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
May 25, 2006 (May 22, 2006) 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 May 22, 2006, Allegheny Energy, Inc. ("AYE" or the "Company") and
Allegheny Energy Supply Company, LLC ("AESC" and, together with the Company, the
"Borrowers") entered into a $579,071,429 Credit Agreement (the "Credit
Agreement") with certain banks, financial institutions and other institutional
lenders, Citigroup Global Markets Inc., as Joint Lead Arranger and Joint Book
Runner, Credit Suisse, Cayman Islands Branch, as Joint Lead Arranger, Joint Book
Runner and Syndication 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 $179,071,429 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) together with the proceeds of the Term
Facility, refinances the aggregate principal amount of the borrowings and
letters of credit outstanding under the previous credit agreement (as amended,
the "Previous Credit Agreement"), dated as of June 16, 2005, among the
Borrowers, the Lenders (as defined therein), the Issuing Banks (as defined
therein), the other financial institutions party thereto, and Citicorp North
America, Inc., as Administrative Agent (collectively, the "Prior Lenders") and
continues the letters of credit issued under the Previous Credit Agreement
(approximately $135 million) and (ii) provides working capital and letters of
credit for AYE. 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 May 22,
2011, 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.
The entire amount of the Term Facility was advanced to AYE on May 22,
2006. AYE must repay the principal amount borrowed under the Term Facility in
consecutive quarterly installments equal to 0.25% of the aggregate principal
amount under the Term Facility beginning September 30, 2006, with the balance
due in full at maturity on May 22, 2011. AYE may prepay amounts borrowed under
the Term Facility but may not re-borrow any part of the Term Facility that it
repays or prepays.
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 0.5% and 0.0% for Base Rate loans, or (ii) the Eurodollar Rate (as
defined in the Credit Agreement), plus the applicable margin, which is between
1.50% and 0.45% 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 1.50% to 0.45%,
times the daily maximum amount available to be drawn under such letter of
credit, computed on a quarterly basis in arrears. 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. As
of May 22, 2006, both the Revolving Facility and Term Facility had an initial
borrowing rate of LIBOR plus 100 basis points.
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 May 22, 2006. 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 an 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 May 22, 2006, by and
among Allegheny Energy, Inc., Allegheny Energy
Supply Company, LLC, certain banks, financial
institutions and other institutional lenders,
Citigroup Global Markets Inc., as Joint Lead
Arranger and Joint Book Runner, Credit Suisse,
Cayman Islands Branch, as Joint Lead Arranger,
Joint Book Runner and Syndication 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: May 25, 2006 By: /s/ Hyun Park
----------------------------------
Name: Hyun Park
Title: Vice President, General Counsel
and Secretary
EXHIBIT INDEX
Exhibit No. Description
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10.1 Credit Agreement, dated as of May 22, 2006, by and among
Allegheny Energy, Inc., Allegheny Energy Supply Company,
LLC, certain banks, financial institutions and other
institutional lenders, Citigroup Global Markets Inc., as
Joint Lead Arranger and Joint Book Runner, Credit
Suisse, Cayman Islands Branch, as Joint Lead Arranger,
Joint Book Runner and Syndication Agent and Citicorp
North America, Inc., as administrative agent.