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Financing | 3 Months Ended
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Mar. 31, 2017
Debt Disclosure [Abstract] |
Financing | Financing The Company’s financing strategy includes both short-term and long-term borrowings. The Company utilizes short-term revolving credit facilities, as well as cash flows from operations, to provide funds for both construction and operating expenditures. Depending on market and other conditions, the Company will periodically sell long-term debt or enter into term loan arrangements and use the proceeds to reduce borrowings under the revolving credit facilities or refinance other debt. Each of the revolving credit facilities and the Company’s term loans contains a single financial covenant, which requires the maintenance of a debt-to-capital ratio of less than or equal to 65%, and generally also include customary covenants, events of default, cross default provisions, and change of control provisions. PNM must obtain NMPRC approval for any financing transaction having a maturity of more than 18 months. In addition, PNM files its annual short-term financing plan with the NMPRC. Additional information concerning financing activities is contained in Note 6 of the Notes to Consolidated Financial Statements in the 2016 Annual Reports on Form 10-K. Financing Activities On March 9, 2015, PNMR entered into a $150.0 million Term Loan Agreement (“PNMR 2015 Term Loan Agreement”) between PNMR, the lenders identified therein, and Wells Fargo Bank, National Association, as Lender and administrative agent. The PNMR 2015 Term Loan Agreement bears interest at a variable rate and must be repaid on or before March 9, 2018. In September 2015, PNMR entered into a hedging agreement whereby it effectively established a fixed interest rate of 1.927%, subject to change if there is a change in PNMR’s credit rating, for borrowings under the PNMR 2015 Term Loan Agreement for the period from January 11, 2016 through March 9, 2018. This hedge is accounted for as a cash-flow hedge and had a fair value gain of $0.2 million at March 31, 2017, which is included in Other current assets on the Condensed Consolidated Balance Sheets, and a fair value loss of less than $0.1 million at December 31, 2016. The fair values were determined using Level 2 inputs under GAAP, including using forward LIBOR curves under the mid-market convention to discount cash flows over the remaining term of the agreement. The interest rate on the PNMR 2015 Term Loan Agreement was 1.75% at March 31, 2017. The $100.0 million PNMR 2016 Two-Year Term Loan and the $175.0 million PNM 2016 Term Loan Agreement also bear interest at variable rates, which were 1.93% and 1.59% at March 31, 2017. As discussed in Note 11, NM Capital, a wholly owned subsidiary of PNMR, entered into a $125.0 million term loan agreement (the “BTMU Term Loan Agreement”) with BTMU, as lender and administrative agent, as of February 1, 2016. The BTMU Term Loan Agreement has a maturity date of February 1, 2021 and bears interest at a rate based on LIBOR plus a customary spread, which aggregated 3.79% at March 31, 2017. PNMR, as parent company of NM Capital, has guaranteed NM Capital’s obligations to BTMU. The BTMU Term Loan Agreement and the guaranty include customary covenants, including requirements for PNMR to not exceed a maximum debt-to-capital ratio of 65%, and customary events of default, a cross default provision, and a change of control provision consistent with PNMR’s other term loan agreements. NM Capital utilized the proceeds of the BTMU Term Loan Agreement to provide funding of $125.0 million (the “Westmoreland Loan”) to a ring-fenced, bankruptcy-remote, special-purpose entity that is a subsidiary of Westmoreland Coal Company to finance the purchase price of the stock of SJCC. The BTMU Term Loan Agreement requires that NM Capital utilize all amounts, less taxes and fees, it receives under the Westmoreland Loan to repay the BTMU Term Loan Agreement. The principal balance outstanding under the BTMU Term Loan Agreement was $82.8 million at March 31, 2017. Based on scheduled payments on the Westmoreland Loan, NM Capital estimates it will make principal