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Debt

12 Months Ended

Dec. 31, 2019

DEBT

Long-Term Debt

The following table presents our long-term debt:



		December 31,
Series	Due	2019			2018
		(In Thousands)
IPL first mortgage bonds:
3.875% ⁽¹⁾	August 2021	$	55,000		$	55,000
3.875% ⁽¹⁾	August 2021	40,000			40,000
3.125% ⁽¹⁾	December 2024	40,000			40,000
6.60%	January 2034	100,000			100,000
6.05%	October 2036	158,800			158,800
6.60%	June 2037	165,000			165,000
4.875%	November 2041	140,000			140,000
4.65%	June 2043	170,000			170,000
4.50%	June 2044	130,000			130,000
4.70%	September 2045	260,000			260,000
4.05%	May 2046	350,000			350,000
4.875%	November 2048	105,000			105,000
Unamortized discount – net		(6,156		)	(6,272		)
Deferred financing costs		(16,629		)	(17,115		)
Total IPL first mortgage bonds		1,691,015			1,690,413
IPL unsecured debt:
Variable ⁽²⁾	December 2020	30,000			30,000
Variable ⁽²⁾	December 2020	60,000			60,000
Deferred financing costs		(114		)	(229		)
Total IPL unsecured debt		89,886			89,771
Total long-term debt – IPL		1,780,901			1,780,184
Long-term debt – IPALCO:
Term Loan	July 2020	65,000			65,000
3.45% Senior Secured Notes	July 2020	405,000			405,000
3.70% Senior Secured Notes	September 2024	405,000			405,000
Unamortized discount – net		(313		)	(424		)
Deferred financing costs		(3,959		)	(5,696		)
Total long-term debt – IPALCO		870,728			868,880
Total consolidated IPALCO long-term debt		2,651,629			2,649,064
Less: current portion of long-term debt		559,199			—
Net consolidated IPALCO long-term debt		$	2,092,430		$	2,649,064


(1)	First mortgage bonds issued to the Indiana Finance Authority, to secure the loan of proceeds from tax-exempt bonds issued by the Indiana Finance Authority.


(2)	Unsecured notes issued to the Indiana Finance Authority by IPL to facilitate the loan of proceeds from various tax-exempt notes issued by the Indiana Finance Authority. The notes have a final maturity date of December 2038, but are subject to a mandatory put in December 2020.

Debt Maturities

Maturities on long-term indebtedness subsequent to December 31, 2019, are as follows:



Year	Amount
	(In Thousands)
2020	$	560,000
2021	95,000
2022	—
2023	—
2024	445,000
Thereafter	1,578,800
Total	$	2,678,800

Significant Transactions

IPL First Mortgage Bonds and Recent Indiana Finance Authority Bond Issuances

The mortgage and deed of trust of IPL, together with the supplemental indentures thereto, secure the first mortgage bonds issued by IPL. Pursuant to the terms of the mortgage, substantially all property owned by IPL is subject to a first mortgage lien securing indebtedness of $1,713.8 million as of December 31, 2019. The IPL first mortgage bonds require net earnings as calculated thereunder be at least two and one-half times the annual interest requirements before additional bonds can be authenticated on the basis of property additions. IPL was in compliance with such requirements as of December 31, 2019.

In November 2018, IPL issued $105 million aggregate principal amount of first mortgage bonds, 4.875% Series, due November 2048, pursuant to Rule 144A and Regulation S under the Securities Act. Net proceeds from this offering were approximately $103.5 million, after deducting the initial purchasers’ discounts and fees and expenses for the offering. The net proceeds from this offering were used to repay amounts due under IPL's Credit Agreement and for general corporate purposes.

In August 2017, IPL repaid $24.7 million in outstanding borrowings of 5.40% IPL first mortgage bonds that were due in August 2017.

IPL Unsecured Notes

In December 2015, the Indiana Finance Authority issued on behalf of IPL an aggregate principal amount of $90 million of Environmental Facilities Refunding Revenue Notes due December 2038 (Indianapolis Power & Light Company Project). These unsecured notes were issued in two series: $30 million Series 2015A notes and $60 million 2015B notes. These notes were initially purchased by a syndication of banks who will hold the notes until the mandatory put date of December 22, 2020.

