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Financing | 3 Months Ended
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Mar. 31, 2018
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 Company’s revolving credit facilities and 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 2017 Annual Reports on Form 10-K. Financing Activities 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 of February 1, 2021 and bears interest at a rate based on LIBOR plus a customary spread, which aggregated 4.41% at March 31, 2018. PNMR, as parent company of NM Capital, has guaranteed NM Capital’s obligations to BTMU. 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 Westmoreland’s purchase of SJCC. See Note 6. 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 $45.1 million at March 31, 2018. Based on scheduled payments on the Westmoreland Loan, NM Capital estimates it will make principal payments of $10.0 million on the BTMU Term Loan Agreement in the twelve months ended March 31, 2019. 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 July 28, 2017, PNM entered into an agreement (the “PNM 2017 Senior Unsecured Note Agreement”) with institutional investors for the sale of $450.0 million aggregate principal amount of Senior Unsecured Notes (the “PNM 2018 SUNs”) offered in private placement transactions. Under the PNM 2017 Senior Unsecured Note Agreement, PNM has agreed to issue $350.0 million of the PNM 2018 SUNs on or about May 15, 2018 and $100.0 million of the PNM 2018 SUNs on or about August 1, 2018. The issuances of the PNM 2018 SUNs are subject to the satisfaction of customary conditions. PNM will use the gross proceeds from the PNM 2018 SUNs to repay $350.0 million of PNM’s 7.95% Senior Unsecured Notes that mature on May 15, 2018 and $100.0 million of PNM’s 7.50% Senior Unsecured Notes that mature on August 1, 2018. The terms of the PNM 2017 Senior Unsecured Note Agreement include customary covenants, including a covenant that requires the maintenance of a debt-to-capital ratio of less than or equal to 65%, customary events of default, including a cross default provision, and covenants regarding parity of financial covenants, liens and guarantees with respect to PNM’s material credit facilities. In the event of a change of control, PNM will be required to offer to prepay the PNM 2018 SUNs at par. PNM will have the right to redeem any or all of the PNM 2018 SUNs prior to their respective maturities, subject to payment of a customary make-whole premium. In accordance with GAAP, aggregate borrowings of $450.0 million under PNM’s Senior Unsecured Notes due on May 15, 2018 and August 1, 2018, are reflected as being long-term in the Condensed Consolidated Balance Sheet at March 31, 2018 since the PNM 2017 Senior Unsecured Note Agreement demonstrates PNM’s ability and intent to re-finance the aggregate $450.0 million Senior Unsecured Notes on a long-term basis. Information concerning the maturities and interest rates on the PNM 2018 SUNs to be issued in May 2018 and August 2018 is as follows:
Scheduled |  |  |  |  |  |
Funding |  | Maturity |  | Principal |  | Interest
Date |  | Date |  | Amount |  | Rate
|  |  |  | (In millions) |  |
May 15, 2018 |  | May 15, 2023 |  | $ | 55.0 |  |  | 3.15 | %
May 15, 2018 |  | May 15, 2025 |  | 104.0 |  |  | 3.45 | %
May 15, 2018 |  | May 15, 2028 |  | 88.0 |  |  | 3.68 | %
May 15, 2018 |  | May 15, 2033 |  | 38.0 |  |  | 3.93 | %
May 15, 2018 |  | May 15, 2038 |  | 45.0 |  |  | 4.22 | %
May 15, 2018 |  | May 15, 2048 |  | 20.0 |  |  | 4.50 | %
|  |  |  | 350.0 |  |  |
August 1, 2018 |  | August 1, 2028 |  | 15.0 |  |  | 3.78 | %
August 1, 2018 |  | August 1, 2048 |  | 85.0 |  |  | 4.60 | %
|  |  |  | 100.0 |  |  |
|  |  |  | $ | 450.0 |  |  |
. On March 9, 2018, PNMR issued $300.0 million aggregate principal amount of 3.250% Senior Unsecured Notes (the “PNMR 2018 SUNs”), which mature on March 9, 2021. The proceeds from the offering were used to repay the $150.0 million PNMR 2015 Term Loan Agreement, and to reduce borrowings under the PNMR Revolving Credit Facility. At March 31, 2018, variable interest rates were 2.64% on the $100.0 million PNMR 2016 Two-Year Term Loan, which matures in December 2018, and 2.61% on the $200.0 million PNM 2017 Term Loan Agreement, which matures in January 2019. 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. PNMR and PNM have entered into agreements to extend the maturities of both facilities to October 31, 2022. 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, 2022. PNM also has the $40.0 million PNM 2017 New Mexico Credit Facility that expires on December 12, 2022. 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 and matures on September 23, 2022. On February 26, 2018, PNMR Development entered into a revolving credit facility with Wells Fargo Bank, National Association, as lender, which allows PNMR Development to borrow up to $24.5 million on a revolving credit basis and also provides for the issuance of letters of credit. The facility expires on February 25, 2019, bears interest at a variable rate, and contains terms similar to the PNMR Revolving Credit Facility. PNMR has guaranteed the obligations of PNMR Development under the facility. PNMR Development uses the facility to finance its participation in NMRD and other activities. Short-term debt outstanding consisted of:
