HomeMy WebLinkAbout20031215Application.pdfPI=" "L\., 1
FILED
2nD3 DEC I PrJ! 2:
, -
i; "J i' ! i C
INTERMOUNTAIN GAS COMP~ES COivj;:hsSION
CASE NO. INT-O3-
APPLICATION
and
EXHIBITS
In the Matter of the Application of INTERMOUNTAIN GAS COMPANY
for Authorization to Issue and Sell Securities
Morgan W. Richards, Jr.
MOFFATT, THOMAS , BARRETT, ROCK & FIELDS, CHARTERED
Post Office Box 829
Boise, Idaho 83701
Telephone (208) 345-2000
MTBR&F 11-500.320
Attorneys for Intennountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of
INTERMOUNTAIN GAS COMPANY
for Authorization to Issue and Sell Securities
Case No. INT 03-
APPLICATION
Intennountain Gas Company ("Intennountain ), an Idaho corporation with general offices
located at 555 South Cole Road, Boise, Idaho, does hereby request authorization of a renegotiated
senior revolving line of credit of Thirty-five Million Dollars ($35 000 000) for a period of three (3)
years, replacing Intennountain s current revolving line of credit of Twenty-five Million Dollars
($25 000 000).
Communications in reference to this Application should be addressed to:
Michael E. Huntington
Vice President - Marketing & External Affairs
Intennountain Gas Company
Post Office Box 7608
Boise, ID 83707
and
Morgan W. Richards, Jr.
Moffatt, Thomas, Barrett, Rock & Fields, Chartered
Post Office Box 829
Boise, ID 83701
In support of this Application, Intennountain does allege and state as follows:
APPLICATION -
Intennountain is a gas utility, subject to the jurisdiction of the Idaho Public Utilities
Commission, engaged in the sale and distribution of natural gas within the State of Idaho under
authority of Commission Certificate No. 219 issued December 2, 1955, as amended and
supplemented by Order No. 6564 dated October 3, 1962. Intennountain's Articles of Incorporation
and Amendments thereto are on file with this Commission in Case No. U-1034-120, to which
reference is hereby made.
Intennountain provides natural gas service to the following Idaho communities and counties
and adjoining areas:
Ada County - Boise, Eagle, Garden City, Kuna, Meridian, and Star;
Bannock County - Chubbuck, Inkom, Lava Hot Springs, McCammon, and Pocatello;
Bear Lake County - Georgetown, and Montpelier;
Bingham County - Aberdeen, Basalt, Blackfoot, Firth, Fort Hall, MorelandlRiverside, and Shelly;
Blaine County - Bellevue, Hailey, Ketchum, and Sun Valley;
Bonneville County - Ammon, Idaho Falls, Iona, and Ucon;
Canyon County - Caldwell, Greenleaf, Middleton, Nampa, Panna, and Wilder;
Caribou County - Bancroft, Conda, Grace, and Soda Springs;
Cassia County - Burley, Declo, Malta, and Raft River;
Elmore County - Glenns Ferry, Hammett, and Mountain Home;
Fremont County - Parker, and St. Anthony;
Gem County - Emmett;
Gooding County - Bliss, Gooding, and Wendell;
Jefferson County - Lewisville, Menan, Ririe, and Rigby;
Jerome County - Jerome;
Lincoln County - Shoshone;
Madison County - Rexburg, and Sugar City;
Minidoka County - Heybum, Paul, and Rupert;
Owyhee County - Bruneau, Homedale
Payette County - Fruitland, New Plymouth, and Payette;
Power County - American Falls;
Twin Falls County - Buhl, Filer, Hansen, Kimberly, Murtaugh, and Twin Falls;
Washington County - Weiser.
Intennountain s properties in these locations consist of transmission pipelines, a compressor
station, a liquefied natural gas storage facility, distribution mains, services, meters and regulators
and general plant and equipment.
APPLICATION -
II.
Commission Order No. 28594, dated December 11, 2000, granted Intennountain authority
to continue issuing a revolving note not to exceed Fifteen Million Dollars ($15 000 000) at anyone
time outstanding and additional authority to continue issuing a seasonal expansion line of credit not
to exceed Ten Million Dollars ($10 000 000). Such authority was granted from the date of the
Order and expires on December 15, 2005. Subsequent to Commission Order No. 28594, the
Commission later granted in Commission Order No. 28672, dated March 14 2001, Intennountain
request to amend Order No. 28594 to extend the seasonal expansion line to a twelve (12) month
year-round period with a quarterly election to make the Ten Million Dollar ($10 000 000) line of
credit active or inactive. Such authority was granted from the date of the Order and expires on
December 15 2005.
This Application seeks authority to replace the existing revolving line of credit with a
renegotiated revolving line of credit of Thirty-five Million Dollars ($35 000 000) for a period of
three (3) years from execution and delivery of the credit agreement.
Based on this Commission s authorization, the revolving line of credit not to exceed Thirty-
five Million Dollars ($35 000 000) will continue to be used in the traditional way by Intennountain
in fmancing principally its construction needs and other working capital requirements.
A copy of Intennountain s Articles of Incorporation, as amended and as of record in the
office of the Secretary of State of Idaho is filed as Exhibit No.1 in the Application in Case No.
