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Financing
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Financing

(8) FINANCING

 

Shelf Registration Statement

 

We maintain an effective shelf registration statement with the SEC under which we may issue, from time to time, an unspecified amount of senior debt securities, subordinate debt securities, common stock, preferred stock, warrants and other securities. In anticipation of the approaching expiration of our previous shelf registration statement on Form S-3 originally filed on August 4, 2020 (Registration No. 333-240320), we filed a new shelf registration statement on Form S-3 on June 16, 2023 (Registration No. 333-272739).

 

Short-term debt

 

Revolving Credit Facility and CP Program

 

On May 9, 2023, we amended and restated our corporate Revolving Credit Facility, which replaced LIBOR as a benchmark interest rate with the SOFR. The adoption of SOFR as a benchmark interest rate was in advance of the scheduled elimination of LIBOR as a benchmark interest rate on June 30, 2023. No other significant terms or conditions, including borrowing capacity, credit spreads or financial covenants were modified under these amendments and restatements.

 

We have a $750 million Revolving Credit Facility that matures on July 19, 2026, with two one-year extension options (subject to consent from lenders). This facility includes an accordion feature that allows us to increase total commitments up to $1.0 billion with the consent of the administrative agent, the issuing agents and each bank increasing or providing a new commitment. Borrowings continue to be available under a base rate or various SOFR rate options. The interest costs associated with the letters of credit or borrowings and the commitment fee under the Revolving Credit Facility are determined based upon our Corporate credit rating from S&P, Fitch and Moody's for our senior unsecured long-term debt. Based on our current credit ratings, the margins for base rate borrowings, SOFR borrowings and letters of credit were 0.125%, 1.125% and 1.125%, respectively, at December 31, 2023. Based on our credit ratings, the commitment fee on unused amounts was 0.175%.

 

We have a $750 million, unsecured CP Program that is backstopped by the Revolving Credit Facility. Amounts outstanding under the Revolving Credit Facility and the CP Program, either individually or in the aggregate, cannot exceed $750 million. The notes issued under the CP Program may have maturities not to exceed 397 days from the date of issuance and bear interest (or are sold at par less a discount representing an interest factor) based on, among other things, the size and maturity date of the note, the frequency of the issuance and our credit ratings. Under the CP Program, any borrowings rank equally with our unsecured debt. Notes under the CP Program are not registered and are offered and issued pursuant to a registration exemption.

 

Our Revolving Credit Facility and CP Program, which are classified as Notes payable on the Consolidated Balance Sheets, had the following borrowings, outstanding letters of credit, and available capacity at December 31 (dollars in millions):

 

 

2023

 

2022

 

Amount outstanding

$

—

 

$

535.6

 

Letters of credit (a)

 

3.7

 

 

24.6

 

Available capacity

 

746.3

 

 

189.8

 

Weighted average interest rates

N/A

 

 

4.88

%

 

(a)
Letters of credit are off-balance sheet commitments that reduce the borrowing capacity available on our corporate Revolving Credit Facility.

 

Revolving Credit Facility and CP Program borrowing activity for the years ended December 31 was as follows (in millions):

 

 

2023

 

2022

 

Maximum amount outstanding (based on daily outstanding balances)

$

548.7

 

$

572.3

 

Average amount outstanding (based on daily outstanding balances)

 

81.7

 

 

390.7

 

Weighted average interest rates

 

4.91

%

 

2.11

%

 

Deferred Financing Costs on the Revolving Credit Facility

 

Total accumulated deferred financing costs on the Revolving Credit Facility of $8.9 million are being amortized over its estimated useful life and were included in Interest expense on the accompanying Consolidated Statements of Income. See below for additional details.

 

Long-term debt

 

Long-term debt outstanding was as follows (dollars in millions):

 

 

Interest Rate at

Balance Outstanding

 

Due Date

December 31, 2023

December 31, 2023

 

December 31, 2022

 

Corporate

 

 

 

 

 

 

Senior unsecured notes due 2023

November 30, 2023

N/A

$

—

 

$

525.0

 

Senior unsecured notes due 2024

August 23, 2024

1.04%

 

600.0

 

 

600.0

 

Senior unsecured notes due 2026

January 15, 2026

3.95%

 

300.0

 

 

300.0

 

Senior unsecured notes due 2027

January 15, 2027

3.15%

 

400.0

 

 

400.0

 

Senior unsecured notes due 2028

March 15, 2028

5.95%

 

350.0

 

 

—

 

Senior unsecured notes, due 2029

October 15, 2029

3.05%

 

400.0

 

 

400.0

 

Senior unsecured notes, due 2030

June 15, 2030

2.50%

 

400.0

 

 

400.0

 

