of
the Credit Agreement, and reference is made to the complete text of the
agreement, which is attached hereto as Exhibit 10.1
Item 1.02 Termination of a Material Definitive Agreement.
The disclosure required by this item is included in Item 1.01 of this
Current Report on Form 8-K and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under
and Off-Balance Sheet Arrangement of a Registrant.
The disclosure required by this item is included in Item 1.01 of this
Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
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10.1 Credit Agreement, dated as of June 16, 2005, by and
among Allegheny Energy, Inc., Allegheny Energy
Supply Company, LLC, certain banks, financial
institutions and other institutional lenders, The
Bank of Nova Scotia, as the initial issuing bank
for the letters of credit pursuant to the Credit
Agreement, Joint Lead Arranger, Joint Book Runner
and Syndication Agent, Citigroup Global Markets
Inc., as Joint Lead Arranger and Joint Book Runner,
Banc of America Securities LLC, as Joint Book
Runner, Bank of America, N.A., as Co-Documentation
Agent, Credit Suisse, Cayman Islands Branch, as
Joint Book Runner and Co-Documentation Agent, PNC
Capital Markets, Inc., as Joint Book Runner, PNC
Bank, National Association, as Co-Documentation
Agent, and Citicorp North America, Inc., as
administrative agent.
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 hereunto duly authorized.
ALLEGHENY ENERGY, INC.
Dated: June 22, 2005 By: /s/ Jeffrey D. Serkes
---------------------------
Name: Jeffrey D. Serkes
Title: Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
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10.1 Credit Agreement, dated as of June 16, 2005, by and
among Allegheny Energy, Inc., Allegheny Energy Supply
Company, LLC, certain banks, financial institutions and
other institutional lenders, The Bank of Nova Scotia, as
the initial issuing bank for the letters of credit
pursuant to the Credit Agreement, Joint Lead Arranger,
Joint Book Runner and Syndication Agent, Citigroup
Global Markets Inc., as Joint Lead Arranger and Joint
Book Runner, Banc of America Securities LLC, as Joint
Book Runner, Bank of America, N.A., as Co-Documentation
Agent, Credit Suisse, Cayman Islands Branch, as Joint
Book Runner and Co-Documentation Agent, PNC Capital
Markets, Inc., as Joint Book Runner, PNC Bank, National
Association, as Co-Documentation Agent, and Citicorp
North America, Inc., as administrative agent.