Short-Term and Long-Term Debt

Short-Term Debt. Total short-term debt outstanding as of December 31, 2011, was $6.5 million ($14.4 million at December 31, 2010) and consisted of long-term debt due within one year and notes payable.

As of December 31, 2011, we had bank lines of credit aggregating $256.4 million ($154.0 million at December 31, 2010), $250.0 million of which expires in June 2015. These bank lines of credit are available to provide short-term bank loans and liquidity support for ALLETE's commercial paper program. At December 31, 2011, $1.1 million ($1.0 million at December 31, 2010) was drawn on our lines of credit leaving a $255.3 million balance available for use ($153.0 million at December 31, 2010).

On February 1, 2012, ALLETE entered into a $150.0 million credit agreement (Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and several other lenders that are parties thereto. The Agreement is unsecured and has a maturity date of January 31, 2014, which may be extended for one year, subject to bank approvals. Advances from the Agreement may be used for general corporate purposes, to provide liquidity support for ALLETE’s commercial paper program and to issue up to $10.0 million in letters of credit.

On May 25, 2011, ALLETE entered into a $250.0 million credit agreement (Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and several other lenders that are parties thereto. The Agreement was effective July 1, 2011, and replaced our previous $150.0 million credit facility. The Agreement is unsecured and has a maturity date of June 30, 2015, which may be extended for one year. Such extension is subject to bank approvals. Advances from the Agreement may be used for general corporate purposes, to provide liquidity support for ALLETE’s commercial paper program and to issue up to $40.0 million in letters of credit.

Long-Term Debt. The aggregate amount of long-term debt maturing during 2012 is $5.4 million ($83.8 million in 2013; $94.1 million in 2014; $16.7 million in 2015; $21.0 million in 2016; and $642.3 million thereafter). Substantially all of our electric plant is subject to the lien of the mortgage collateralizing outstanding first mortgage bonds. The mortgages contain non-financial covenants customary in utility mortgages, including restrictions on our ability to incur liens, dispose of assets, and merge with other entities.

On August 25, 2011, ALLETE entered into a $75.0 million term loan agreement with JPMorgan Chase Bank, N.A., as administrative agent and a lender, and Bank of America, N.A., as a lender (Term Loan). The Term Loan is an unsecured, single-draw loan that is due on August 25, 2014. The interest rate on the Term Loan is equal to the one-month LIBOR plus 1 percent; however, we also entered into an interest rate swap agreement which effectively fixed the interest rate at 1.825 percent over the term of the loan. (See Note 8. Derivatives.) Proceeds from the Term Loan were used for general corporate purposes. As of December 31, 2011, there was $75.0 million outstanding on the Term Loan.

On November 14, 2011, ALLETE Properties renewed an $8.3 million line of credit with RBC Bank extending the maturity of the line of credit to November 2013. The previous line of credit was $10.0 million which ALLETE Properties reduced by $1.7 million million at the time of renewal.

On October 7, 2011, ALLETE Properties renewed a $3.0 million line of credit with Intracoastal Bank, extending maturity of the

line to October 2013, with all other terms remaining unchanged.

Note 10. Short-Term and Long-Term Debt (Continued)



Long-Term Debt
As of December 31	2011		2010
Millions
First Mortgage Bonds
4.86% Series Due 2013		$60.0		$60.0
6.94% Series Due 2014	18.0		18.0
7.70% Series Due 2016	20.0		20.0
8.17% Series Due 2019	42.0		42.0
5.28% Series Due 2020	35.0		35.0
4.85% Series Due 2021	15.0		15.0
4.95% Pollution Control Series F Due 2022	111.0		111.0
6.02% Series Due 2023	75.0		75.0
4.90% Series Due 2025	30.0		30.0
5.10% Series Due 2025	30.0		30.0
5.99% Series Due 2027	60.0		60.0
5.69% Series Due 2036	50.0		50.0
6.00% Series Due 2040	35.0		35.0
5.82% Series Due 2040	45.0		45.0
SWLP& First Mortgage Bonds 7.25% Series Due 2013	10.0		10.0
Senior Unsecured Notes 5.99% Due 2017	50.0		50.0
Variable Demand Revenue Refunding Bonds Series 1997 A, B, and C Due 2013 – 2020	28.2		28.3
Industrial Development Revenue Bonds 6.5% Due 2025	6.0		6.0
Industrial Development Variable Rate Demand Refunding Revenue Bonds Series 2006 Due 2025	27.8		27.8
Unsecured Term Loan Variable Rate Due 2014	75.0		—
Other Long-Term Debt, 1.0% – 8.0% Due 2012 – 2037	40.3		36.9
Total Long-Term Debt	863.3		785.0
Less: Due Within One Year	5.4		13.4
Net Long-Term Debt		$857.9		$771.6

Financial Covenants. Our long-term debt arrangements contain customary covenants. In addition, our lines of credit and letters of credit supporting certain long-term debt arrangements contain financial covenants. Our compliance with financial covenants is not dependent on debt ratings. The most restrictive covenant requires ALLETE to maintain a ratio of its Indebtedness to Total Capitalization (as the amounts are calculated in accordance with the respective long-term debt arrangements) of less than or equal to 0.65 to 1.00 measured quarterly. As of December 31, 2011, our ratio was approximately 0.44 to 1.00. Failure to meet this covenant would give rise to an event of default if not cured after notice from the lender, in which event ALLETE may need to pursue alternative sources of funding. Some of ALLETE’s debt arrangements contain “cross-default” provisions that would result in an event of default if there is a failure under other financing arrangements to meet payment terms or to observe other covenants that would result in an acceleration of payments due. As of December 31, 2011, ALLETE was in compliance with its financial covenants.