UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
The information set forth in Item 2.03 with respect to the Amendment and Credit Agreement is incorporated herein in its entirety.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Second Amendment to the Credit Agreement
On August 12, 2021, the Company entered into an Amended and Restated Credit Agreement, as subsequently amended (the “Credit Agreement”), with PNC Bank, National Association, as administrative agent, swing loan lender, issuing lender and green loan coordinator (“PNC”), and several other financial institutions (together with PNC, collectively, the “Lenders”), pursuant to which the Lenders committed to provide the Company an unsecured $400 million revolving credit facility, including a $200 million five year facility (the “Five Year Facility”) and a $200 million 364 days facility (the “364 Days Facility” and, together with the Five Year Facility, the “Revolver”), subject to the terms and conditions in the Credit Agreement. Participating Lenders included PNC, Bank of America, N.A., Citizens Bank N.A., Truist Bank, Wells Fargo Bank, National Association Royal Bank of Canada, and City National Bank.
On August 9, 2023, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement (“Second Amendment”) with the Lenders, providing for $175 million of short-term debt capacity over the next 364-day period. The Second Amendment provides for, among other things, the following: borrowings under the 364 Days Facility shall now bear interest (i) based upon the Secured Overnight Financing Rate (“SOFR”), plus a 10-basis point credit spread adjustment, and an applicable margin of 1.05% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate, as selected by the Company in its discretion. Further, the Second Amendment provided that Borrowings under the 364 Days Green Loan shall now bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.00% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate plus 0.05% or less, as selected by the Company in its discretion.
Simultaneous with the execution of the Second Amendment, an updated 364 Days Facility was made available to the Company for the upcoming year expiring on August 8, 2024. In conjunction with this updated Facility, Truist Bank and City National Bank relinquished all of their rights and interests under the 364 Days Facility, including their commitments to extend $30 million and $12.5 million, respectively, to the Company on a short-term basis for the upcoming 364-day period. Additionally, Royal Bank of Canada, and Wells Fargo increased their rights and interests under the updated 364 Days Facility by $15 million and $2.5 million, raising each bank’s commitment to $27.5 million. At this time, Truist Bank and City National Bank have retained all such interests and obligations under the Five Year Facility.
All other terms and conditions of the Credit Agreement were unchanged and remain in full force and effect.
The following summarizes certain of the key provisions for the Revolver, including the changes discussed above:
Borrowings under the Five Year Facility shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.25% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization as defined in the Credit Agreement or (ii) the Base Rate plus 0.25% or less, as selected by the Company in its discretion. The Five Year Facility has a reduced interest rate margin with respect to borrowed amounts allocated to certain sustainable investments (the “Five Year Green Loan”). The maximum principal amount that can be borrowed under the Five Year Green Loan is $50,000,000. Borrowings under the Green Loan shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.20% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate plus 0.20% or less.
Borrowings under the 364 Days Facility shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.05% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate, as selected by the Company in its discretion. The 364 Days Facility has a reduced interest rate margin with respect to borrowed
amounts allocated to certain sustainable investments (the “364 Days Green Loan”). The maximum principal amount that can be borrowed under the 364 Days Green Loan is $50,000,000. Borrowings under the 364 Days Green Loan shall bear interest at (i) the SOFR Rate plus a 10-basis point credit spread adjustment and an applicable margin of 1.00% or less, with such margin based on Total Indebtedness as a percentage of Total Capitalization or (ii) the Base Rate plus 0.05% or less, as selected by the Company in its discretion.
