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 u...
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