20101008Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
WORKING FILE
FROM:TERRI CARLOCK
DATE:OCTOBER 7, 2010
SUBJECT:VISTA CORPORATION'S APPLICATION FOR AUTHORITY TO
ENTER INTO CREDIT FACILITIES UP TO $600,000,000;
CASE NO. A VU-I0-
On September, 16, 2010, A vista Corporation (A vista) applied for authority to enter into
one or more debt credit facilities up to $600 000 000 in total. The term of the facilities will be
for five years subject to extensions not to exceed two years if the Company and the banks agree.
The credit facilities may include issuance of secured or unsecured bonds, notes or other
indebtedness. It is proposed that any guarantee of indebtedness may be refunded, extended
renewed or replaced within the authorized timeframe.
The proceeds will be used for one or more of the following purposes: (a) the Company
acquisition, construction, completion, extension or improvement of facilities, (b) the
improvement or maintenance of service, ( c) retirement or exchange of one or more outstanding
stock, bond, or note issuances, (c) reimbursement to the treasury for funds previously expended
and (d) for such other purposes as may be permitted by law. The requested authority will replace
current facilities set to expire in April 2011.
The estimated fees and borrowing spreads will be based on the Company s current senior
secured debt rating and current market information. Avista s current bond ratings are BBB+ by
S&P and Baal by Moody s. This currently places Avista in Pricing Level III where the facility
fee would be 0.50%. Avista will only enter into transactions where the fees, interest rates and
expenses charged or incurred by A vista in connection with the transactions and any refunding,
extensions, renewals or replacements are competitive with market prices for similar transactions.
DECISION MEMORANDUM OCTOBER 7, 2010
The Company also requests authority to issue , refund, extend, renew or replace
indebtedness under the credit facility without further Commission approval. The issuance would
allow the Company greater flexibility to manage its daily cash funds and reduce borrowing costs
thereby permitting the Company to better manage its debt and capital in a more efficient and cost
effective manner.
ST AFF RECOMMENDATION
Staff recommends approval of the proposed credit facilities up to $600 000 000 in total.
Staff also recommends the authority be for five years with allowed extensions up to two
additional years. If the extensions are exercised, Staff recommends the Company be required to
file an informational letter notifying the Commission of any extensions under this authority. In
addition, it is recommended that the authority under this initial approval be continuing (without
further order required) for the five-year term plus any extensions provided A vista maintains
senior secured debt ratings that are investment grade, BBB-/Baa3 or at least Pricing Level V.
The Company agrees with Staffs recommendations.
COMMISSION DECISION
1. Does the Commission wish to approve Avista s request to issue up to $600 000 000 in
one or more credit facility?
2. Does the Commission wish to authorize a term of five years with extensions up to two
years?
3. Does the Commission wish to require Avista file an informational letter if extensions
are exercised?
4. Does the Commission wish to allow its authority under this Order to be continuing
during the authorized term provided the senior secured debt rating levels remain investment
grade?
Terri Carlock
TC:AVU-IO-I Debt Credit Facility dmlO 2010
DECISION MEMORANDUM OCTOBER 7 2010