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