INT-89-, and is incorporated herein by reference. No change has been made to the Articles on
file with this Commission. The Board of Directors of Intennountain has duly authorized the
requested line of credit at Intennountain s Board Meeting held October 8, 2003. A copy of the
Resolution authorizing the line of credit is attached hereto as Exhibit No.2 and is incorporated
herein by reference.
III.
The tenus and conditions of the revolving line of credit of Thirty-five Million Dollars
($35 000 000) issued by Wells Fargo Bank, N.A. will continue to be substantially the same as those
set forth in Case No. INT-00-3 and approved by Order No. 28672, dated March 14, 2001. A copy
of the tenus for the above referenced line of credit is attached hereto as Exhibit No.3 and is
incorporated herein by reference.
APPLICATION -
Borrower:
Lender:
Principal Amount:
Security:
Use of Proceeds:
Maturity:
Summary of Tenns and Conditions
Intennountain Gas Company
Wells Fargo Bank, N.
Revolving Line of Credit - $35 000 000
None
To refinance certain existing indebtedness, and to provide for the
working capital, deferred gas costs, and general corporate
purpose needs ofIntennountain.
Three (3) years from execution and delivery of the credit
agreement, or approximately January 2007.
Applicable Margin and Unused
Commitment Fees:
Tier
ill
Other Requirements:
Capitalization
Ratio
.:::::40.
::0-40..::::: 47.
::0-47.0.::::: 54.
::0-54.0.::::: 60.
::0-60.0.::::: 65.
An option to make advances under the line of credit using either
a Base Rate, defined as the higher of (a) the Prime Rate in effect
that day, or (b) the Federal Funds Rate in effect that day plus5%, or a LIBOR option. The margins and unused
commitment fee are based upon the Capitalization Ratio and
expressed in basis points. These rates are as follows:
Base Rate
mar in
25 bps
25 b s
+ 0 bps
+25 b s
+50 bps
Unused
Fee
25 b s
30 bps
40 bps
40 bps
50b s
Costs associated with this transaction are to be paid
Intennountain.
IV.
The proceeds from the proposed revolving line of credit of Thirty-five Million Dollars
($35 000 000) will continue to be used in the traditional way by Intennountain in financing
principally its construction needs and other working capital requirements.
APPLICATION -
These uses are consistent with the public interest and necessary, appropriate, and consistent
with the proper and legally mandated perfonnance to the public by Intennountain as a public utility.
Intennountain statement of capitalization as of September 30, 2003 , showing all
authorized and outstanding classes of securities, is as follows:
September 30. 2003
Amount
Outstanding
($OOO'Ratio
Long- Tenn Debt:
TIAA Senior Debentures
Wells Fargo Bank Revolving Line of Credit
Total Long-Tenn Debt
Common Shareholder s Interest
Total Capitalization
$58 000
11.500
500
68.408
$137.908
50.4%
49.
100.
Amount Outstanding on $25 Million Line of Credit.
VI.
The estimated fees and expenses of the issuance of such promissory notes are expected to
total $91 000, consisting of the following:
Facility Fee
Legal Fees
IPUC Issuance Fees
Total
$70 000.
000.
1.000.
$91.000.
VII.
The fee of $1 000., required by Section 61-905 of the Idaho Code, was detennined as
follows:
First
Next
Remaining
$ 100 000 at $1.00 per $1 000 =
900 000 at $0.25 per $1 000 =
34,000,000 at $0.10 per $1 000 =
$ 35.000.000
$ 100.
225.
3.400.
$3.725.
APPLICATION -
As this amount is larger than the $1 000.00 maximum fee set forth in Section 61-905 of the
Idaho Code, a check for $1 000.00 is enclosed with this Application.
VIII.
This Application is filed pursuant to the applicable statutes, including Idaho Code Sections
61-901 61-902 61-903 and 61-905, the Rules and Regulations of this Commission and resolution
ofthe Board of Directors ofIntennountain.
Intennountain stands ready for an immediate hearing of this Application if such
determined necessary by this Commission.
Proposed Order granting this Application is attached hereto as Exhibit 4 and is
incorporated herein by reference.
IX.
Notice of this Application will be published prior to Commission authorization in The
Idaho State Journal, The Idaho Statesman, The Post Register, The Idaho Business Review and The
Times News pursuant to Rule 141.8 of the Commission s Rules of Practice and Procedure.
APPLICATION - 6
WHEREFORE, Intennountain respectfully petitions the Idaho Public Utilities Commission
as follows:
That this Application be processed without hearing pursuant to the Rules and
Regulations ofthis Commission and acted upon at the earliest possible date;
Additionally, that this Commission approve and authorize the issuance a line
credit for the purposes described up to and including Thirty-five Million Dollars ($35 000 000) for
a period of three (3) years from the date the loan is executed with the bank.
That this Commission allow Intennountain to manage its short-tenn financing
pursuant to the order issued in this matter until such time as Intennountain s Board of Directors
changes the authorized level of such short-tenn borrowing, with Intennountain making quarterly
reports to this Commission setting forth the date of issuance, principal amount, interest rate, date of
maturity and identity of payee for all promissory notes issued during such quarter;
For such other and further relief as to this Commission seems proper.
