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Financing | 3 Months Ended
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Mar. 31, 2019
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 contain a single financial covenant that requires the maintenance of a debt-to-capitalization ratio. For the PNMR and PNMR Development agreements, this ratio must be maintained at less than or equal to 70%, and for the PNM and TNMP agreements, this ratio must be maintained at less than or equal to 65%. The Company’s revolving credit facilities and term loans generally also contain 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 7 of the Notes to Consolidated Financial Statements in the 2018 Annual Reports on Form 10-K. Financing Activities 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 was required to post in connection with permits relating to the operation of the San Juan mine. On March 15, 2019, WSJ LLC acquired the assets of SJCC following the bankruptcy of Westmoreland. WSJ LLC assumed the obligations to PNMR under the letters of credit support (Note 11). On April 9, 2018, PNMR Development deposited $68.2 million with PNM related to potential transmission network interconnections, which was classified as a cash inflow from financing activities on PNM’s Condensed Consolidated Statements of Cash Flows in the second quarter of 2018. PNM used the deposit to repay intercompany borrowings. PNM is required to pay interest to PNMR Development to the extent work under the interconnections has not been performed. During the three months ended March 31, 2019, PNM recognized $0.9 million of interest expense under the agreement. At March 31, 2019, PNM’s remaining obligation under the interconnection agreement with PNMR Development of $68.2 million, excluding unpaid interest, is reflected in other deferred credits on PNM’s Condensed Consolidated Balance Sheets. As required by GAAP, all intercompany transactions related to this deposit have been eliminated on PNMR’s Condensed Consolidated Financial Statements. On January 18, 2019, PNM entered into a $250.0 million term loan agreement (the “PNM 2019 Term Loan”) among PNM, the lenders identified therein, and U.S. Bank N.A., as administrative agent. PNM used the proceeds of the PNM 2019 Term Loan to repay the PNM 2017 Term Loan, to reduce short-term borrowings under the PNM Revolving Credit Facility, and for general corporate purposes. The PNM 2019 Term Loan bears interest at a variable rate and must be repaid on or before July 17, 2020. On February 26, 2019, TNMP entered into the TNMP 2019 Bond Purchase Agreement with institutional investors for the sale of $305.0 million aggregate principal amount of four series of TNMP first mortgage bonds (the “TNMP 2019 Bonds”) offered in private placement transactions. TNMP issued $225.0 million of TNMP 2019 Bonds on March 29, 2019 and used the proceeds to repay TNMP’s $172.3 million 9.50% first mortgage bonds at their maturity on April 1, 2019, as well as to repay borrowings under the TNMP Revolving Credit Facility and for other general corporate purposes. TNMP will issue the remaining $80.0 million of TNMP 2019 Bonds on or before July 1, 2019 and will use the proceeds from that issuance to repay borrowings under the TNMP Revolving Credit Facility and for other general corporate purposes. The issuance of the remaining TNMP 2019 Bonds is subject to the satisfaction of customary conditions, and the TNMP 2019 Bonds are subject to continuing compliance with the representations, warranties and covenants of the TNMP 2019 Bond Purchase Agreement. The terms of the TNMP 2019 Bond Purchase Agreement include customary covenants, including a covenant that requires TNMP to maintain a debt-to-capitalization ratio of less than or equal to 65%, customary events of default, a cross-default provision, and a change-of-control provision. TNMP will have the right to redeem any or all of the TNMP 2019 Bonds prior to their respective maturities, subject to payment of a customary make-whole premium. In accordance with GAAP, borrowings under the $172.3 million 9.50% TNMP first mortgage bonds are reflected as being long-term in the Condensed Consolidated Balance Sheets at December 31, 2018 since TNMP demonstrated its intent and ability to re-finance the agreement on a long-term basis. These bonds are reflected in current maturities of long-term debt on the Condensed Consolidated Balance Sheets at March 31, 2019 since the proceeds from the issuance of $225.0 million of TNMP 2019 Bonds, net of amounts used to repay short-term debt, are reflected in cash and cash equivalents. Information concerning the funding dates, maturities and interest rates on the TNMP 2019 Bonds issued in March 2019 and to be issued on or before July 1, 2019 is as follows:
Funding Date |  | Maturity Date |  | Principal Amount |  | Interest Rate
|  |  |  | (In millions) |  |
March 29, 2019 |  | March 29, 2034 |  | $ | 75.0 |  |  | 3.79 | %
March 29, 2019 |  | March 29, 2039 |  | 75.0 |  | 3.92 | %
March 29, 2019 |  | March 29, 2044 |  | 75.0 |  | 4.06 | %