IPL has classified its outstanding $90 million aggregate principal amount of these unsecured notes as short-term indebtedness as they are due December 2020. Management plans to refinance these unsecured notes with new debt. In the event that we are unable to refinance these unsecured notes on acceptable terms, IPL has available borrowing capacity on its revolving credit facility that could be used to satisfy the obligation.

IPALCO’s Senior Secured Notes and Term Loan

IPALCO has $405 million of 3.45% Senior Secured Notes due July 15, 2020 ("2020 IPALCO Notes") and a $65 million Term Loan due July 1, 2020. Although current liquid funds are not sufficient to pay the collective amounts due under the 2020 IPALCO Notes and Term Loan at their maturities, we believe that we will be able to refinance the 2020 IPALCO Notes and Term Loan based on our conversations with investment bankers, which currently indicate more than adequate demand for new IPALCO debt at our current credit ratings, and our previous successful issuance of our $405 million IPALCO senior secured notes in 2017, which served to refinance notes existing at the time. Should the capital markets not be accessible to us at the time of the maturity of the 2020

IPALCO Notes and Term Loan, management believes that other financing options are at its disposal to meet the needs of the maturities.

IPALCO Term Loan

On October 31, 2018, IPALCO closed on a new Term Loan consisting of a $65 million credit facility maturing July 1, 2020. The Term Loan is variable rate and is secured by IPALCO’s pledge of all the outstanding common stock of IPL. The lien on the pledged shares is shared equally and ratably with IPALCO’ existing senior secured notes. The Term Loan proceeds were used to repay amounts under IPL's Credit Agreement and for general corporate purposes.

IPALCO’s Senior Secured Notes

In August 2017, IPALCO completed the sale of the $405 million 2024 IPALCO Notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The 2024 IPALCO Notes were issued pursuant to an Indenture dated August 22, 2017, by and between IPALCO and U.S. Bank, National Association, as trustee. The 2024 IPALCO Notes were priced to the public at 99.901% of the principal amount. Net proceeds to IPALCO were approximately $399.3 million after deducting underwriting costs and estimated offering expenses. These costs are being amortized to the maturity date using the effective interest method. We used the net proceeds from this offering, together with cash on hand, to redeem the $400 million 2018 IPALCO Notes on September 21, 2017, and to pay certain related fees, expenses and make-whole premiums. A loss on early extinguishment of debt of $8.9 million for the 2018 IPALCO Notes is included as a separate line item within “Other Income/(Expense), Net” in the accompanying Consolidated Statements of Operations.

The 2020 IPALCO Notes and 2024 IPALCO Notes are secured by IPALCO’s pledge of all of the outstanding common stock of IPL. The lien on the pledged shares is shared equally and ratably with IPALCO’s Term Loan. IPALCO filed its registration statement on Form S-4 with respect to the 2024 IPALCO Notes with the SEC on November 13, 2017, and this registration statement was declared effective on December 5, 2017. The exchange offer was completed on January 12, 2018.

Line of Credit

IPL entered into an amendment and restatement of its 5-year $250 million revolving credit facility on June 19, 2019 with a syndication of bank lenders. This Credit Agreement is an unsecured committed line of credit to be used: (i) to finance capital expenditures; (ii) to refinance certain existing indebtedness, (iii) to support working capital; and (iv) for general corporate purposes. This agreement matures on June 19, 2024, and bears interest at variable rates as described in the Credit Agreement. It includes an uncommitted $150 million accordion feature to provide IPL with an option to request an increase in the size of the facility at any time prior to June 19, 2023, subject to approval by the lenders. The Credit Agreement also includes two one-year extension options, allowing IPL to extend the maturity date subject to approval by the lenders. Prior to execution, IPL and IPALCO had existing general banking relationships with the parties to the Credit Agreement. IPL had no outstanding borrowings on the committed line of credit as of December 31, 2019 and 2018, respectively.

