The following discussion and analysis should be read in combination with our
Interim Condensed Financial Statements contained in this Form 10-Q and our
Annual Report on Form 10-K for the year ended December 31, 2013 (2013 Form
Debt Matters. Approximately $84 million
aggregate principal amount of pollution
control bonds issued on behalf of CenterPoint Energy Houston Electric, LLC
(CenterPoint Houston) were redeemed on June 2, 2014
at 100% of their principal
amount plus accrued interest. The bonds had an interest rate of 4.25%, were
scheduled to mature in 2017 and were collateralized by general mortgage bonds of
Enable Initial Public Offering. On April 16, 2014
, Enable Midstream Partners, LP
(Enable) completed its initial public offering (IPO) of 28,750,000 common units
at a price of $20.00
per unit, which included 3,750,000 common units sold by
ArcLight Capital Partners, LLC
(ArcLight) pursuant to an over-allotment option
that was fully exercised by the underwriters. Enable received approximately
in net proceeds from the sale of the units, after deducting
underwriting fees, structuring fees and other offering costs.
In connection with its IPO, on March 25, 2014
, Enable effected a 1 for
1.279082616 reverse unit split. Immediately following the unit split,
CenterPoint Energy Resources Corp.
) owned 227,508,825 common units,
representing a 58.3% limited partner interest in Enable. Also in connection with
Enable's IPO, 139,704,916 of CERC Corp.'s
common units and 68,150,514 of OGE
Energy Corp.'s (OGE) common units were converted into subordinated units.
Immediately following Enable's IPO, CERC Corp.
owned 87,803,909 common units and
139,704,916 subordinated units in Enable, representing a 54.7% limited partner
interest. Enable is equally controlled by CERC Corp.
and OGE; each own 50% of
the management rights in the general partner of Enable. CERC Corp.
and OGE also
own a 40% and 60% economic interest, respectively, in the incentive distribution
rights held by the general partner of Enable.
Subsequent to Enable's IPO, Enable is expected to pay a minimum quarterly
distribution of $0.2875
per unit on its outstanding units to the extent it has
sufficient cash from operations after establishment of cash reserves and payment
of fees and expenses, including payments to its general partner and its
affiliates (referred to as "available cash") within 45 days after the end of
each quarter. Enable adjusted the amount of this distribution for the period
from the completion of its IPO through June 30, 2014
based on the actual length
of the period.
Put Rights. In accordance with the Enable formation agreements, we had certain
put rights, and Enable had certain call rights, exercisable with respect to the
25.05% interest in Southeast Supply Header, LLC
(SESH) retained by us, under
which we would contribute our retained interest in SESH, in exchange for a
specified number of limited partner units in Enable and a cash payment, payable
either from us to Enable or from Enable to us, for changes in the value of SESH.
Specifically, the rights were and are exercisable with respect to (1) a 24.95%
interest in SESH (24.95% Put), which closed on May 30, 2014
and (2) a 0.1%
interest in SESH, which may be exercised no earlier than June 2015
common units in Enable. Subject to certain restrictions, if the fair market
value of the contributed SESH interest is more or less than the value of the
common units issued as consideration for the SESH interest, a cash payment may
be required to be made by either Enable or us.
On May 30, 2014
, we closed our 24.95% Put and contributed to Enable our 24.95%
interest in SESH in exchange for 6,322,457 common units of Enable, which
increased our limited partner interest in Enable from approximately 54.7% to
approximately 55.4%. No cash payment was required to be made pursuant to the
Enable formation agreements in connection with our exercise of the 24.95% Put.
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