LONG-TERM DEBT

9 Months Ended

Sep. 30, 2024

We have $2.7 billion of long-term debt which consists of mortgage notes payable, pollution control revenue bonds and the Springerville certificates. The mortgage notes payable and pollution control revenue bonds are secured on a parity basis by a Master First Mortgage Indenture, Deed of Trust and Security Agreement (“Master Indenture”). Substantially all our assets, rents, revenues and margins are pledged as collateral. The Springerville certificates are secured by the assets of Springerville Unit 3. All long-term debt contains certain restrictive financial covenants, including a debt service ratio ("DSR") requirement on an annual basis and an equity to capitalization ratio ("ECR") requirement of at least 18 percent at the end of each fiscal year. Other than long-term debt for the Springerville certificates that has a DSR requirement of at least 1.02 on an annual basis, all other long-term debt contains a DSR requirement of at least 1.10 on an annual basis. A DSR below 1.025 under the Master Indenture would require us to transfer all cash to a special fund managed by the trustee of the Master Indenture.

We have a secured revolving credit facility with National Rural Utilities Cooperative Finance Corporation (“CFC”), as lead arranger and administrative agent, in the amount of $520 million (“2022 Revolving Credit Agreement”) that expires on April 25, 2027 and includes a swingline sublimit of $125 million, a letter of credit sublimit of $75 million, and a commercial

paper back-up sublimit of $500 million. As of September 30, 2024, we had $445 million in availability (including $425 million under the commercial paper back-up sublimit) under the 2022 Revolving Credit Agreement.

Long-term debt consists of the following (dollars in thousands):


	September 30, 2024		December 31, 2023
Total debt	$	2,905,162	$	3,137,534
Less debt issuance costs	(17,739)		(19,723)
Less debt discounts	(8,456)		(8,678)
Plus debt premiums	10,287		10,896
Total debt adjusted for debt issuance costs, discounts and premiums	2,889,254		3,120,029
Less current maturities	(192,561)		(223,523)
Long-term debt	$	2,696,693	$	2,896,506

We entered into both a loan agreement and security agreement, dated October 1, 2024, with the Rural Utilities Service (“RUS”), a part of the United States Department of Agriculture (“USDA”), for a $75 million zero percent interest loan. The loan agreement includes financial DSR requirements in line with the covenants contained in our Master Indenture. This loan was provided by RUS as part of the Rural Energy Savings Program pursuant to the Farm Security and Rural Investment Act of 2002. We can draw up to $50 million of this loan as part of our new Electrify and Save® On-Bill Repayment Program that allows our Utility Members’ customers to install energy efficiency measures, at no up-front cost, and repay over time through their monthly utility bill from our Utility Members the costs of the measures and installation, at low interest rates. The remaining $25 million may be used as permitted in our work plan with RUS. Other than a special draw of $3 million that is due at maturity, each draw must be repaid within 10 years. The loan has a final maturity of October 1, 2044 and is not secured under our Master Indenture, but rather secured by certain depository accounts related to the On-Bill Repayment Program and certain rights in our On-Bill Repayment Program.

As a requirement of the loan from RUS, we must maintain a letter of credit for the benefit of RUS equal to 50 percent of the amount drawn and outstanding from the loan. We expect to make an initial special draw of $3 million and have provided RUS a letter of credit for $3 million issued under our 2022 Revolving Credit Agreement for the $3 million special draw and expected upcoming draws as part of our On-Bill Repayment Program.