Credit Facility
Update
Jason Bartlett
Senior Finance Manager
SEPTEMBER 16, 2022
2 Current Credit Facility Position
• EBCE currently holds an $80MM credit facility with Barclays Bank • Entered into agreement on March 15, 2018 for $50MM
• First Amendment to the agreement on August 1, 2019 lowered interest rates, reduced reserve fund holdings from $17.1MM to $7MM, and established $30MM to be used for letters of credit (LOCs)
• Second Amendment on January 3, 2020 increased capacity to a max of $80MM with up to $60MM is available for cash and up to $35MM for letters of credit
• Cash portion expires on December 19, 2022 and LOC expires on July 31, 2024 3 New Credit Facility Interests
• Barclays opted to not renew any credit exposure to CCAs in light of Western Energy bankruptcy in 2021
• EBCE conducted a formal RFP to solicit offers to replace and expand the current credit facility
• Uniform interviews were conducted with all responding proposers, followed by several rounds of negotiations on terms with two highest scoring proposers until one was chosen • Additionally considered ESG goals, reference vetting, adherence to RFP details, and applied scoring methodology
• EBCE is seeking to upsize facility due to multiple risk factors • More volatile market conditions may stress working capital needs while preserving reserve balances • Load Serving Entities (LSEs) have a risk of posting higher collateral because of market conditions—LOCs can protect reserves and working capital
• Stress testing shows chance of needing additional liquidity should market prices spike with weather, political conditions, or other systemic risk factors
4 New Credit Facility Terms
• Some aspects of the facility are still being negotiated by Staff, but terms are settled as the following:
• Undrawn Fee is 0.25% of any undrawn or unused balance—This is the cost to hold the facility as available • Letters of Credit is the Applicable Margin of 1.40% on face value of issuance, with issuance charges of 0.25% of value
• Cash Draws is the Applicable Margin plus Secured Overnight Financing Rate (SOFR), which as of September 9, 2022, is 2.28%
• The Undrawn Fee and Applicable Margin can increase in the event that S&P downgrades EBCE’s “A” rating • A “default” will result in an increase of the Undrawn Fee and Applicable Margin by 1.50% each and an increase in the SOFR by 2.00%
• There is no reserve requirement.
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