Restrictions on Issuance of Debt

All of IPL’s long-term borrowings must first be approved by the IURC and the aggregate amount of IPL’s short-term indebtedness must be approved by the FERC. IPL has approval from FERC to borrow up to $500 million of short-term indebtedness outstanding at any time through July 26, 2020. In December 2018, IPL received an order from the IURC granting IPL authority through December 31, 2021 to, among other things, issue up to $350 million in aggregate principal amount of long-term debt and refinance up to $185.0 million in existing indebtedness, all of which authority remains available under the order as of December 31, 2019. This order also grants IPL authority to have up to $500 million of long-term credit agreements and liquidity facilities outstanding at any one time, of which $250.0 million remains available under the order as of December 31, 2019. As an alternative to the sale of all or a portion of $65 million in principal of the long-term debt mentioned above, we have the authority to issue up to $65 million of new preferred stock, all of which authority remains available under the order as of December 31, 2019. IPL also has restrictions on the amount of new debt that may be issued due to contractual obligations of AES and by financial covenant restrictions under our existing debt obligations. Under such restrictions, IPL is generally allowed to fully draw the amounts available on its Credit Agreement, refinance existing debt and issue new debt approved by the IURC and issue certain other indebtedness.

Credit Ratings

Our ability to borrow money or to refinance existing indebtedness and the interest rates at which we can borrow money or refinance existing indebtedness are affected by our credit ratings. In addition, the applicable interest rates on IPL’s Credit Agreement and other unsecured notes are dependent upon the credit ratings of IPL. Downgrades in the credit ratings of AES could result in IPL’s and/or IPALCO’s credit ratings being downgraded.

Indianapolis Power And Light Company

Entity Information [Line Items]

Debt

. DEBT

Long-Term Debt

The following table presents IPL’s long-term debt:



		December 31,
Series	Due	2019			2018
		(In Thousands)
IPL first mortgage bonds:
3.875% ⁽¹⁾	August 2021	55,000			55,000
3.875% ⁽¹⁾	August 2021	40,000			40,000
3.125% ⁽¹⁾	December 2024	40,000			40,000
6.60%	January 2034	100,000			100,000
6.05%	October 2036	158,800			158,800
6.60%	June 2037	165,000			165,000
4.875%	November 2041	140,000			140,000
4.65%	June 2043	170,000			170,000
4.50%	June 2044	130,000			130,000
4.70%	September 2045	260,000			260,000
4.05%	May 2046	350,000			350,000
4.875%	November 2048	105,000			105,000
Unamortized discount – net		(6,156		)	(6,272		)
Deferred financing costs		(16,629		)	(17,115		)
Total IPL first mortgage bonds		1,691,015			1,690,413
IPL unsecured debt:
Variable ⁽²⁾	December 2020	30,000			30,000
Variable ⁽²⁾	December 2020	60,000			60,000
Deferred financing costs		(114		)	(229		)
Total IPL unsecured debt		89,886			89,771
Total consolidated IPL long-term debt		1,780,901			1,780,184
Less: current portion of long-term debt		89,886			—
Net consolidated IPL long-term debt		$	1,691,015		$	1,780,184


(1)	First mortgage bonds issued to the Indiana Finance Authority, to secure the loan of proceeds from tax-exempt bonds issued by the Indiana Finance Authority.


(2)	Unsecured notes issued to the Indiana Finance Authority by IPL to facilitate the loan of proceeds from various tax-exempt notes issued by the Indiana Finance Authority. The notes have a final maturity date of December 2038, but are subject to a mandatory put in December 2020.

Debt Maturities

Maturities on long-term indebtedness subsequent to December 31, 2019, are as follows:



Year	Amount
	(In Thousands)
2020	$	90,000
2021	95,000
2022	—
2023	—
2024	40,000
Thereafter	1,578,800
Total	$	1,803,800

Significant Transactions

IPL First Mortgage Bonds and Recent Indiana Finance Authority Bond Issuances

In August 2017, IPL repaid $24.7 million in outstanding borrowings of 5.40% IPL first mortgage bonds that were due in August 2017.

IPL Unsecured Notes

Line of Credit

dates subject to approval by the lenders. Prior to execution, IPL had existing general banking relationships with the parties to the Credit Agreement. IPL had no outstanding borrowings on the committed line of credit as of December 31, 2019 and 2018, respectively.

Restrictions on Issuance of Debt

Credit Ratings

IPL’s ability to borrow money or to refinance existing indebtedness and the interest rates at which IPL can borrow money or refinance existing indebtedness are affected by IPL’s credit ratings. In addition, the applicable interest rates on IPL’s Credit Agreement and other unsecured notes are dependent upon the credit ratings of IPL. Downgrades in the credit ratings of AES and/or IPALCO could result in IPL’s credit ratings being downgraded.