payments of $33.5 million on the BTMU Term Loan Agreement in the twelve months ended March 31, 2018. On October 21, 2016, PNMR entered into letter of credit arrangements with JPMorgan Chase Bank, N.A. (the “JPM LOC Facility”) under which letters of credit aggregating $30.3 million were issued to facilitate the posting of reclamation bonds, which SJCC is required to post in connection with permits relating to the operation of the San Juan mine (Note 11). On March 9, 2017, PNMR entered into a four-year hedging agreement whereby it effectively established a fixed interest rate of 1.926% plus a customary spread, subject to change if there is a change in PNMR’s credit rating, for $50.0 million of its variable rate short-term debt. This hedge is accounted for as a cash-flow hedge and had a fair value loss of $0.4 million at March 31, 2017, which is included in Other current liabilities on the Condensed Consolidated Balance Sheets. The fair value was determined using Level 2 inputs under GAAP, including using forward LIBOR curves under the mid-market convention to discount cash flows over the remaining term of the agreement. Short-term Debt and Liquidity Currently, the PNMR Revolving Credit Facility has a financing capacity of $300.0 million and the PNM Revolving Credit Facility has a financing capacity of $400.0 million. In November 2016, PNMR and PNM entered into agreements to extend the maturity of both facilities from October 31, 2020 to October 31, 2021. However, one lender, whose current commitment is $10.0 million under the PNMR Revolving Credit Facility and $40.0 million under the PNM Revolving Credit Facility, did not agree to extend its commitments beyond October, 31, 2020. Unless one or more of the other current lenders or a new lender assumes the commitments of the non-extending lender, the financing capacities will be reduced to $290.0 million for the PNMR Revolving Credit Facility and $360.0 million for the PNM Revolving Credit Facility from November 1, 2020 through October 31, 2021. The TNMP Revolving Credit Facility is a $75.0 million revolving credit facility secured by $75.0 million aggregate principal amount of TNMP first mortgage bonds. The TNMP Revolving Credit Facility matures on September 18, 2018. PNM also has the $50.0 million PNM New Mexico Credit Facility that expires on January 8, 2018. At March 31, 2017, the weighted average interest rate was 2.19% for the PNMR Revolving Credit Facility, 2.11% for the PNM Revolving Credit Facility, 1.94% for the TNMP Revolving Credit Facility, and 1.83% for the PNMR 2016 One-Year Term Loan, which matures in December 2017. Short-term debt outstanding consisted of:
|  | March 31, |  | December 31,
Short-term Debt |  | 2017 |  | 2016
|  | (In thousands)
PNM: |  |  |  |
PNM Revolving Credit Facility |  | $ | 16,200 |  |  | $ | 35,000 |
PNM New Mexico Credit Facility |  | — |  |  | 26,000 |
TNMP Revolving Credit Facility |  | 22,000 |  |  | — |
PNMR: |  |  |  |
PNMR Revolving Credit Facility |  | 164,900 |  |  | 126,100 |
PNMR 2016 One-Year Term Loan |  | 100,000 |  |  | 100,000 |
|  | $ | 303,100 |  |  | $ | 287,100 |
In addition to the above borrowings, PNMR, PNM, and TNMP had letters of credit outstanding of $6.2 million, $2.5 million, and $0.1 million at March 31, 2017 that reduce the available capacity under their respective revolving credit facilities. The above table excludes intercompany debt. As of March 31, 2017, TNMP had intercompany borrowings from PNMR of $6.3 million. At April 24, 2017, PNMR, PNM, and TNMP had $137.7 million, $389.7 million, and $34.9 million of availability under their respective revolving credit facilities, including reductions of availability due to outstanding letters of credit, and PNM had $43.0 million of availability under the PNM New Mexico Credit Facility. Total availability at April 24, 2017, on a consolidated basis, was $605.3 million for PNMR. As of April 24, 2017, TNMP had borrowings of $5.0 million from PNMR under its intercompany loan agreement. At April 24, 2017, PNMR, PNM, and TNMP had consolidated invested cash of $1.5 million, none, and none.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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