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Debt
 3 Months Ended
Mar. 31, 2022
Debt Disclosure [Abstract]  
Debt
Note 5 – Debt
Long-Term Debt
Long-term debt is recognized in the Company’s and Southwest’s Condensed Consolidated Balance Sheets generally at the carrying value of the obligations outstanding. Details surrounding the fair value and individual carrying values of instruments are provided in the table that follows.
 March 31, 2022December 31, 2021
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
(Thousands of dollars)
Southwest Gas Corporation:
Debentures:
Notes, 6.1%, due 2041
$125,000 $146,293 $125,000 $166,380 
Notes, 4.05%, due 2032
600,000 598,242 — — 
Notes, 3.875%, due 2022
250,000 249,993 250,000 250,603 
Notes, 4.875%, due 2043
250,000 272,933 250,000 307,538 
Notes, 3.8%, due 2046
300,000 276,144 300,000 329,055 
Notes, 3.7%, due 2028
300,000 303,660 300,000 325,191 
Notes, 4.15%, due 2049
300,000 296,361 300,000 342,030 
Notes, 2.2%, due 2030
450,000 398,066 450,000 440,838 
Notes, 3.18%, due 2051
300,000 246,813 300,000 292,116 
8% Series, due 2026
75,000 86,880 75,000 92,623 
Medium-term notes, 7.78% series, due 2022
— — 25,000 25,122 
Medium-term notes, 7.92% series, due 2027
25,000 28,987 25,000 31,555 
Medium-term notes, 6.76% series, due 2027
7,500 8,230 7,500 8,949 
Unamortized discount and debt issuance costs(27,091)(19,959)
2,955,409 2,387,541 
Revolving credit facility and commercial paper— — 130,000 130,000 
Industrial development revenue bonds:
Tax-exempt Series A, due 202850,000 50,000 50,000 50,000 
2003 Series A, due 203850,000 50,000 50,000 50,000 
2008 Series A, due 203850,000 50,000 50,000 50,000 
2009 Series A, due 203950,000 50,000 50,000 50,000 
Unamortized discount and debt issuance costs(1,853)(1,938)
198,147 198,062 
Less: current maturities(250,000)(275,000)
Southwest Gas Corporation total long-term debt, less current maturities$2,903,556 $2,440,603 
Southwest Gas Holdings, Inc.:
Centuri secured term loan facility$1,014,275 $1,000,329 $1,117,138 $1,117,841 
Centuri secured revolving credit facility108,035 108,060 103,329 103,749 
MountainWest unsecured senior notes, 3.53%, due in 2028
102,001 95,819 102,078 102,078 
MountainWest unsecured senior notes, 4.875%, due in 2041
199,765 176,488 199,926 199,926 
MountainWest unsecured senior notes, 3.91%, due in 2038
147,760 131,379 147,735 147,735 
Other debt obligations148,981 142,712 51,665 50,003 
Unamortized discount and debt issuance costs(23,546)(24,466)
Less: current maturities(41,069)(22,324)
Southwest Gas Holdings, Inc. total long-term debt, less current maturities$4,559,758 $4,115,684 
Southwest has a $400 million credit facility that is scheduled to expire in April 2025. Southwest designates $150 million of associated capacity as long-term debt and the remaining $250 million for working capital purposes. Interest rates for the credit facility are calculated at either the Secured Overnight Financing Rate (“SOFR”) or an “alternate base rate,” plus in each case an applicable margin that is determined based on Southwest’s senior unsecured debt rating. At March 31, 2022, the applicable margin is 1.125% for loans bearing interest with reference to SOFR and 0.125% for loans bearing interest with reference to the alternative base rate. At March 31, 2022, no borrowings were outstanding on the long-term portion (including under the commercial paper program, discussed below) of the facility or on the short-term portion of this credit facility discussed below.
Southwest has a $50 million commercial paper program. Issuances under the commercial paper program are supported by Southwest’s revolving credit facility and, therefore, do not represent additional borrowing capacity under the credit facility. Borrowings under the commercial paper program are designated as long-term debt. Interest rates for the program are calculated at the then current commercial paper rate. At March 31, 2022, as noted above, no borrowings were outstanding under the commercial paper program.
In March 2022, Southwest issued $600 million aggregate principal amount of 4.05% Senior Notes at a discount of 0.65%. The notes will mature in March 2032. Southwest used the net proceeds to redeem the $250 million 3.875% notes due in April 2022 and to repay outstanding amounts under its credit facility, with the remaining net proceeds used for general corporate purposes.
