Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Pinnacle West Capital Corporation ("Pinnacle West") Facility
On May 28, 2021, Pinnacle West entered into a five-year unsecured revolving
credit facility with Barclays Bank PLC, as Agent, Co-Sustainability Structuring
Agent and Issuing Bank, Mizuho Bank, Ltd., as Syndication Agent,
Co-Sustainability Structuring Agent and Issuing Bank, Bank of America, N.A., BNP
Paribas, JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., Truist Bank and Wells Fargo
Bank, National Association, as Co-Documentation Agents and Issuing Banks, and
the other lender parties thereto, allowing Pinnacle West to borrow, repay and
reborrow, from time to time, up to $200 million through May 28, 2026. On May 28,
2021, Pinnacle West terminated its prior $200 million unsecured revolving credit
facility with Barclays Bank PLC, as Agent and Issuing Bank, Mizuho Bank, Ltd.,
as Syndication Agent and Issuing Bank, Bank of America, N.A., BNP Paribas,
JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., SunTrust Bank and Wells Fargo Bank,
National Association, as Co-Documentation Agents and Issuing Banks, and the
other lender parties thereto, which was replaced by the new Pinnacle West
facility. The prior credit facility would have expired on July 11, 2023.
Pinnacle West will use the new facility for general corporate purposes,
including as a standby facility to support commercial paper issuances. The
facility can also be used for letters of credit.
Borrowings under the facility will bear interest based on Pinnacle West's
then-current senior unsecured debt ratings. The Pinnacle West facility includes
a sustainability-linked pricing metric which permits an interest rate increase
or reduction by meeting or missing targets related to specific environmental and
employee health and safety sustainability objectives.
Borrowings under the facility are conditioned on Pinnacle West's ability to make
certain representations at the time each borrowing is made, except for
representations concerning no material adverse effect and certain litigation
matters, which were made only at the time the facility was entered into. The
facility includes customary covenants, including requirements that Pinnacle West
maintain ownership of a specified percentage of the outstanding capital stock of
Arizona Public Service Company ("APS"), maintain a consolidated
debt-to-capitalization ratio no greater than a prescribed level and comply with
certain lien restrictions. The facility also includes customary events of
default, including a cross default provision and a change of control provision.
If an event of default occurs, lenders holding a specified percentage of the
commitments, or the agent with such lenders' consent, may terminate the
obligations of the lenders to make loans under the facility and the obligations
of the issuing banks to issue letters of credit and may declare the obligations
outstanding under the facility to be due and payable.
Pinnacle West and its affiliates maintain normal banking and other relationships
with the agents and various other lenders in the new facility and/or their
affiliates, and in the prior $200 million credit facility that has been
terminated.
APS Facility
On May 28, 2021, APS entered into two five-year unsecured revolving credit
facilities each with Barclays Bank PLC, as Agent, Co-Sustainability Structuring
Agent and Issuing Bank, Mizuho Bank, Ltd., as Syndication Agent,
Co-Sustainability Structuring Agent and Issuing Bank, Bank of America, N.A., BNP
Paribas, JPMorgan Chase Bank, N.A., MUFG Union Bank, N.A., Truist Bank and Wells
Fargo Bank, National Association, as Co-Documentation Agents and Issuing Banks,
and the other lender parties thereto, allowing
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APS to borrow, repay and reborrow, from time to time, up to $500 million for
each facility through May 28, 2026 (collectively, the "APS Facilities").
On May 28, 2021, APS terminated its prior $500 million unsecured revolving
credit facility with Barclays Bank PLC, as Agent and Issuing Bank, Mizuho Bank,
Ltd., as Syndication Agent and Issuing Bank, Bank of America, N.A., BNP Paribas,
JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., SunTrust Bank and Wells Fargo Bank,
National Association, as Co-Documentation Agents and Issuing Banks, and the
other lender parties thereto, which was replaced by one of the new APS
Facilities. The prior credit facility would have expired on July 11, 2023.
Also, on May 28, 2021, APS terminated its other prior $500 million unsecured
revolving credit facility with Barclays Bank PLC, as Agent and Issuing Bank,
Mizuho Bank, Ltd., as Syndication Agent and Issuing Bank, Bank of America, N.A.,
BNP Paribas, JPMorgan Chase Bank, N.A., MUFG Union Bank, N.A., SunTrust Bank and
Wells Fargo Bank, National Association, as Co-Documentation Agents and Issuing
Banks, and the other lender parties thereto, which was replaced by one of the
new APS Facilities. The prior credit facility would have expired on June 29,
2022.
APS will use the new APS Facilities for general corporate purposes, including as
a standby facility to support commercial paper issuances. The new APS Facilities
can also be used for letters of credit. Borrowings under the APS Facilities will
bear interest based on APS's then-current senior unsecured debt ratings. The APS
Facilities include a sustainability-linked pricing metric which permits an
interest rate increase or reduction by meeting or missing targets related to
specific environmental and employee health and safety sustainability objectives.
Borrowings under the APS Facilities are conditioned on APS's ability to make
certain representations at the time each borrowing is made, except for
representations concerning no material adverse effect and certain litigation
matters, which were made only at the time the facilities were entered into. The
APS Facilities include customary covenants, including that APS maintain a
consolidated debt-to-capitalization ratio no greater than a prescribed level and
comply with certain lien restrictions. The APS Facilities also include customary
events of default, including a cross default provision and a change of control
provision relating to Pinnacle West, the parent company of APS. If an event of
default occurs, lenders holding a specified percentage of the commitments, or
the agent with such lenders' consent, may terminate the obligations of the
lenders to make loans under the facilities and the obligations of the issuing
banks to issue letters of credit and may declare the obligations outstanding
under the facilities to be due and payable.
APS and its affiliates maintain normal banking and other relationships with the
agents and various other lenders in the new facilities and/or their affiliates,
and in the prior two $500 million credit facilities that have been terminated.
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