Northwest Natural enters $155 million 364-day, five-year term loans

By Marisa Wong

Los Angeles, June 14 – Northwest Natural Gas Co. entered into a $100 million 364-day term loan credit agreement on June 10 with U.S. Bank, NA as administrative agent, bookrunner and lead arranger, according to an 8-K filing with the Securities and Exchange Commission.

At closing, the company borrowed the full amount under the term loan, proceeds of which are expected to be used for general corporate purposes.

All principal and unpaid interest is due and payable on June 9, 2022.

Eurodollar loans bear interest at Libor plus 55 basis points.

The term loan requires that the company maintain credit ratings with Standard & Poor’s and Moody’s Investor Services. A change in debt ratings may result in a change to the interest rate but is not an event of default.

The loan also requires the company to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the banks to terminate their lending commitments and to accelerate the maturity of all amounts outstanding. The company was in compliance with this covenant as of June 10.

NW Natural Water loan

Also on June 10, NW Natural Water Co., LLC, a wholly owned subsidiary of Northwest Natural Holding Co., entered into a $55 million term loan with Bank of America, NA as administrative agent and BofA Securities, Inc. as bookrunner and lead arranger.

NW Natural Water borrowed the full amount at closing. The proceeds are expected to be used to refinance or repay existing debt, including the $35 million two-year term loan entered into in June 2019, and for general corporate purposes.

The loan matures on June 10, 2026.

Interest is based on Northwest Natural Holding’s credit ratings (or Northwest Natural Gas’ credit ratings if Northwest Natural Holding does not have a credit rating). Northwest Natural Holding does not currently maintain ratings with S&P or Moody’s, the filing noted. The spread on Libor loans ranges from 70 bps to 100 bps.

The NW Natural Water loan is guaranteed by Northwest Natural Holding and requires Northwest Natural Holding to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the banks to terminate their lending commitments and to accelerate the maturity of all amounts outstanding. Northwest Natural Holding was in compliance with this covenant as of June 10.

In addition, Northwest Natural Gas is required to maintain credit ratings with S&P and Moody’s. A change in debt ratings may result in a change to the interest rate but is not an event of default.

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