DATED at Boise, Idaho , this 15th day of December 2003.
INTERMOUNTAIN GAS COMPANY
71tutiM.J? t ~
Michael E. Huntington
Vice President - Marketing & External Affairs
MOFFATT, THOMAS, BARRETT, ROCK & FIELDS, CHARTERED
By fYJ tJ.
Morgan W. 'chards, Jr. - Of the Fi ,
Attorneys for Intennountain Gas Company
APPLICATION -
EXHIBIT NO.
CASE NO. INT-O3-
INTERMOUNTAIN GAS COMPANY
ARTICLES OF INCORPORATION
(On File)
EXHIBIT NO.
CASE NO. INT-O3-
INTERMOUNTAIN GAS COMPANY
TERMS AND CONDITIONS OF
REVOLVING LINE OF CREDIT AGREEMENT
CO NFID ENTIAL
(6 pages)
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 1 of 6
INTERMOUNTAIN GAS COMPANY
$35,000,000 Senior Credit Facility
Summary of Terms and Conditions
BORROWER:Intermountain Gas Company (the "Borrower
LENDER:Wells Fargo Bank, National Association (the "lender").
CREDIT
FACILITY:A $35 000,000 senior revolving credit facility (the " Revolver"). Replaces
existing $25MM revolving credit facilities provided by lender.
The Facility shall be guaranteed by all existing and hereafter acquired or
created subsidiaries of Borrower, if any.
GUARANTORS:
MATURITY:Three (3) years from execution and delivery of the credit agreement
Closing
PURPOSE:The proceeds of the Credit Facility will be used to (i) refinance certain
existing indebtedness of the Borrower, (ii) provide for the working capital
deferred gas costs and general corporate purpose needs of the Borrower
and its subsidiaries.
INTEREST RATES:Borrower shall have the option to make advances under the Credit
Facility using either a Base Rate or UBOR option. The UBOR and Base
Rate margins for the Credit Facility will be subject to Performance Pricing
adjustments, based upon Borrower's Capitalization Ratio (defined under
Financial Covenants).
Base Rate on any day means the higher of (a) the Prime Rate in effect on
that day, or (b) the Federal ,Funds Rate in effect on that day as
announced by the Federal Reserve Bank of New York, plus 0.5%.
Prime Rate means at any time the rate of interest most recently
announced within lender at its principal office in San Francisco as its
Prime Rate, with the understanding that lender's Prime Rate is one of its
base rates and serves ,as the basis upon which effective rates of interest
are calculated for those loans making reference thereto, and is evidencedby the recording thereof after its announcement in such internal
publication or publications as lender may designate: Each change in the
Prime Rate will be effective on the day the change is announced bylender.
UBOR for an interest period means the average of the rate of interest at
which deposits (approximately equal to the amount of the requested loan
and for the same term as the interest period) are offered to lender in the
london interbank eurodollar market for delivery on the first day of the
interest period, as adjusted for reserve requirements and rounded
upwards if necessary to the next higher 1/16%.
Confidential Page 1
UPFRONT FEE:
UNUSED FEE:
PERFORMANCE
PRICING:
SECURITY:
NOTICES OF
BORROWING:
Exhibit No.
Case No. INT-03-
Intermountain Gas Company
Page 2 of 6
Interest on Base Rate loans will be payable monthly. Interest on lIBOR
loans will be payable at the end of each interest period selected by
Borrower (one, two, three or six months), and at the end of three months
in the case of a six-month interest period. Interest on all loans will also
be payable upon their prepayment and maturity.
All interest and fees will be computed on the basis of actual days elapsed
in a, 360-day year for lIBOR borrowings and Base Rate borrowings.
Borrower will compensate lender if certain changes in circumstances
result in increased costs or reduced returns such as tax (other than
income taxes), reserve, special deposit, insurance or capital adequacy
requirements. All payments by Borrower will be made free and clear of
present and future taxes, withholding or deductions, except for lender's
income taxes.
Payable at the Closing, a non-refundable fee of .20% multiplied by the
total amount of Credit Facility commitment amount.
A fee per annum on the unused portion of the Credit Facility, payable
quarterly in arrears and accruing from Closing. Such fee will be subject
to a Performance Pricing grid.
Borrower will have pricing options indicated on the grid below based upon
its Capitalization Ratio. The Capitalization Ratio is defined in the
Financial Condition Covenants section of this Summary of Terms and
Conditions.
lIBOR and Base Rate Margins and the Unused Fee shall be adjusted on
the first day of December, March, June and September based on the
financial information of Borrower's fiscal quarter ends of September
December, March and June.
Capitalization
RatioI. c:: 40.
II. ::-40.c:: 47.
III. ::-47.0 c:: 54.
IV ::-54.0 c:: 60.
V. :::.60.0 c:: 65.
Unsecured. The Credit Facility shall contain a negative pledge on all
assets of the Borrower and its present and hereafter acquired
subsidiaries.
