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Item 1.01
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Entry into a Material Definitive Agreement
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Bridge Facility
On February 4, 2019, and in connection with the closing of the Acquisition (as defined below), Cleco Corporate Holdings LLC (the “Company”) entered into a Bridge Loan Agreement (the “Bridge Loan Agreement”), dated as of February 1, 2019, with Mizuho Bank, Ltd (“Mizuho”), as administrative agent, and the lenders party thereto. The Bridge Loan Agreement provides for a senior unsecured bridge term loan facility in an aggregate principal amount of $300 million (the “Bridge Facility”) to fund, in part, amounts payable by Cleco Cajun LLC (“Cleco Cajun”) and the Company in connection with the Acquisition. The Bridge Facility bears interest at an annual rate equal to .75% plus a margin ranging from 0.25% to 2.0%, depending on the Company’s credit rating, and matures on June 28, 2021. The Bridge Loan Agreement contains certain financial covenants, including requiring the Company to maintain (i) a Debt to Capital Ratio (as defined in the Bridge Loan Agreement) below 65% and (ii) a rating applicable to the Company’s Senior Debt Rating (as defined in the Bridge Loan Agreement). Under the Bridge Loan Agreement, Mizuho will act as sole and exclusive administrative agent, and each of the Lenders will act as a joint bookrunner and joint lead arranger for the Bridge Facility, and each will perform the duties customarily associated with such roles. It is anticipated that some or all of the Bridge Facility will be replaced or repaid with long-term financing, markets permitting, within 12 months of the Acquisition closing.
The foregoing description of the Bridge Loan Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Bridge Loan Agreement, a copy of which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.
Term Loan Facility
On February 4, 2019, and also in connection with the closing of the Acquisition, the Company entered into a Term Loan Agreement (the “Term Loan Agreement”), dated as of February 1, 2019, with Mizuho, as administrative agent, and the lenders party thereto. The Term Loan Agreement provides for a senior unsecured term loan facility in an aggregate principal amount of $100 million (the “Term Loan Facility”) to fund, in part, amounts payable by Cleco Cajun and the Company in connection with the Acquisition. The Term Loan Facility bears interest at an annual rate equal to Libor or Base Rate plus a margin ranging from 0.25% to 2.25%, depending on the Company’s credit rating, and matures on June 28, 2021. The Term Loan Agreement contains certain financial covenants, including requiring the Company to maintain (i) a Debt to Capital Ratio (as defined in the Term Loan Agreement) below 65% and (ii) a rating applicable to the Company’s Senior Debt Rating (as defined in the Term Loan Agreement). It is anticipated that some or all of the Term Loan Facility may be replaced or repaid with long-term financing, markets permitting, within 12 months of the Acquisition closing.
The foregoing description of the Term Loan Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Term Loan Agreement, a copy of which is attached hereto as Exhibit 10.2, and is incorporated herein by reference.
Credit Agreement
On February 4, 2019, and also in connection with the closing of the Acquisition, the Company entered into an Increasing Lender Supplement (each, a “Supplement”), dated as of February 1, 2019, with each of Mizuho, The Bank of Nova Scotia and Credit Agricole Corporate and Investment Bank (each, an “Increasing Lender”), supplementing the Company’s Credit Agreement, dated as of April 13, 2016 (“Existing Credit Agreement”) among Cleco MergerSub Inc., or, immediately upon consummation of the Acquisition referred to therein, the Company, the lenders from time to time party thereto and Mizuho, as administrative agent for the lenders. Each Supplement will increase the aggregate commitment of the Increasing Lender under the Existing Credit Agreement by $25.0 million ($75.0 million in total), providing for a revolving credit facility of up to $175.0 million.
The foregoing description of each Supplement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of each Supplement, a copy of which is attached hereto as Exhibits 10.3, 10.4 and 10.5, respectively, and is incorporated herein by reference.
Purchase and Sale Agreement
As previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2018, Cleco Cajun (f/k/a Cleco Energy LLC), a wholly owned subsidiary of the Company, entered into a Purchase and Sale Agreement (the “Purchase Agreement”), dated as of February 6, 2018, with NRG Energy, Inc. (“Seller”) and NRG South Central Generating LLC, a subsidiary of Seller (“NRG South Central”) to acquire from Seller all of the outstanding membership interest in NRG South Central (the “Acquisition”) for approximately $1.0 billion. On February 4, 2019, Seller and Cleco Cajun entered into that certain Letter Agreement (the “Letter Agreement”), dated as of February 1, 2019, supplementing, amending and modifying the Purchase Agreement. The foregoing description of the Letter Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Letter Agreement, a copy of which is attached hereto as Exhibit 10.6, and is incorporated herein by reference.