|  | March 31, |  | December 31,
Short-term Debt |  | 2018 |  | 2017
|  | (In thousands)
PNM: |  |  |  |
PNM Revolving Credit Facility |  | $ | — |  |  | $ | 39,800 |
PNM 2017 New Mexico Credit Facility |  | — |  |  | — |
|  | — |  |  | 39,800 |
TNMP Revolving Credit Facility |  | 21,200 |  |  | — |
PNMR: |  |  |  |
PNMR Revolving Credit Facility |  | 96,000 |  |  | 165,600 |
PNMR 2016 One-Year Term Loan (as extended) |  | 100,000 |  |  | 100,000 |
PNMR Development Revolving Credit Facility |  | 21,500 |  |  | — |
|  | $ | 238,700 |  |  | $ | 305,400 |
At March 31, 2018, the weighted average interest rate was 3.05% for the PNMR Revolving Credit Facility, 2.54% for the TNMP Revolving Credit Facility, 2.72% for the PNMR Development Revolving Credit Facility, and 2.63% for the PNMR 2016 One-Year Term Loan (as extended), which matures in December 2018. In addition to the above borrowings, PNMR, PNM, and TNMP had letters of credit outstanding of $6.4 million, $2.5 million, and $0.1 million at March 31, 2018 that reduce the available capacity under their respective revolving credit facilities. The above table excludes intercompany debt. As of March 31, 2018 and December 31, 2017, PNM had $54.6 million and zero and TNMP had $2.6 million and zero of intercompany borrowings from PNMR. On April 9, 2018, PNMR Development deposited $68.2 million with PNM related to transmission network interconnection studies. PNM used the deposit to repay intercompany borrowings. In 2017, PNMR entered into three separate four-year hedging agreements whereby it effectively established fixed interest rates of 1.926%, 1.823%, and 1.629%, plus customary spreads over LIBOR, subject to change if there is a change in PNMR’s credit rating, for three separate tranches, each of $50.0 million, of its variable rate debt. These hedge agreements are accounted for as cash flow hedges. These hedge agreements had fair value gains totaling $3.1 million at March 31, 2018 that is included in Other deferred charges and $1.4 million at December 31, 2017 that is included in Other current assets on the Condensed Consolidated Balance Sheets. 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. At April 23, 2018, PNMR, PNM, TNMP, and PNMR Development had availability of $197.4 million, $397.5 million, $34.5 million, and none under their respective revolving credit facilities, including reductions of availability due to outstanding letters of credit, and PNM had $40.0 million of availability under the PNM New Mexico Credit Facility. Total availability at April 23, 2018, on a consolidated basis, was $669.4 million for PNMR. As of April 23, 2018, PNM and TNMP had no borrowings from PNMR under their intercompany loan agreements. At April 23, 2018, PNMR, PNM, and TNMP had invested cash of $0.9 million, $8.6 million, and none. As described above, PNM entered into the PNM 2017 Senior Unsecured Note Agreement on July 28, 2017 to issue $450.0 million of the PNM 2018 SUNs on May 15, 2018 and August 1, 2018, proceeds from which will be used to repay like amounts of PNM Senior Unsecured Notes maturing on those dates. The $200.0 million PNM 2017 Term Loan Agreement matures on January 18, 2019. PNM has no other long-term debt due through March 31, 2019. The $100.0 million PNMR 2016 One-Year Term Loan (as extended) matures on December 14, 2018 and the $100.0 million PNMR 2016 Two-Year Term Loan matures on December 21, 2018. PNMR also anticipates repayments on the BTMU Term Loan Agreement of $10.0 million in the period from April 1, 2018 through March 31, 2019 and $9.4 million in the remainder of 2019. TNMP has $172.3 million of first mortgage bonds that are due in April 2019. The $24.5 million PNMR Development revolving credit facility expires on February 25, 2019. Additional information on debt maturities is contained in Note 6 of the Notes to Consolidated Financial Statements in the 2017 Annual Reports on Form 10-K.

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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 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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