Credit agreement - HECO

9 Months Ended

Sep. 30, 2013

Credit agreement and long-term debt

Credit agreement. HEI maintains an amended revolving non-collateralized credit agreement, which established a line of credit facility of $125 million, with a letter of credit sub-facility, expiring on December 5, 2016, with a syndicate of eight financial institutions. The credit facility will be maintained to support the issuance of commercial paper, but also may be drawn to repay HEI’s short-term and long-term indebtedness, to make investments in or loans to subsidiaries and for HEI’s working capital and general corporate purposes.

Changes in long-term debt.

March 6, 2013 notes. On March 6, 2013, HEI entered into a First Supplement (the First Supplement) to the Master Note Purchase Agreement dated March 24, 2011 (the Note Agreement). Under the First Supplement, HEI issued $50 million of its unsecured, 3.99% Series 2013A Senior Notes, due March 6, 2023, via a private placement with The Prudential Insurance Company of America, Prudential Arizona Reinsurance Captive Company and The Lincoln National Life Insurance Company.

The Note Agreement, as modified by the First Supplement (which includes representations that supersede and supplement the representations in the Note Agreement), contains customary representations and warranties, affirmative and negative covenants, and events of default (the occurrence of which may result in some or all of the Notes then outstanding becoming immediately due and payable) and provisions requiring the maintenance by HEI of certain financial ratios generally consistent with those in HEI’s existing amended revolving non-collateralized credit agreement described above and in HEI’s Form 10-K for the year ended December 31, 2012. For example, under the Note Agreement, it is an event of default if HEI fails to maintain an unconsolidated “Capitalization Ratio” (funded debt) of 50% or less (actual ratio of 17% as of September 30, 2013, as calculated under the agreement) or “Consolidated Net Worth” of at least $975 million (actual Net Worth of $1.7 billion as of September 30, 2013, as calculated under the agreement).

The net proceeds from the issuance of the Notes were used by HEI to refinance $50 million of its unsecured, 5.25% Medium-Term Notes, Series D, which matured on March 7, 2013.

Hawaiian Electric Company, Inc. and Subsidiaries

Credit agreement

Credit agreement and long-term debt

Credit agreement. Hawaiian Electric maintains an amended revolving non-collateralized credit agreement, which established a line of credit facility of $175 million, with a letter of credit sub-facility, expiring on December 5, 2016, with a syndicate of eight financial institutions. The credit facility will be maintained to support the issuance of commercial paper, but also may be drawn to repay Hawaiian Electric’s short-term indebtedness, to make loans to subsidiaries and for Hawaiian Electric’s capital expenditures, working capital and general corporate purposes.

Subsequent event-changes in long-term debt. On October 3, 2013, Hawaiian Electric, Maui Electric and Hawaii Electric Light each entered into its separate note purchase agreement with various purchasers of their taxable unsecured senior notes (Notes) with an aggregate principal amount of $236 million. The Utilities issued through a private placement the following series of Notes:



Amount	Series	Maturity
Hawaiian Electric Notes
$40 million¹	4.45% Senior Notes, Series 2013A	December 1, 2022
$50 million¹	4.84% Senior Notes, Series 2013B	October 1, 2027
$50 million²	5.65% Senior Notes, Series 2013C	October 1, 2043
$140 million	Total
Maui Electric Notes
$20 million¹	4.84% Senior Notes, Series 2013A	October 1, 2027
$20 million²	5.65% Senior Notes, Series 2013B	October 1, 2043
$40 million	Total
Hawaii Electric Light Notes
$14 million¹	3.83% Senior Notes, Series 2013A	July 1, 2020
$12 million¹	4.45% Senior Notes, Series 2013B	December 1, 2022
$30 million¹	4.84% Senior Notes, Series 2013C	October 1, 2027
$56 million	Total

¹Proceeds were used in October 2013 to redeem the following special purpose revenue bonds (SPRBs) and refunding SPRBs issued by the Department of Budget and Finance of the State of Hawaii for the benefit of the Utilities with an aggregate principle amount of $166 million:



Series	Year of maturity
4.75% Refunding Series 2003A Bonds	2020
5.00% Refunding Series 2003B Bonds	2022
5.65% Series 1997A Bonds	2027

²Proceeds were and/or will be used by the respective utility to finance their capital expenditures and/or for the reimbursement of funds used for the payment of capital expenditures.

Hawaiian Electric has guaranteed the obligations of Maui Electric and Hawaii Electric Light under their respective Notes.

The three note purchase agreements contain customary representations and warranties, affirmative and negative covenants, and events of default (the occurrence of which may result in some or all of the Notes of each and all of the Utilities then outstanding becoming immediately due and payable). The note purchase agreements also include provisions requiring the maintenance by Hawaiian Electric and each of Maui Electric and Hawaii Electric Light of certain financial ratios consistent with those in each of the Utilities’ existing note purchase agreements dated April 19, 2012 and September 13, 2012 (Hawaiian Electric only) and generally consistent with those in Hawaiian Electric’s existing amended revolving non-collateralized credit agreement described above.

All of the Notes may be prepaid in whole or in part at any time at the prepayment price of the principal amount of the Notes plus payment of a “Make-Whole Amount.” Each of the Note Purchase Agreements also (a) requires the Utilities to offer to prepay the Notes (without a Make-Whole Amount) in the event that HEI ceases to own 100% of the common stock or other securities of Hawaiian Electric that is ordinarily entitled, in the absence of contingencies, to vote in the election of Hawaiian Electric directors unless, at the time of such cessation of ownership and at all times during the period of 90 consecutive days thereafter, the long-term unsecured, unenhanced debt of Hawaiian Electric maintains an investment grade rating by at least one rating agency or, if more than one rating agency rates such indebtedness, then by each such rating agency, and (b) permits the Utilities to offer to prepay the Notes (without a Make-Whole amount) in the event of a sale of assets that would otherwise constitute a covenant default.

- 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.

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