Title
Resolution - Approval of Authorization for Increase and Extension of Long-Term Debt Financing for the Cooperative - R Kruger
Other Info
Submitted By: Randy Kruger
Department: Chief Financial Officer
Financial Impact and Cost/Benefit Considerations: As discussed in Executive Session.
Discussion
Pedernales Electric Cooperative, Inc. (PEC or Cooperative) has various existing long-term and short-term debt (secured and unsecured) to finance the operations and expenses of the Cooperative. In November 2020, the Board approved issuance of debt up to $200,000,000 with NYL Investors LLC and/or one or more affiliates (NY Life) to be secured under the Master Indenture of Trust by the assets of the Cooperative (Resolution 2020-405).
Under this facility, the Cooperative previously issued $175,000,000 in the aggregate of note obligations in 2020 and 2024 and authorized its Tenth Supplemental Indenture of Trust dated as of December 8, 2020 (Supplemental Indenture) to secure this debt. Separately, NY Life has purchased additional debt of PEC in the amount of $66,000,000 under other outstanding long-term debt facilities of the Cooperative.
PEC’s financing priorities include identifying diverse and flexible financing sources, accessing lower cost short and long term capital, and preserving PEC’s credit rating. PEC recommends that it increase and extend its long-term debt facility with NY Life up to an additional $200,000,000 and to amend the terms of this facility to reflect all outstanding debt owed to NY Life. This debt will contribute to the diversity and flexibility of PEC’s lending sources and fund PEC capital improvements and operating expenses needed to provide service to its members.
Body
WHEREAS, to continue to fund PEC’s capital improvement budget and operating budget in the next five-years so that it may continue providing safe and reliable electric service to its members, the Cooperative requires an extension of its long-term debt facility with NY Life under reasonable terms;
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the Cooperative is authorized to extend its long-term debt facility with NY Life in the aggregate principal amount up to $400,000,000, which debt may be secured under the Supplemental Indenture by substantially all the assets of the Cooperative; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the long-term debt authorized herein may include the issuance of bonds, notes or other obligations (including, without limitation, notes to be purchased by NY Life) in one or more series or tranches on behalf the Cooperative; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that such bonds, notes or other obligations will be secured under the Supplemental Indenture; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the Chief Executive Officer and the Chief Financial Officer of the Cooperative, or designee, (Authorized Officers) are authorized to negotiate and execute all necessary forms or agreements that may be required with a credit bank, lender, purchaser, trustee, or depository institution, and any other agreements, certificates, consents, affidavits, opinions, and other instruments necessary or appropriate to give effect to such documents or agreements or the long term financings described in this resolution; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the Authorized Officers are authorized as necessary to negotiate and execute renewals, extensions, supplements and/or amendments to any of the aforementioned documents; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the Authorized Officers are authorized to do any and all acts deemed by such officer in such officer's judgment to be necessary or appropriate in the best interests of the Cooperative to give effect to the foregoing resolutions; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that all actions taken prior to the effective date hereof by the officers and duly authorized agents of the Cooperative in connection with the subject of the foregoing resolutions be and are hereby ratified, confirmed, and approved.