Centuri has a $1.545 billion secured revolving credit and term loan multi-currency facility. Amounts can be borrowed in either Canadian or U.S. dollars. The revolving credit facility matures on August 27, 2026 and the term loan facility matures on August 27, 2028. Interest rates for the revolving credit facility and term loan facility are based on either a “base rate” or LIBOR, plus an applicable margin in either case. The capacity of the line of credit portion of the facility is $400 million; related amounts borrowed and repaid are available to be re-borrowed. The term loan portion of the facility has a limit of $1.145 billion. The obligations under the credit agreement are secured by present and future ownership interests in substantially all direct and indirect subsidiaries of Centuri, substantially all of the tangible and intangible personal property of each borrower, certain of their direct and indirect subsidiaries, and all products, profits, and proceeds of the foregoing. Centuri’s assets securing the facility at March 31, 2022 totaled $2.4 billion. At March 31, 2022, $1.122 billion in borrowings were outstanding under Centuri’s combined secured revolving credit and term loan facility. During March 2022, Centuri utilized proceeds of approximately $100 million in fixed-rate term loans secured by owned vehicles and equipment to repay a corresponding amount outstanding under the term loan facility.
MountainWest has two private placement unsecured senior notes and a public unsecured senior note, with a combined carrying value of $449.5 million and aggregate principal amount of $430 million. The carrying value is higher than the principal balance as amounts outstanding were recorded at their fair values as of the December 31, 2021 acquisition date of the MountainWest entities.
Short-Term Debt
Southwest Gas Holdings, Inc. has a $200 million credit facility that is scheduled to expire in December 2026 and is primarily used for short-term financing needs. Interest rates for the credit facility are calculated at either SOFR or the “alternate base rate” plus in each case an applicable margin. There was $69 million outstanding under this credit facility as of March 31, 2022.
As indicated above, under Southwest’s $400 million credit facility, no short-term borrowings were outstanding at March 31, 2022.
In March 2022, Southwest amended its $250 million Term Loan, extending the maturity date to March 21, 2023 and replacing LIBOR interest rate benchmarks with SOFR interest rate benchmarks. The proceeds were originally used to fund the increased cost of natural gas supply during the month of February 2021, caused by extreme weather conditions in the central U.S. Management extended the maturity date to fund recent increases in gas purchase costs, as reflected in the PGA. Interest rates for the amended term loan are calculated at either SOFR or an “alternate base rate,” plus in each case an applicable margin that is determined based on Southwest’s senior unsecured long-term debt rating. The applicable margin ranges from 0.550% to 1.000% for loans bearing interest with reference to SOFR and 0.000% for loans bearing interest with reference to an alternate base rate. The amended agreement contains a financial covenant requiring Southwest to maintain a ratio of funded debt to total capitalization not to exceed 0.70 to 1.00 as of the end of any quarter of any fiscal year.
In November 2021, Southwest Gas Holdings, Inc. entered into a 364-day term loan credit agreement (the “Credit Agreement”). The Credit Agreement provided for a $1.6 billion delayed-draw term loan (the “Term Loan Facility”) to fund and to pay fees, commissions, and expenses related to the Term Loan Facility and the acquisition of the equity interests in MountainWest (refer to Note 8 - Business Acquisitions). The Term Loan Facility was funded on December 31, 2021, and matures on December 30, 2022. Interest rates for the Term Loan Facility are based on either the “base rate” or LIBOR, plus an applicable margin. There was $1.16 billion outstanding under the Term Loan Facility as of March 31, 2022.
The borrowings under the term loan facility to temporarily finance the acquisition of MountainWest created a negative working capital condition for the Company, which as of March 31, 2022 is approximately $584 million. As of May 10, 2022, the Company does not have sufficient liquidity or capital resources to repay the term loan facility without issuing new debt or equity. Management intends to issue long-term debt to permanently refinance the remaining portion of the term loan facility.
Management believes that its refinancing plan is probable based on the Company’s ability to generate consistent cash flows, its current credit ratings, its relationships with its lenders and its prior history of successfully raising debt and equity necessary to fund its acquisitions and operations. As such, management has concluded that the Company can satisfy its obligations for at least the next twelve months from the issuance date of these financial statements.
The Company’s ability to access capital markets or to otherwise obtain sufficient financing may be affected by future conditions. If the Company is unable to execute its plan to refinance debt obligations, the Company’s credit facility could be terminated, and amounts due under its revolver and other borrowing arrangements could be declared immediately due and payable.
LIBOR
Certain rates established at LIBOR are scheduled to be discontinued as a benchmark or reference rate after 2021, while other LIBOR-based rates are scheduled to be discontinued after June 2023. As of March 31, 2022, the Company had $2.17 billion in aggregate outstanding borrowings under Centuri’s combined facility and Southwest Gas Holdings, Inc.’s Term Loan Facility. Southwest had no outstanding borrowings or variable rate debt agreements with reference to LIBOR as of March 31, 2022. In order to mitigate the impact on the financial condition and results of operations of the Company, management will monitor developments and work with lenders to determine the appropriate replacement/alternative reference rate for variable rate debt. At this time the Company can provide no assurances as to the impact a LIBOR discontinuance will have on their financial condition or results of operations. Any alternative rate may be less predictable or less attractive than LIBOR.