|  |  |  | 225.0 |  |  |
July 1, 2019 |  | July 1, 2029 |  | 80.0 |  |  | 3.60 | %
|  |  |  | $ | 305.0 |  |  |
At March 31, 2019, variable interest rates were 3.29% on the $50.0 million PNMR 2018 Two-Year Term Loan, which matures in December 2020, 3.13% on the $250.0 million PNM 2019 Term Loan, which matures in July 2020, 3.20% on the $35.0 million TNMP 2018 Term Loan, which matures in July 2020, and 3.30% on the $90.0 million PNMR Development Term Loan, which matures in November 2020. Short-term Debt and Liquidity 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. Both facilities currently expire on October 22, 2023 but contain options to be extended through October 2024, subject to approval by a majority of the lenders. One lender whose commitment was $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. On April 25, 2019, a new lender assumed the commitments of the non-extending lender under the PNMR and PNM Revolving Credit Facilities. 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 22, 2019, PNMR Development amended its $24.5 million revolving credit facility to increase the capacity to $25.0 million and to extend the term until February 24, 2020. The PNMR Development Revolving Credit Facility 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 for other activities. Short-term debt outstanding consisted of:
|  | March 31, |  | December 31,
Short-term Debt |  | 2019 |  | 2018
|  | (In thousands)
PNM: |  |  |  |
PNM Revolving Credit Facility |  | $ | — |  |  | $ | 32,400 |
PNM 2017 New Mexico Credit Facility |  | — |  |  | 10,000 |
|  | — |  |  | 42,400 |
TNMP Revolving Credit Facility |  | — |  |  | 17,500 |
PNMR: |  |  |  |
PNMR Revolving Credit Facility |  | 62,200 |  |  | 20,000 |
PNMR 2018 One-Year Term Loan |  | 150,000 |  |  | 150,000 |
PNMR Development Revolving Credit Facility |  | 11,600 |  |  | 6,000 |
|  | $ | 223,800 |  |  | $ | 235,900 |
At March 31, 2019, the weighted average interest rate was 3.74% for the PNMR Revolving Credit Facility, 3.24% for the PNMR 2018 One-Year Term Loan, and 3.49% for the PNMR Development Revolving Credit Facility. In addition to the above borrowings, PNMR, PNM, and TNMP had letters of credit outstanding of $4.7 million, $2.5 million, and $0.7 million at March 31, 2019 that reduce the available capacity under their respective revolving credit facilities. The above table excludes intercompany debt. As of March 31, 2019 and December 31, 2018, TNMP had zero and $0.1 million of intercompany borrowings from PNMR, PNM had zero and $19.8 million of intercompany borrowings from PNMR, and PNMR Development had $3.1 million and zero of intercompany borrowings from PNMR. 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 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 values aggregating $1.4 million at March 31, 2019 that is included in other deferred charges and $1.0 million at December 31, 2018 that is included in other current assets on the Condensed Consolidated Balance Sheets. As discussed in Note 3, changes in the fair value of the cash flow hedge are deferred in AOCI and amounts reclassified to the Condensed Consolidated Statement of Earnings are recorded in interest charges. 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. On January 1, 2019, the Company adopted Accounting Standards Update 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Adoption of the updated standard did not have a significant impact on these cash flow hedges. At May 3, 2019, PNMR, PNM, TNMP, and PNMR Development had availability of $239.4 million, $397.5 million, $45.7 million, and $9.9 million 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 2017 New Mexico Credit Facility. Total availability at May 3, 2019, on a consolidated basis, was $732.5 million for PNMR. As of May 3, 2019, PNM and TNMP had no borrowings from PNMR under their intercompany loan agreements. At May 3, 2019, PNMR, PNM, and TNMP had invested cash of $0.9 million, $9.0 million, and none. The Company’s debt arrangements have various maturities and expiration dates. As discussed above, on February 26, 2019 TNMP entered into the TNMP 2019 Bond Purchase Agreement providing for the issuance of an aggregate of $305.0 million of TNMP 2019 Bonds. TNMP issued $225.0 million of the TNMP 2019 Bonds on March 29, 2019 and used a portion of the proceeds from that issuance to repay TNMP’s $172.3 million 9.50% first mortgage bonds at their maturity on April 1, 2019. TNMP will issue the remaining $80.0 million of TNMP 2019 Bonds on or before July 1, 2019 and will use the proceeds from that issuance to repay borrowings under the TNMP Revolving Credit Facility and for other general corporate purposes. In addition, the $150.0 million PNMR 2018 One-Year term loan will mature in December 2019. The Company has no other long-term debt due through March 31, 2020. Additional information on debt maturities is contained in Note 7 of the Notes to Consolidated Financial Statements in the 2018 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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