Senior unsecured notes due 2033

May 1, 2033

4.35%

 

400.0

 

 

400.0

 

Senior unsecured notes due 2034

May 15, 2034

6.15%

 

450.0

 

 

—

 

Senior unsecured notes, due 2046

September 15, 2046

4.20%

 

300.0

 

 

300.0

 

Senior unsecured notes, due 2049

October 15, 2049

3.88%

 

300.0

 

 

300.0

 

Total Corporate debt

 

 

 

3,900.0

 

 

3,625.0

 

Less unamortized debt discount

 

 

 

(8.9

)

 

(5.3

)

Total Corporate debt, net

 

 

 

3,891.1

 

 

3,619.7

 

 

 

 

 

 

 

South Dakota Electric

 

 

 

 

 

 

First Mortgage Bonds due 2032

August 15, 2032

7.23%

 

75.0

 

 

75.0

 

First Mortgage Bonds due 2039

November 1, 2039

6.13%

 

180.0

 

 

180.0

 

First Mortgage Bonds due 2044

October 20, 2044

4.43%

 

85.0

 

 

85.0

 

Total South Dakota Electric debt

 

 

 

340.0

 

 

340.0

 

Less unamortized debt discount

 

 

 

(0.1

)

 

(0.1

)

Total South Dakota Electric debt, net

 

 

 

339.9

 

 

339.9

 

 

 

 

 

 

 

Wyoming Electric

 

 

 

 

 

 

Industrial development revenue bonds due 2027(a) (b)

March 1, 2027

3.93%

 

10.0

 

 

10.0

 

First Mortgage Bonds due 2037

November 20, 2037

6.67%

 

110.0

 

 

110.0

 

First Mortgage Bonds due 2044

October 20, 2044

4.53%

 

75.0

 

 

75.0

 

Total Wyoming Electric debt

 

 

 

195.0

 

 

195.0

 

Less unamortized debt discount

 

 

 

—

 

 

—

 

Total Wyoming Electric debt, net

 

 

 

195.0

 

 

195.0

 

 

 

 

 

 

 

Total long-term debt

 

 

 

4,426.0

 

 

4,154.6

 

Less current maturities

 

 

 

(600.0

)

 

(525.0

)

Less unamortized deferred financing costs (c)

 

 

 

(24.8

)

 

(22.3

)

Long-term debt, net of current maturities and deferred financing costs

 

 

$

3,801.2

 

$

3,607.3

 

 

(a)
Variable interest rate.
(b)
A reimbursement agreement is in place with Wells Fargo on behalf of Wyoming Electric for the $10 million bonds due March 1, 2027. In the case of default, we hold the assumption of liability for drawings on Wyoming Electric’s Letter of Credit attached to these bonds.
(c)
Includes deferred financing costs associated with our Revolving Credit Facility of $1.1 million and $1.8 million as of December 31, 2023 and December 31, 2022, respectively.

 

Scheduled maturities of long-term debt and associated interest payments by year are shown below (in millions):

 

Payments Due by Period

 

2024

 

2025

 

2026

 

2027

 

2028

 

Thereafter

 

Total

 

Principal payments on Long-term debt including current maturities (a)

$

600.0

 

$

—

 

$

300.0

 

$

410.0

 

$

350.0

 

$

2,775.0

 

$

4,435.0

 

Interest payments on Long-term debt (a)

 

179.0

 

 

168.1

 

 

162.2

 

 

149.6

 

 

132.9

 

 

1,052.2

 

 

1,844.0

 

 

(a)
Long-term debt amounts do not include deferred financing costs or discounts or premiums on debt. Estimated interest payments on variable rate debt are calculated by utilizing the applicable rates as of December 31, 2023.

 

 

Our debt securities contain certain restrictive financial covenants, all of which the Company and its subsidiaries were in compliance with at December 31, 2023. See below for additional information.

 

Substantially all of the tangible utility property of South Dakota Electric and Wyoming Electric is subject to the lien of indentures securing their first mortgage bonds. First mortgage bonds of South Dakota Electric and Wyoming Electric may be issued in amounts limited by property, earnings and other provisions of the mortgage indentures.

 

Debt Transactions

 

On September 15, 2023, we completed a public debt offering of $450 million, 6.15% senior unsecured notes due May 15, 2034. Proceeds from the offering, which were net of $7.6 million of deferred financing costs, along with available cash were used to repay all of our $525 million principal amount outstanding notes on their November 30, 2023 maturity date and for other general corporate purposes.

 

On March 7, 2023, we completed a public debt offering of $350 million, 5.95% five year senior unsecured notes due March 15, 2028. The proceeds from the offering, which were net of $4.2 million of deferred financing costs, were used to repay notes outstanding under our CP Program and for other general corporate purposes.

