Item 1.01 Entry into a Material Definitive Agreement.
On December 14, 2016, Spire Inc. (“Spire”), Laclede Gas Company (“Laclede Gas”) and Alabama Gas Corporation (“Alagasco”) (each of the above, individually, a “Borrower” and collectively, the “Borrowers”), entered into a new syndicated revolving credit facility pursuant to a loan agreement (“Loan Agreement”) with Wells Fargo Bank, National Association, as Administrative Agent; U.S. Bank National Association and JPMorgan Chase Bank, N.A., as Co-Syndication Agents; Bank of America, N.A., Credit Suisse, AG, Cayman Islands Branch, Morgan Stanley Bank, N.A., Regions Bank, Royal Bank of Canada and TD Bank, N.A. as Co-Documentation Agents; and Wells Fargo Securities LLC, U.S. Bank National Association and J.P. Morgan Chase Bank N.A., as Joint Lead Arrangers and Joint Bookrunners; and Commerce Bank and Stifel Bank & Trust as the other participating banks. Spire, Laclede Gas, Alagasco and their affiliates have or may have customary banking relationships with one or more of these banks for the provision of a variety of financial services, including commercial paper dealer, pension fund trustee, cash management, investment banking, and lockbox services, none of which are material individually or in the aggregate with respect to any individual party.
The Loan Agreement is for a term of five years, but the Borrowers may request up to two one-year extensions of the Loan Agreement. The Loan Agreement contains affirmative and negative covenants customary for such agreements, including, among other things, limitations on certain types of acquisitions, investments, and sales of property. The Loan Agreement also contains financial covenants limiting each Borrower’s consolidated debt to 70% of such Borrower’s capitalization. The calculation is more specifically described in the Loan Agreement. The Loan Agreement also contains customary events of default, including, without limitation, payment defaults, covenant defaults, material inaccuracy of representations and warranties, certain events of bankruptcy and insolvency, cross defaults to certain other agreements, and the entry of certain judgments not appealed or satisfied.
Under the Loan Agreement, at each Borrower’s option, as applicable, borrowings will bear interest at either (i) the highest of (a) Wells Fargo Bank’s prime rate, (b) the federal funds rate plus 0.50% and (c) one-month LIBOR plus 1.00% (Base Rate), plus a margin of 0.0% to 0.50% (depending on the Borrower’s credit rating, as applicable) (Adjusted Base Rate), or (ii) LIBOR plus a margin of 0.875% to 1.50% (depending on the Borrower’s credit rating, as applicable). At the Borrower’s option, as applicable, swingline loans will bear interest at either (i) the Adjusted Base Rate or (ii) the one-month LIBOR market index rate plus a margin determined by the Borrower’s credit rating, as applicable. Fees are payable on letters of credit at the same margin that is applicable to LIBOR loans for that Borrower. Other fees may also be charged by the bank that issues a letter of credit. Borrowings by Laclede Gas or Alagasco under the Loan Agreement will be due within no more than 364-days.
Each Borrower has paid an upfront fee to the banks for the Loan Agreement, and, during the term of the Loan Agreement, each Borrower will pay the banks a commitment fee on the unused portion of the credit made available under the Loan Agreement.
The Loan Agreement replaces Spire’s and Laclede Gas’ existing loan agreements with Wells Fargo Bank, National Association, as administrative agent and the several banks parties thereto, dated as of September 3, 2013 and amended on September 3, 2014, which were set to expire on September 3, 2019, and Alagasco’s existing loan agreement with Wells Fargo Bank, National Association, as administrative agent and the several banks party thereto, dated September 2, 2014, which was set to expire on September 2, 2019. All three agreements were terminated early on December 14, 2016, effective with the closing of the Loan Agreement.
The Loan Agreement has an aggregate credit commitment of $975 million, including sublimits of $300 million for Spire, $475 million for Laclede Gas and $200 million for Alagasco. These sublimits may be reallocated from time to time among the three Borrowers within the $975 million aggregate commitment. Under certain terms and conditions, the Borrowers may request an increase in the aggregate credit commitment of up to $300 million. The Loan Agreement also provides for letters of credit available to the Borrowers in an aggregate amount up to $60 million, and swingline loans in an aggregate amount up to $75 million. Letters of credit and swingline loans will constitute usage under the Loan Agreements. Spire, Laclede Gas and Alagasco expect to use the Loan Agreement for general corporate purposes, including short-term borrowings and letters of credit.