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PNM RESOURCES, INC.

(PNM)
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PNM RESOURCES INC : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Financial Statements and Exhibits (form 8-K)

08/16/2021 | 04:35pm EDT

Item 1.01 Entry into a Material Definitive Agreement.

On August 16, 2021, PNM Resources, Inc.'s indirect wholly-owned subsidiary, Texas-New Mexico Power Company ("TNMP"), issued $65,000,000 aggregate principal amount of its 2.44% First Mortgage Bonds, due 2035, (the "Bonds") in a private placement in reliance on an exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"). The Bonds were sold by TNMP to institutional accredited investors (as defined by Rule 501(a) of the Securities Act) pursuant to a Bond Purchase Agreement dated July 14, 2021 (the "Bond Purchase Agreement"). The Bond Purchase Agreement was filed as Exhibit 10.2 to TNMP's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2021.

The Bonds were issued pursuant to TNMP's First Mortgage Indenture dated as of March 23, 2009 (the "First Mortgage Indenture"), between TNMP and U.S. Bank National Association (ultimate successor as trustee to The Bank of New York Mellon Trust Company, N.A.), as trustee (the "Trustee"), as previously supplemented and amended and as further supplemented by the Fourteenth Supplemental Indenture thereto, dated as of August 16, 2021, between TNMP and the Trustee (the "Fourteenth Supplemental Indenture" and, together with the First Mortgage Indenture, the "Indenture"). The Bonds are secured by a first mortgage lien on substantially all of TNMP's property, subject to excepted encumbrances, reservations, contracts and other exceptions as are permitted by the Indenture, and rank equally in right of payment with all other securities theretofore or thereafter issued under the First Mortgage Indenture.

Interest on the Bonds is payable semiannually on February 15 and August 15 of each year, commencing on February 15, 2022, at a fixed rate of 2.44% per annum. TNMP may, upon not less than ten nor more than sixty days' prior written notice (unless the holders of more than 50% of the principal amount of the then-outstanding Bonds of the applicable series agree in writing to another time period), prepay at any time all, or from time to time any part of, the Bonds of any series, in an amount not less than ten percent of the aggregate principal amount of the Bonds of such series then outstanding in the case of a partial prepayment, at a prepayment price equal to the sum of (a) 100% of the principal amount so prepaid, (b) accrued and unpaid interest thereon and (c) a make-whole amount, if any, determined for the prepayment date with respect to such principal amount. The principal amount of the Bonds is payable on August 15, 2035.

The Indenture contains events of default customary for such a transaction, including, without limitation: failure to pay interest on any Security (as defined in the Indenture) for sixty days after becoming due; failure to pay the principal of or premium on any Security when due; failure to comply with or breach of any covenant or warranty contained in the Indenture, subject to a ninety day cure period after written notice of default has been delivered; and certain events relating to reorganization, bankruptcy and insolvency of TNMP. If an "Event of Default" (as defined in the Indenture) occurs and is continuing, the Trustee or the holders of not less than thirty-three percent in principal amount of the Securities then outstanding may declare the principal amount of all Securities then outstanding to be immediately due and payable.

In addition, the Fourteenth Supplemental Indenture contains bond repurchase events (subject to a fifteen day cure period), including, without limitation: actions by TNMP or any Controlled Entity (as defined in the Fourteenth Supplemental Indenture) which subject a Bond holder to terrorism sanctions regulations; the sale or lease of TNMP's assets in excess of specified thresholds during any calendar year; defaults in respect to obligations relating to certain debt; failure to deliver to each institutional investor Bond holder certain financial and business information related to TNMP; failure to maintain a ratio of consolidated indebtedness to consolidated capitalization of less than or equal to 0.65 to 1.0; and material misrepresentations of any representation or warranty contained in the Fourteenth Supplemental Indenture. If a "Bond Repurchase Event" (as defined in the Fourteenth Supplemental Indenture) occurs and is continuing, TNMP must repurchase the Bonds for a purchase price equal to the aggregate principal amount of the Bonds then outstanding, plus all accrued and unpaid interest thereon and a make-whole amount determined for the Bond Repurchase Event date with respect to such principal amount.

The Fourteenth Supplemental Indenture further includes a provision whereby a change in control in TNMP or PNM Resources Inc. (other than the pending merger between Avangrid, Inc. and PNM Resources, Inc.) would obligate TNMP to offer to prepay all of the Bonds at one-hundred percent (100%) of the principal amount of the Bonds, plus all accrued and unpaid interest thereon, but without any make-whole amount or other premium.

The above description of the Indenture does not purport to be a complete statement of the parties' rights and obligations thereunder. Such description is qualified in its entirety by reference to the Fourteenth Supplemental Indenture, a copy of which is attached to this Current Report on Form 8-K as Exhibit 4.1, and the First Mortgage Indenture, as previously

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amended and supplemented, and as previously filed, each of which is incorporated herein by reference. The form of Bonds, which is included as a part of the Fourteenth Supplemental Indenture, is incorporated herein by reference.

The Bonds are not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements and applicable state laws. This Current Report on Form 8-K does not constitute an offer to sell nor a solicitation of an offer to purchase the Bonds or any other securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.


Item 9.01       Financial Statements and Exhibits.

(d) Exhibits:


Exhibit Number   Description

4.1 Fourteenth Supplemental Indenture, dated as of August 16, 2021, between Texas-New Mexico Power Company and U.S. Ban k National Association, as Trustee.

4.2 Form o f TNMP 2021 Bonds (included in Exhibit 4.1).

104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

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