 

Debt Covenants

 

Revolving Credit Facility

 

We were in compliance with all of our Revolving Credit Facility covenants as of December 31, 2023. We are required to maintain a Consolidated Indebtedness to Capitalization Ratio not to exceed 0.65 to 1.00. Subject to applicable cure periods, a violation of this covenant would constitute an event of default that entitles the lenders to terminate their remaining commitments and accelerate all principal and interest outstanding. As of December 31, 2023, our Consolidated Indebtedness to Capitalization Ratio was 0.58 to 1.00.

 

Wyoming Electric

 

Wyoming Electric was in compliance with all covenants within its financing agreements as of December 31, 2023. Wyoming Electric is required to maintain a debt to capitalization ratio of no more than 0.60 to 1.00. As of December 31, 2023, Wyoming Electric's debt to capitalization ratio was 0.51 to 1.00.

 

Dividend Restrictions

 

Our Revolving Credit Facility and other debt obligations contain restrictions on the payment of cash dividends when a default or event of default occurs.

 

Due to our holding company structure, substantially all of our operating cash flows are provided by dividends paid or distributions made by our subsidiaries. The cash to pay dividends to our shareholders is derived from these cash flows. As a result, certain statutory limitations or regulatory or financing agreements could affect the levels of distributions allowed to be made by our subsidiaries.

 

Our Utilities are generally limited to the amount of dividends allowed to be paid to our utility holding company under the Federal Power Act and settlement agreements with state regulatory jurisdictions. As of December 31, 2023, the amount of restricted net assets at our Utilities that may not be distributed to our utility holding company in the form of a loan or dividend was approximately $142.6 million.

 

South Dakota Electric and Wyoming Electric are generally limited to the amount of dividends allowed to be paid to our utility holding company under certain financing agreements.

 

Equity

 

Although our aforementioned shelf registration statement does not limit our issuance capacity, our ability to issue securities is limited to the authority granted by our Board of Directors, certain covenants in our financing arrangements and restrictions imposed by federal and state regulatory authorities. Our articles of incorporation authorize the issuance of 100 million shares of common stock and 25 million shares of preferred stock. As of December 31, 2023, we had approximately 68 million shares of common stock outstanding and no shares of preferred stock outstanding.

 

At-the-Market Equity Offering Program


As previously disclosed, on August 4, 2020, we entered into an Amended and Restated Equity Distribution Sales Agreement ("Previous Sales Agreement") to sell shares of common stock up to an aggregate of $400 million, from time to time, through our ATM program utilizing our shelf registration statement. In conjunction with the new shelf registration statement filing discussed above, we entered into a new Equity Distribution Sales Agreement ("Sales Agreement") on June 16, 2023. We also terminated the Previous Sales Agreement on June 16, 2023. The Sales Agreement is similar to the Previous Sales Agreement and allows us to sell shares of common stock up to an aggregate of $400 million through our ATM program.

 

ATM activity for the years ended December 31 was as follows (in millions, except Average price per share amounts):

 

 

December 31, 2023

 

December 31, 2022

 

December 31, 2021

 

August 4, 2020 ATM Program

 

 

 

 

 

 

Proceeds, (net of issuance costs of $(0.5), $(0.9) and $(1.1), respectively)

$

48.5

 

$

90.3

 

$

118.8

 

Number of shares issued

 

0.8

 

 

1.3

 

 

1.8

 

 

 

 

 

 

 

June 16, 2023 ATM Program

 

 

 

 

 

 

Proceeds, (net of issuance costs of $(0.7), $0, $0, respectively

$

70.2

 

$

—

 

$

—

 

Number of shares issued

 

1.2

 

 

—

 

 

—

 

 

 

 

 

 

 

Total activity under both ATM Programs

 

 

 

 

 

 

Proceeds, (net of issuance costs of $(1.2), $(0.9) and $(1.1), respectively)

$

118.7

 

$

90.3

 

$

118.8

 

Number of shares issued

 

2.0

 

 

1.3

 

 

1.8

 

Average price per share

$

59.04

 

$

69.74

 

$

66.18

 

 

Shareholder Dividend Reinvestment and Stock Purchase Plan

 

Effective as of July 7, 2023, we terminated our DRSPP. On July 10, 2023, we filed a post-effective amendment to amend the Registration Statement on Form S-3 (File No. 333-240319) filed with the SEC on August 4, 2020. The filing of this post-effective amendment de-registered all shares of common stock that were issuable under the DRSPP but not sold as of July 7, 2023. With the termination of the DRSPP, a direct stock purchase plan is being offered which will allow shareholders to continue making share transactions. This plan is sponsored and administered solely by EQ Shareowner Services, our transfer agent.