Unless borrowing requests are made via Credit Manager or automated
sweep, Borrower will give lender advance notice of its intent to borrow as
follows:
Confidential Page 2
MINIMUM
BORROWING:
OPTIONAL
PREPAYMENT:
INCREASED COSTS
REDUCED RETURNS:
CONDITIONS
PRECEDENT
TO CLOSING:
LOAN DOCUMENTS:
CONDITIONS TO
, ALL BORROWINGS:
Exhibit No.
Case No. INT -03-
Intermountain Gas Company
Page 3 of 6
Base Rate borrowing
LlBOR borrowing
1 business day
2 business days
Each Base Rate loan will be at least $500,000, provided there will be no
minimum requirement on Base Rate advances made as sweep loans.
Each LlBOR loan will be at least $1,000 000 and a multiple of $100 000.
No more that six LlBOR loans may be outstanding at any time.
Borrower may prepay any Base Rate loan without penalty on onebusiness day's advance notice, provided repayment will be at least
$500 000. The minimum prepayment limits will not apply to repayment of
loans made by automated sweep. Borrower may prepay any LlBOR
loan, with penalty, during an interest period on three business daysadvance notice. Prepayments will be at least $1 000,000 and a multiple
of $100,000, and will include interest accrued to the prepayment date.
If Borrower makes an optional or required prepayment of a LlBOR loan
before the end of the related interest period, or fails to borrow, convert orextend a UBOR loan after giving notice thereof, or if a LlBOR loan is
converted to a Base Rate loan as a result of certain changes incircumstances, Borrower will reimburse lender for any related funding
losses and losses of anticipated earnings.
The Credit Facility will be subject to the satisfaction of conditionsprecedent usual and customary for transactions of this nature including
but not limited to the following:
1) Due diligence satisfactory to lender.
2) Repayment and/or termination/amendment of certain existing debt or
credit agreement of Borrower.
3) No material adverse change of Borrower, or other subsidiaries of the
Borrower prior to Closing.
4) Borrower obtaining the necessary Regulatory approvals.
5) Other conditions deemed appropriate.
The Credit Facility will be subject to the negotiation, execution anddelivery of a credit agreement and other loan documents, which willcontain conditions to borrowings, representations and warranties,covenants, events of default, indemnification, and other provisions that
are customary for similar financings by lender, including without
limitation those indicated below. The loan documents will be prepared by
counsel for lender.
After the credit agreement has been executed, the obligation of lender toadvance under the Credit Facility will be subject to receipt of customary
documents satisfactory to lender and the obligation of lender to make
Confidential Page 3
REPRESENTATIONS
AND
WARRANTIES:
PRINCIPAL
COVENANTS:
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 4 of 6
each loan will be subject to all'representations and warranties remaining
true and correct, no material averse change relating to Borrower or its
subsidiaries having occurred since the date of the latest provided audited
statement delivered to lender before Closing and no event of default or
potential default existing or resulting from the loan.
As customary, including the following, applicable to Borrower and its
- subsidiaries: proper corporate status and authority, loan documents
valid, binding and enforceable against Borrower; loan documents notviolating laws or existing agreements or requiring governmental
regulatory or other approvals; payment of taxes; no litigation that may
have a material adverse effect; compliance with ERISA, environmental
and other laws and regulations; no adverse agreements, existing defaults
or non-permitted liens; financial statements true and correct.
The principal covenants expected to be included in the credit agreement
are indicated below. Financial terms and calculations will be
accordance with generally accepted accounting principles, unless noted.
General covenants. Customary for similar financings by lender.
Financial condition covenants.
Minimum Tanaible Net Worth.Borrower will maintain at all times
Tangible Net Worth of not less than $55 000 000.
Tangible Net worth means stockholders' equity, minus anytreasury stock and minus any intangible assets.
CaDitalization Ratio.Borrower shall not at any time permit Funded Debt
to exceed 65% of Capitalization.
Funded Debt is defined as the sum of (a all obligations of the Borrower
and its subsidiaries for borrowed money including but not limited to
revolving lines of credit, senior bank debt, senior notes, securitizationdebt and subordinated debt and shall include the long-term private
placement notes of Borrower b) capital leases; c) issued and outstanding
standby letters of credit and d) contingent obligations, including, but not
limited to guarantees.
Capitalization means the sum of Funded Debt plus Tangible Net Worth,
as defined above.
Other financial covenants. Restrictions may apply to: changes in the
nature of Borrower s business; changes in accounting treatment or
reporting practices; sale of all or a substantial or material part of its
assets; consolidations, mergers, acquisitions reorganizations andrecapitalizations; liens; guarantees; debt; leases; investments; debtprepayments; sale-leasebacks; lease expenditures; contingentobligations; joint ventures; non hypothecation agreements; use of
proceeds, ERISA and transactions with affiliates.
Confidential Page 4
EVENTS OF
DEFAULT:
FEES, EXPENSES
AND
INDEMNIFICATION:
GOVERNING LAW:
Exhibit No.
Case No. (NT -O3-
Intermountain Gas Company
Page 5 of 6
Reporting reQuirements. Borrower will provide the following information:
Quarterly consolidated, balance sheets, statements of income,
retained earnings and cash flow of Borrower, in accordance with
generally accepted accounting principles, together with
calculations confirming Borrower's compliance with all financial
covenants. certified by a senior officer. within 45 days after the
end of each fiscal quarter.
