Financing	9 Months Ended
Sep. 30, 2014
Financing
Financing	Note 6— Financing On October 15, 2014, we entered into a Bond Purchase Agreement for a private placement of $60.0 million of 4.27% First Mortgage Bonds due December 1, 2044. The delayed settlement is anticipated to occur on or about December 1, 2014, subject to customary closing conditions. Interest will be payable semi-annually on the bonds on each December 1 and June 1, commencing June 1, 2015. Once issued, the bonds may be redeemed at our option, at any time prior to maturity, at par plus a make whole premium, together with accrued and unpaid interest, if any, to the redemption date. The bonds have not been, and will not be, registered under the Securities Act of 1933, as amended. The bonds will be issued under the EDE Mortgage. We expect to use the proceeds from the sale of the bonds to refinance existing short-term indebtedness and for general corporate purposes. The principal amount of all series of first mortgage bonds outstanding at any one time under the EDE Mortgage is limited by terms of the mortgage to $1 billion. Substantially all of the property, plant and equipment of The Empire District Electric Company (but not its subsidiaries) are subject to the lien of the EDE Mortgage. On October 20, 2014, we entered into a new $200 million 5-year Credit Agreement replacing the former $150 million Third Amended and Restated Unsecured Credit Agreement dated January 17, 2012 which had a January 2017 expiration date. This new agreement may be used for working capital, commercial paper back-up and general corporate purposes. The credit facility includes a $20 million swingline loan sublimit, a $20 million sublimit for letters of credit issuance and, subject to bank approval, a $75 million accordion feature and two one-year extensions of the credit facility’s maturity date. Interest on borrowings under the new facility accrues at a rate equal to, at our option, (i) the highest of (A) the agent prime rate, (B) the federal funds effective rate plus 0.5% or (C) one month LIBOR plus 1.0%, in each case, plus a margin or (ii) one month, two month, three month or six month LIBOR, in each case, plus a margin. Each margin is based on our current credit ratings and the pricing schedule in the facility. As of the date hereof, and based on our current credit ratings, the LIBOR margin under the facility is 1.025%. A facility fee is payable quarterly on the full amount of the commitments under the facility based on our current credit ratings, which is currently 0.175%. In addition, upon entering into the new credit facility, we paid upfront fees to the revolving credit banks of $0.3 million in the aggregate. The new credit facility requires our total indebtedness to be less than 65.0% of our total capitalization at the end of each fiscal quarter and a failure to maintain this ratio will result in an event of default under the credit facility and will prohibit us from borrowing funds thereunder. As of September 30, 2014, we were in compliance with the prior credit agreement’s financial covenants, specifically: (a) the ratio of total indebtedness to total capitalization of less than 62.5% and (b) the minimum ratio of EBITDA (defined as net income plus interest, taxes, depreciation and amortization) to interest charges of 2.0 to 1.0 while prospectively also being in compliance with the new agreement’s ratio of total indebtedness to total capitalization of 65.0%. Our total indebtedness is 51% of our total capitalization as of September 30, 2014 and our EBITDA was 6.0 times our interest charges for the twelve months ended September 30, 2014. This new credit facility is subject to cross-default if we default on more than $25 million in the aggregate on our other indebtedness. The new credit agreement does not legally restrict the use of our cash in the normal course of operations. There were no outstanding borrowings under the prior credit agreement at September 30, 2014, however, $63.0 million was used to back up our outstanding commercial paper.

Note 6— Financing

On October 15, 2014, we entered into a Bond Purchase Agreement for a private placement of $60.0 million of 4.27% First Mortgage Bonds due December 1, 2044. The delayed settlement is anticipated to occur on or about December 1, 2014, subject to customary closing conditions. Interest will be payable semi-annually on the bonds on each December 1 and June 1, commencing June 1, 2015. Once issued, the bonds may be redeemed at our option, at any time prior to maturity, at par plus a make whole premium, together with accrued and unpaid interest, if any, to the redemption date. The bonds have not been, and will not be, registered under the Securities Act of 1933, as amended. The bonds will be issued under the EDE Mortgage. We expect to use the proceeds from the sale of the bonds to refinance existing short-term indebtedness and for general corporate purposes. The principal amount of all series of first mortgage bonds outstanding at any one time under the EDE Mortgage is limited by terms of the mortgage to $1 billion. Substantially all of the property, plant and equipment of The Empire District Electric Company (but not its subsidiaries) are subject to the lien of the EDE Mortgage.

On October 20, 2014, we entered into a new $200 million 5-year Credit Agreement replacing the former $150 million Third Amended and Restated Unsecured Credit Agreement dated January 17, 2012 which had a January 2017 expiration date. This new agreement may be used for working capital, commercial paper back-up and general corporate purposes. The credit facility includes a $20 million swingline loan sublimit, a $20 million sublimit for letters of credit issuance and, subject to bank approval, a $75 million accordion feature and two one-year extensions of the credit facility’s maturity date.

Interest on borrowings under the new facility accrues at a rate equal to, at our option, (i) the highest of (A) the agent prime rate, (B) the federal funds effective rate plus 0.5% or (C) one month LIBOR plus 1.0%, in each case, plus a margin or (ii) one month, two month, three month or six month LIBOR, in each case, plus a margin. Each margin is based on our current credit ratings and the pricing schedule in the facility. As of the date hereof, and based on our current credit ratings, the LIBOR margin under the facility is 1.025%. A facility fee is payable quarterly on the full amount of the commitments under the facility based on our current credit ratings, which is currently 0.175%. In addition, upon entering into the new credit facility, we paid upfront fees to the revolving credit banks of $0.3 million in the aggregate.

The new credit facility requires our total indebtedness to be less than 65.0% of our total capitalization at the end of each fiscal quarter and a failure to maintain this ratio will result in an event of default under the credit facility and will prohibit us from borrowing funds thereunder. As of September 30, 2014, we were in compliance with the prior credit agreement’s financial covenants, specifically: (a) the ratio of total indebtedness to total capitalization of less than 62.5% and (b) the minimum ratio of EBITDA (defined as net income plus interest, taxes, depreciation and amortization) to interest charges of 2.0 to 1.0 while prospectively also being in compliance with the new agreement’s ratio of total indebtedness to total capitalization of 65.0%. Our total indebtedness is 51% of our total capitalization as of September 30, 2014 and our EBITDA was 6.0 times our interest charges for the twelve months ended September 30, 2014. This new credit facility is subject to cross-default if we default on more than $25 million in the aggregate on our other indebtedness. The new credit agreement does not legally restrict the use of our cash in the normal course of operations. There were no outstanding borrowings under the prior credit agreement at September 30, 2014, however, $63.0 million was used to back up our outstanding commercial paper.