On
November 3, 2008, Central Vermont Public Service Corporation (the
“Company”) entered into a Credit Agreement, dated November 3, 2008 (the
“Credit Agreement”), with KeyBank National Association (“KeyBank”), which
provides for the Company’s issuance of a $40 million revolving credit note
to KeyBank (“Revolving Credit Note”) and the effectiveness of the Credit
Agreement upon approval of the transaction by the Vermont Public Service
Board (“VPSB”). The Company’s obligations under the Credit
Agreement are guaranteed by the Company’s wholly owned, unregulated
subsidiaries, C.V. Realty and Catamount Resources Corporation. On
November 6, 2008, the VPSB issued its approval order in Docket No. 7482,
and on November 7, 2008, the Company executed and issued the Revolving
Credit Note to KeyBank. The purpose of the Revolving Credit
Note is to provide liquidity for general corporate purposes, including
working capital needs and power contract performance assurance
requirements, in the form of funds borrowed and letters of
credit. Increasing the Revolving Credit Note provides the
company with an alternative means of financing if the state of the credit
markets alters the Company’s plans to consider a possible equity offering
in the fourth quarter of 2008.
Interest
and Fees
Loans
under the Revolving Credit Note will bear interest, at the Company’s
option, at KeyBank’s Prime Rate, or LIBOR plus 0.9%, or at other rates as
provided in the Credit Agreement. The Company is required to
pay accrued interest at established intervals. The Company
pays, on a quarterly basis, a per annum facility fee of
0.225%. The interest rate margin and Facility Fee are variable
depending upon the Company’s debt rating) on the aggregate commitment of
the Revolving Credit Note, whether used or unused. In the event
of less that 50% utilization, the Facility Fee increases by 12.5 basis
points.
The
Revolving Credit Note is guaranteed by the Company’s wholly-owned
subsidiaries CV Realty, Inc., and Catamount Resources
Corporation.
Covenants
and Events of Acceleration
The
Credit Agreement contains customary covenants, including but not limited
to restrictions on the Company’s ability, and in certain instances its
subsidiaries’ ability, to: incur liens; make acquisitions,
investments and capital expenditures; pay dividends; sell or transfer
assets and stock; and enter into hedging agreements. The Credit
Agreement also limits certain subsidiaries’ ability to incur additional
indebtedness. Additionally, the Company may not permit its
Total Debt to Total Capitalization Ratio exceed .65 to 1.00 or its
consolidated interest coverage ratio to equal or be less than 1.75 to 1.00
during specified periods.
Upon
the occurrence of certain events of default, the Company’s obligations
under the Credit Agreement and the Revolving Credit Note may be
accelerated and the lending commitments under the Credit Agreement and the
Revolving Credit Note terminated. Such events of default
include payment defaults to the lender, material inaccuracies of
representations and warranties, covenant defaults, material payment
defaults (other than under the Revolving Credit Note), voluntary and
involuntary bankruptcy proceedings, material money judgments, material
ERISA events, change of control of the Company and other customary
defaults.
At
November 7, 2008, there were no borrowings outstanding under the Revolving
Credit Note, but $5 million of letters of credit were outstanding in
support of performance assurance requirements associated with our power
transactions.
The
Company has an ongoing relationship with KeyBank, for which KeyBank has
received customary fees and expenses. KeyBank has also acted as
an underwriter for issuances of our first mortgage bonds and equity
securities.
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