(a) Annual consolidated balance sheets, statements of income,retained earnings and cash flow of the Borrower, with an
unqualified opinion from a nationally recognized independent
public accounting firm together with (b) calculations confirming
Borrower's compliance with all financial covenants, all certified by
a senior financial officer, within 120 days after the end of each
fiscal year.
Consolidated financial budgets for the ensuing fiscal year,
later than 30 days after the end of each fiscal year.
Copies of any and all final management letters received by the
Borrower or any subsidiary from an independent auditor
promptly upon receipt.
Other information reasonably requested by lender.
As customary for similar financings, including the following, applicable to
Borrower and its subsidiaries: failure to make payments when due under
any of the loan documents; breach of any representation or warranty;
breach ,of any covenant continuing beyond cure period; default under any
other loan; bankruptcy or insolvency event; unpaid judgment; adverseERISA event; material adverse change; invalidity of any of the loan
documents; or change in control.
Whether or not the credit agreement is executed, Borrower will (a) pay all
fees, out-of-pocket expenses, and other expenses of lender (includingfees and expenses of outside counsel and allocated costs of internal
counsel) relating to preparation of the loan documents or to the CreditFacility, and (b) indemnify lender and its respective directors, officers
and employees against all claims asserted and losses, liabilities and
expenses incurred in connection with the Credit Facility.
State of Idaho. Upon the demand of any party. any action, dispute, claim
or controversy of any kind, whether in contract or tort, statutory or
common law, legal or equitable, arising under or in any way pertaining to
this letter or any extensions of credit or other activities, transactions orobligations of any kind related hereto, shall be resolved by binding
arbitration administered by the American Arbitration Association ("AAA"in accordance with the AAA Commercial Arbitration Rules and the
Confidential Page 5
Exhibit No.
Case No. INT -O3-
Intermountain Gas Company
Page 6 of 6
Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision herein. Bank'
current standard provision governing arbitration of disputes is deemed
incorporated herein as though set forth in full and shall be included in full
in the loan agreement and/or other contracts, instruments and
documents required hereby. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all
costs and expenses incurred by such other party in compelling
arbitration.
This Summary of Terms and Conditions is not intended to , and should not be construed as an
attempt to establish alf of the terms and conditions relating to the Facility. It is intended only to indicative of certain terms and conditions around which the loan documents will be structured, and
not to preclude negotiations within the general scope of these terms and conditions. The loan
documents containing final terms and conditions wilf be subject to approval by Bo"ower and WelfsFargo.
Confidential Page 6
EXHIBIT NO.
CASE NO. INT-O3-
INTERMOUNTAIN GAS COMPANY
BOARD RESOLUTION
CONFIDENTIAL
(8 page)
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INTERMOUNTAIN GAS COMPANY
Summary of Loan Terms
General Terms
Term of Agreement
Face
Borrowing Rates:
Base Interest Rat~Prime
LlBOR
Other Fees & Charges
Facility Fee
Upfront fee/Annual fee
Covenants
Minimum Net Worth (1)
Capitalization Ratio
, -
Limitations on Investments
Sale of Assets limitation
Limitations on Restricted Payments
limit on Indebtedness for Money Borrowed
Term Sheet
Three Years
$35 Million
(2)
(2)
Prime -25%
libor +1.25%
(2)
25%, annual on Unused
Commitment
2% of Face or $70,000
$55 million
Max of 65% of Capital
N/A
N/A
N/A
N/A
(1) Adjusted to exclude effects
ofOCI(2) Rates increase as the business leverage increases
Exhibit No.
Case No. INT-03-
Intermountain Gas Company
Page 2 of 8
Current Loan
Five Years
$25 Million
Prime -50%
libor + 1.25%
25%, annual on Unused
Commitment
$10 000
$44.6 million
Max of 65% of Capital, has a
sixty day override to 66.67%
15% Net Worth
Max 10% per year, Max 30%
cumulative
limited to income since
10/1997
75% of Total Capital
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 3 of 8
INTERMOUNTAIN GAS COMPANY
$35,000,000 Senior Credit Facility
Summary of Terms and Conditions
BORROWER:
LENDER:
Intermountain Gas Company (the "Borrower").
Wells Fargo Bank, National Association (the "lender").
CREDIT
FACILITY:A $35 000,000 senior revolving credit facility (the "Revolver"). Replaces
existing $25MM revolving credit facilities provided by lender.
GUARANTORS:The Facility shall be guaranteed by all existing and hereafter acquired or
created subsidiaries of Borrower, if any.
MATURITY:Three (3) years from execution and delivery of the credit agreement
Closing
PURPOSE:The proceeds of the Credit Facility will be used to (i) refinance certain
existing indebtedness of the Borrower, (ii) provide for the working capital
deferred gas costs and general corporate purpose needs of the Borrower
and its subsidiaries.
INTEREST RATES:Borrower shall have the option to make advances under the Credit
Facility using either a Base Rate or lIBOR option. The lIBOR and Base
Rate margins for the Credit Facility will be subject to Performance Pricing
adjustments, based upon Borrower s Capitalization Ratio (defined under
Financial Covenants).
