Item 1.01 Entry into a Material Definitive Agreement.
In connection with the Bankruptcy Filing, TCEH received a binding commitment, subject to certain customary conditions, from certain financial institutions for the debtor-in-possession facility described below (the "TCEH DIP Facility"), and filed a motion with the
The TCEH DIP Facility is a Senior Secured, Super-Priority Credit Agreement by and among EFCH, TCEH, and the subsidiaries of TCEH that are Debtors in the Chapter 11 Cases (the "TCEH Debtors"), the lenders that are party thereto from time to time and an administrative and collateral agent (the "TCEH DIP Credit Agreement"). The TCEH DIP Facility provides for up to
The principal amounts outstanding under the TCEH DIP Facility bear interest based on applicable
The TCEH DIP Facility will mature on the twenty-fourth month after the closing date of such facility. The maturity date may be extended to the thirtieth month after the closing date of the TCEH DIP Facility subject to the satisfaction of certain conditions, including the payment of a 25 basis points extension fee, a requirement that an acceptable plan of reorganization has been filed on or prior to such extension and the availability of certain metrics of liquidity applicable to the TCEH Debtors.
The TCEH Debtors' obligations under the TCEH DIP Facility are secured by a lien covering substantially all of the TCEH Debtors' assets, rights and properties, subject to certain exceptions set forth in the TCEH DIP Facility. The TCEH DIP Facility provides that all obligations thereunder constitute administrative expenses in the Chapter 11 Cases, with administrative priority and senior secured status under Section 364(c) and 364(d) of the Bankruptcy Code and, subject to certain exceptions set forth in the TCEH DIP Facility, have priority over any and all administrative expense claims, unsecured claims and costs and expenses in the Chapter 11 Cases.
The TCEH DIP Facility provides for a carve-out (the "RCT Carve-Out") related to mining reclamation requirements that TCEH's Luminant Mining subsidiary has with the Railroad Commission of
The TCEH DIP Facility also permits certain hedging agreements to be secured on a pari-passu basis with the TCEH DIP Facility in the event those hedging agreements meet certain criteria set forth in the TCEH DIP Facility.
The TCEH DIP Facility provides for affirmative and negative covenants applicable to the TCEH Debtors, including affirmative covenants requiring the TCEH Debtors to provide financial information, budgets and other information to the agents under the TCEH DIP Facility, and negative covenants restricting the TCEH Debtors' ability to incur additional indebtedness, grant liens, dispose of assets, make investments, pay dividends or take certain other actions, in each case except as permitted in the TCEH DIP Facility. The TCEH Debtors' ability to borrow under the TCEH DIP Facility is subject to the satisfaction of certain customary conditions precedent set forth therein.
The TCEH DIP Facility provides for certain customary events of default, including events of default resulting from non-payment of principal, interest or other amounts when due, material breaches of representations and warranties, material breaches of covenants in the TCEH DIP Facility or ancillary loan documents, cross-defaults under other agreements or instruments and the entry of material judgments against the TCEH Debtors. The TCEH DIP Facility also includes an event of default that may arise from our failure to meet a consolidated super-priority leverage test. Upon the existence of an event of default, the TCEH DIP Facility provides that all principal, interest and other amounts due thereunder will become immediately due and payable, either automatically or at the election of specified lenders.
A copy of the TCEH DIP Credit Agreement is filed as an exhibit to this Current Report on Form 8-K and is incorporated herein by reference. The above description of the TCEH DIP Credit Agreement is qualified in its entirety by reference to the TCEH DIP Credit Agreement.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information relating to the TCEH DIP Credit Agreement set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 7.01 Regulation FD Disclosure.
The information relating to the TCEH DIP Credit Agreement set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 7.01.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 10.1 Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of
May 5, 2014among EFCH, as Parent Guarantor, TCEH, as Borrower, the Several Lenders from Time to Time Parties Thereto, Citibank, N.A., as Administrative Agent and Collateral Agent, the Co-Syndication Agents Parties Thereto, the Co-Documentation Agents Parties Thereto and the Joint Lead Arrangers and Joint Bookrunners Parties Thereto
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. All statements, other than statements of historical facts, are forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. Although we believe that in making any such forward-looking statement our expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the discussion of risk factors under Item 1A, "Risk Factors" and the discussion under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Reports on Form 10-K filed by each of
• our ability to obtain the approval of the
Bankruptcy Courtwith respect to motions to be filed in the bankruptcy proceedings;
• the effectiveness of the overall restructuring activities pursuant to the
Bankruptcy Filing and any additional strategies we employ to address our liquidity and capital resources;
• the terms and conditions of any reorganization plan that is ultimately
approved by the
Bankruptcy Courtin the bankruptcy proceedings;
• the extent to which the Bankruptcy Filing causes customers, suppliers and
others with whom we have commercial relationships to lose confidence in us, which may make it more difficult for us to obtain and maintain such commercial relationships on competitive terms;
• difficulties we may face in retaining and motivating our key employees
through the reorganization process, and difficulties we may face in attracting new employees;
• the significant time and effort required to be spent by our senior management
in dealing with the bankruptcy and restructuring activities rather than focusing exclusively on business operations;
• our ability to remain in compliance with the requirements of the TCEH DIP
• our ability to maintain or obtain sufficient financing sources for operations
or to fund any reorganization plan and meet future obligations;
• limitations on our ability to utilize previously incurred federal net
operating losses or alternative minimum tax credits;
• the actions and decisions of creditors, regulators and other third parties
that have an interest in the bankruptcy proceedings that may be inconsistent with our plans;
• the length of time that the Debtors will be debtors-in-possession under the
Bankruptcy Code pursuant to the bankruptcy proceedings;
• the actions and decisions of regulatory authorities relative to any
reorganization plan; and
• restrictions on our operations due to the terms of our debt agreements,
including the TCEH DIP Facility, and restrictions imposed by the Bankruptcy
Court in the bankruptcy proceeding.
Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of them; nor can we assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. As such, you should not unduly rely on such forward-looking statements.