The Company utilizes proceeds from the Revolver for general corporate purposes including repayments of short-term borrowings, working capital requirements and capital expenditures. Borrowings under the Five Year Green Loan and the 364 Days Green Loan may be used to support sustainable investments. Interest on SOFR Rate loans shall be paid on the last day of the Interest Period selected by the Company and if such Interest Period is longer than three months, also on the 90th day of such period. Interest on Base Rate loans shall be paid on the first day of each calendar quarter. All accrued but unpaid interest due under the Revolver is payable on the earlier of any applicable specified maturity date or the expiration date of the Credit Agreement. The Revolver has a commitment fee of 0.175% or less per annum on the unused commitments associated with both the Five Year Facility and the 364 Days Facility, with such fee based on Total Indebtedness as a percentage of Total Capitalization as defined in the Credit Agreement. The Company may request to extend the expiration date for up to three one-year extensions for both the Five Year Facility and the 364 Days Facility on any anniversary date of the Revolver, with such extension subject to each Lender’s approval. The Company may also request Lenders to increase the Revolver by up to $100,000,000 for both the Five Year Facility and the 364 Days Facility, provided that no Lender shall be obligated to increase its credit commitment and any increase in its credit commitment shall be in such Lender’s sole discretion.
The Credit Agreement contains customary representations and warranties and affirmative and negative covenants for agreements of this type, including, among others, covenants regarding the maintenance of a financial ratio, covenants relating to financial reporting, compliance with laws, payment of taxes, preservation of existence, books and records, maintenance of properties and insurance, limitations on liens and other encumbrances on property, limitations on the incurrence of indebtedness, restrictions on mergers and restrictions on sales of the Company’s or its subsidiaries’ assets, and limitations on changes in the nature of the Company’s business.
The Credit Agreement provides for customary events of default, including, among other things, in the event of nonpayment of principal, interest, fees or other amounts, a representation or warranty proving to have been incorrect in any material respect when made, failure to perform or observe covenants within a specified period of time, a cross-default to other Company indebtedness of a specified amount, the bankruptcy or insolvency of the Company, monetary judgment defaults of a specified amount, a change of control of the Company, and ERISA defaults resulting in liability for a specified amount. In the event of a default by the Company, PNC or the requisite number of Lenders may declare all amounts owed under the Credit Agreement and outstanding Letters of Credit immediately due and payable and terminate the Lenders’ commitments to make loans under the Credit Agreement. For defaults related to insolvency and receivership, the commitments of the Lenders will be automatically terminated and all outstanding loans and other amounts will become immediately due and payable. Under the terms of the Credit Agreement, a 2% interest penalty may apply to any outstanding amount not paid when due or that remains outstanding while an event of default exists.
The foregoing descriptions of the Credit Agreement, the First Amendment and the Second Amendment are only summaries and are qualified in their entirety by reference to the full text of the Credit Agreement and the First Amendment, which were filed as exhibits to the Company’s Form 10-Q for the quarterly periods ended September 30, 2021, and 2022, respectively, and to the Second Amendment, which will be filed as an exhibit to the Company’s Form 10-Q for the quarterly period ended September 30, 2023.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Chesapeake Utilities Corporation | ||||||
| August 15, 2023 | By: | /s/ Beth W. Cooper | ||||
| Name: Beth W. Cooper | ||||||
| Title: Executive Vice President, Chief Financial Officer, Treasurer and Assistant Corporate Secretary | ||||||
Document and Entity Information |
Aug. 09, 2023 |
|---|---|
| Cover [Abstract] | |
| Entity Registrant Name | CHESAPEAKE UTILITIES CORP |
| Amendment Flag | false |
| Entity Central Index Key | 0000019745 |
| Document Type | 8-K |
| Document Period End Date | Aug. 09, 2023 |
| Entity Incorporation State Country Code | DE |
| Entity File Number | 001-11590 |
| Entity Tax Identification Number | 51-0064146 |
| Entity Address, Address Line One | 500 Energy Lane |
| Entity Address, City or Town | Dover |
| Entity Address, State or Province | DE |
| Entity Address, Postal Zip Code | 19901 |
| City Area Code | 302 |
| Local Phone Number | 734.6799 |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
| Security 12b Title | Common Stock - par value per share $0.4867 |
| Trading Symbol | CPK |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | false |
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