Base Rate on any day means the higher of (a) the Prime Rate in effect on
that day, or (b) the Federal -Funds Rate in effect on that day as
announced by the Federal Reserve Bank of New York, plus 0.5%.
Prime Rate means at any time the rate of interest most recently
announced within lender at its principal office in San Francisco as its
Prime Rate, with the understanding that lender's Prime Rate is one of its
base rates and serves -as the basis upon which effective rates of interest
are calculated for those loans making reference thereto, and is evidenced
by the recording thereof after its announcement in such internal
publication or publications as lender may designate. Each change in thePrime Rate will be effective on the day the change is announced bylender.
lIBOR for an interest period means the average of the rate of interest at
which deposits (approximately equal to the amount of the requested loan
and for the same term as the interest period) are offered to lender in thelondon interbank eurodollar market for delivery on the first day of the
interest period, as adjusted for reserve requirements and rounded
upwards if necessary to the next higher 1/16%.
Confulential Page 1
UPFRONT FEE:
UNUSED FEE:
PERFORMANCE
PRICING:
SECURITY:
NOTICES OF
BORROWING:
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 4 of 8
Interest on Base Rate loans will be payable monthly. Interest on LlBOR
loans will be payable at the end of each interest period selected by
Borrower (one, two. three or six months), and at the end of three months
in the case of a six-month interest period. Interest on aliloahs will also
be payable upon their prepayment and maturity.
All interest and fees will be computed on the basis of actual days elapsed
in a 360-day year for LlBOR borrowings and Base Rate borrowings.
Borrower will compensate lender if certain changes in circumstances
result in increased costs or reduced returns such as tax (other than
income taxes), reserve, special deposit. insurance or capital adequacy
requirements. All payments by Borrower will be made free and clear of
present and future taxes, withholding or deductions. except for lender's
income taxes.
Payable at the Closing. a non-refundable fee of .20% multiplied by the
total amount of Credit Facility commitment amount.
A fee per annum on the unused portion of the Credit Facility, payable
quarterly in arrears and accruing from Closing. Such fee will be subject
to a Performance Pricing grid.
Borrower will have pricing options indicated on the grid below based upon -
its Capitalization Ratio. 'The Capitalization Ratio is defined in the
Financial Condition Covenants section of this Summary of Terms and
Conditions.
LlBOR and Base Rate Margins and the Unused Fee shall be adjusted on
the first day of December. March, June and September based on the
financial information of Borrower s fiscal quarter ends of September
December, March and June.
Capitalization
RatioI. oe:: 40.
II. ~40.0 oe:: 47.
III. ~47.oe:: 54.
IV ~54.0 oe:: 60.
V. ~0.Ooe::65;
Unsecured. The Credit Facility shall contain a negative pledge on all
assets of the Borrower and its present and hereafter acquired
subsidiaries.
Unless borrowing requests are made via Credit Manager or automated
sweep, Borrower will give lender advance notice of its intent to borrow as
follows:
Confidential Page 2
MINIMUM
BORROWING:
OPTIONAL
PREPAYMENT:
INCREASED COSTS
REDUCED RETURNS:
CONDITIONS
PRECEDENT
TO CLOSING:
LOAN DOCUMENTS:
CONDITIONS TO
, ALL BORROWINGS:
Exhibit No.
Case No. INT-03-
Intermountain Gas Company
Page 5 of 8
Base Rate borrowing
LlBOR borrowing
1 business day
2 business days
Each Base Rate loan will be at least $500.000, provided there will be no
minimum requirement on Base Rate advances made as sweep loans.
Each LlBOR loan will be at least $1 000 000 and a multiple of $100,000.
No more that six LlBOR loans may be outstanding at any time.
Borrower may prepay any Base Rate loan without penalty on one
business day's advance notice. provided repayment will be at least
$500,000. The minimum prepayment limits will not apply to repayment of
loans made by automated sweep. Borrower may prepay any LlBOR
loan, with penalty, during an interest period on three business daysadvance notice. Prepayments will be at least $1,000,000 and a multiple
of $100 000. and will include interest accrued to the prepayment date.
If Borrower makes an optional or required prepayment of a LlBOR loan
before the end of the related interest period, or fails to borrow, convert or
extend a UBOR loan after giving notice thereof. or if a LlBOR loan is
converted to a Base Rate loan as a result of certain changes
circumstances. Borrower will reimburse lender for any related funding
losses and losses of anticipated earnings.
The Credit Facility will be subject to the satisfaction of conditions
precedent usual and customary for transactions of this nature including
but not limited to the following:
1) Due diligence satisfactory to lender.
2) Repayment and/or termination/amendment of certain existing debt or
credit agreement of Borrower.
3) No material adverse change of Borrower, or other subsidiaries of the
Borrower prior to Closing.
4) Borrower obtaining the necessary Regulatory approvals.
5) Other conditions deemed appropriate.
The Credit Facility will be subject to the negotiation, execution and
delivery of a credit agreement and other loan documents, which willcontain conditions to borrowings, representations and warranties
covenants, events of default. indemnification, and other provisions that
are customary for similar financings by Lender. including without
limitation those indicated below. The loan documents will be prepared by
counsel for lender.
