American Electric enters $500 million credit agreement

By Taylor Fox

New York, March 10 – American Electric Power Co., Inc. entered a $500 million credit agreement, according to an 8-K filing with the Securities and Exchange Commission.

The borrowings will be used to reduce outstanding commercial paper and for other general corporate purposes. American Electric expects to have sufficient liquidity in the form of cash on hand and from operations and available credit capacity to support funding needs.

The credit agreement contains some covenants and requires American Electric to maintain its percentage of debt to total capitalization at a level that does not exceed 67.5%. Failure to comply with the covenants could result in an event of default under the agreement.

The acceleration of the company’s payment obligations, or the obligations of some of its respective subsidiaries, prior to maturity under any other agreement or instrument relating to debt outstanding in excess of $50 million would also cause an event of default under the credit agreement and permit the lenders to declare outstanding amounts payable.

U.S. Bank NA is the administrative agent.

American Electric Power is a Columbus, Ohio-based electricity provider.

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