After the credit agreement has been executed, the obligation of lender to
advance under the Credit Facility will be subject to receipt of customary
documents satisfactory to lender and the obligation of lender to make
Confidential Page 3
REPRESENTATIONS
AND
WARRANTIES:
PRINCIPAL
COVENANTS:
Exhibit No.
Case No. INT-03-
Intermountain Gas Company
Page 6 of 8
each loan will be subject to all. representations and warranties remaining
true and correct, no material averse change relating to Borrower or its
subsidiaries having occurred since the date of the latest provided audited
statement delivered to lender before Closing and no event of default or
potential default existing or resulting from the loan.
As customary, including the following, applicable to Borrower and its- subsidiaries: proper corporate status and authority; loan documents
valid, binding and enforceable against Borrower; loan documents notviolating laws or existing agreements or requiring governmental
regulatory or other approvals; payment of taxes; no litigation that may
have a material adverse effect; compliance with ERISA, environmental
and other laws and regulations; no adverse agreements, existing defaults
or non-permitted liens; financial statements true and correct.
The principal covenants expected to be included in the credit agreementare indicated below. Financial terms and calculations will be
accordance with generally accepted accounting principles, unless noted.
General covenants. Customary for similar financings by lender.
Financial condition covenants.
Minimum Tanaible Net Worth.Borrower will maintain at all times
Tangible Net Worth of not less than $55 000,000.
Tangible Net worth means stockholders' equity, minus any
treasury stock and minus any intangible assets.
Cacitalization Ratio.Borrower shall not at any time permit Funded Debt
to exceed 65% of Capitalization.
Funded Debt is defined as the sum of (a all obligations of the Borrowerand its subsidiaries for borrowed money including but not limited to
revolving lines of credit, senior bank debt, senior notes, securitizationdebt and subordinated debt and shall include the long-term private
placement notes of Borrower b) capital leases; c) issued and outstanding
standby letters of credit and d) contingent obligations, including, but not
limited to guarantees.
Capitalization means the sum of Funded Debt plus Tangible Net Worth,
as defined above.
Other financial covenants Restrictions may apply to: changes in the
nature of Borrower s business; changes in accounting treatment or
reporting practices; sale of all or a substantial or material part of its
assets; consolidations, mergers, acquisitions, reorganizations and
recapitalizations; liens; guarantees; debt; leases; investments; debtprepayments; sale-lease backs; lease expenditures; contingentobligations; joint ventures; non hypothecation agreements; use of
proceeds, ERISA and transactions with affiliates.
Confidential Page 4
EVENTS OF
DEFAULT:
FEES, EXPENSES
AND
INDEMNIFICATION:
GOVERNING LAW:
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 7 of 8
Reoortino reQuirements. Borrower will provide the following information:
1 )Quarterly consolidated, balance sheets, statements of income,
retained earnings and cash flow of Borrower, in accordance with
generally accepted accounting principles together with
calculations confirming Borrower s compliance with all financial
covenants, certified by a senior officer, within 45 days after the
end of each fiscal quarter.
(a) Annual consolidated balance sheets, statements of income,retained earnings and cash flow of the Borrower, with an
unqualified opinion from a nationally recognized independent
public accounting firm together with (b) calculations confirming
Borrower's compliance with all financial covenants, all certified by
a senior financial officer, within 120 days after the end of each
fiscal year.
Consolidated financial budgets for the ensuing fiscal year,
later than 30 days after the end of each fiscal year.
Copies of any and all final management letters received by the
Borrower or any subsidiary from an independent auditor
promptly upon receipt.
Other information reasonably requested by Lender.
As customary for similar financings, including the following, applicable to
Borrower and its subsidiaries: failure to make payments when due under
any of the loan documents; breach of any representation or warranty;
breach of any covenant continuing beyond cure period; default under any
other loan; bankruptcy or insolvency event; unpaid judgment; adverse
ERISA event; material adverse change; invalidity of any of the loan
documents; or change in control.
Whether or not the credit agreement is executed, Borrower will (a) pay allfees, out-of-pocket expenses, and other expenses of lender (includingfees and expenses of outside counsel and allocated costs of internal
counsel) relating to preparation of the loan documents or to the Credit
Facility, and (b) indemnify lender and its respective directors, officersand employees against all claims asserted and losses, liabilities and
expenses incurred in connection with the Credit Facility.
State of Idaho. Upon the demand of any party, any action, dispute, claim
or controversy of any kind, whether in contract or tort, statutory or
common law, legal or equitable, arising under or in any way pertaining to
this letter or any extensions of credit or other activities, transactions orobligations of any kind related hereto, shall be resolved by binding
arbitration administered by the American Arbitration Association ("AAA"
in accordance with the AAA Commercial Arbitration Rules and the
Confidential Page 5
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 8 of 8
Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision herein. Bank'
current standard provision governing arbitration of disputes is deemed
incorporated herein as though set forth in full and shall be included in fullin the loan agreement and/or other contracts, instruments and
documents required hereby. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all
costs and expenses incurred by such other party in compelling
arbitration.
This Summary of Terms and Conditions is not intended to be, and should not be construed as
attempt to establish all of the terms and conditions relating to the Facility. It is intended only to be
indicative of certain terms and conditions around which the loan documents will be structured, andnot to preclude negotiations within the general scope of these terms and conditions. The loandocuments containing final terms and conditions will be subject to approval by Borrower and Wells
Fargo.
Confidential Page 6
EXHIBIT NO.
CASE NO. INT-G-O3-
INTERMOUNTAIN GAS COMPANY
IDAHO PUBLIC UTILITIES COMMISSION
PROPOSED ORDER
(4 pages)
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 1 of 4
PROPOSED ORDER OF APPLICANT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of
INTERMOUNTAIN GAS COMPANY
for Authorization to Issue and Sell Securities
Case No. INT -03-
ORDER NO.
On December 15, 2003 , Intennountain Gas Company (hereinafter "Intennountain" or
IGC") filed an Application pursuant to Chapter 9 of Title 61 , Idaho Code and Rules 141 through
150 of the Commission s Rules of Procedure. IDAPA 31.01.01.141-150. Through this
Application, IGC requests authorization of a renegotiated senior revolving line of credit, not to
exceed $35 000 000, for a period of three years, replacing Intennountain s current revolving line of
credit of $25 000 000. IGC contends that this line of credit will continue to be used in the
traditional manner, which is principally to finance construction needs and other working capital
requirements.
The Idaho Public Utilities Commission, having fully considered the Application and
exhibits attached thereto, and all of the Commission s files and records pertaining to this
Application, now makes the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT
IGC is an Idaho corporation with its office and principal place of business in Boise, Idaho.
IGC is a natural gas public utility, owning and operating transmission pipelines, a compressor
station, a liquefied natural gas storage facility, distribution mains, services, meters and regulators
and general plant and equipment.
Intennountain seeks the Commission s authorization and pennission to issue a revolving
line of credit not to exceed $35 000 000 at anyone time outstanding for a period of three years from
the execution and delivery of the credit agreement. The revolving line of credit will be issued
through Wells Fargo Bank, N.A. The proceeds from the borrowing of this issuance will be used
principally to finance construction and other working capital requirements ofIGc.
ORDER NO.PAGE 1
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 2 of 4
CONCLUSIONS OF LAW
IGC is a gas corporation within the definition of Idaho Code ~ 61-117 and is a public utility
within the definition of Idaho Code ~ 61-129.
The Idaho Public Utilities Commission has jurisdiction over this matter pursuant to the
provisions of Idaho Code ~ 61-901 et seq.and the Application reasonably confonns to Rules 141-
150 ofthe Commission s Rules of Procedure (IDAPA 31.01.01-141-150).
The method of issuance is proper.
The general purposes to which the proceeds will be put are lawful under the Public Utility
Law of the state of Idaho and are compatible with the public interest. However, this general
approval of the general purposes to which the proceeds will be put is neither a rIDding of fact nor a
conclusion of law that any particular construction program of IGC which may be benefited by the
approval ofthis Application has been considered or approved by this Order, and this Order shall not
be construed to that effect.
The issuance of an Order authorizing the proposed financing does not constitute agency
determination/approval of the type of financing or the related costs for ratemaking purposes. The
Idaho Public Utilities Commission does not have before it for detennination, and therefore does not
determine, any effect of the proposed transactions on rates to be charged by IGC for natural gas to
consumers in the state ofIdaho.
All lawful fees have been paid by Intennountain as provided by Idaho Code ~ 61-905.
The Application should be approved.
ORDER
IT IS THEREFORE ORDERED that the Application of Intennountain Gas Company for
authority to issue a revolving line of credit not to exceed $35 000 000 at anyone time outstanding
as described in its Application should be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that this authority will be from the date of this Order and
expire on the maturity date of this newly authorized line of credit.
ORDER NO.PAGE 2
Exhibit No.
Case No. INT-O3-
Intermountain Gas Company
Page 3 of 4
IT IS FURTHER ORDERED that Intennountain will continue to make quarterly reports to
this Commission setting forth the date of issuance, principal amount, interest rate, date of maturity
and identity of payee for all promissory notes issued during such quarter
IT IS FURTHER ORDERED that the foregoing authorization is without prejudice to the
regulatory authority of this Commission with respect to rates, service, accounts, valuation, estimates
or detennination of cost or any other matter which may come before this Commission pursuant to
this jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provisions of Chapter 9
Title 61 , Idaho Code, or Rules 141-150 of the Commission s Rules of Procedure, or any act or deed
done or perfonned in connection with this Order shall be construed to obligate the state ofIdaho to
payor guarantee in any manner whatsoever any security authorized, issued, assumed or guaranteed
under the provisions of said Chapter 9, Title 61 , Idaho Code and Rules 141-150 of the
Commission s Rules of Procedure.
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of
Intennountain s exhibits or other material accompanying this Application for any purpose other
than the issuance of this Order.
THIS IS A FINAL ORDER.Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration.
ORDER NO.PAGE 3
Exhibit No.
Case No. INT O3-
Intermountain Gas Company
Page 4 of 4
DONE by Order of the Idaho Public Commission at Boise, Idaho this
January, 2004.
day of
PRESIDENT
COMMISSIONER
COMMISSIONER
ATTEST:
SECRETARY
ORDER NO.PAGE 4