Chugach secures financing program
Chugach Electric Association has arranged for a $300 million, 3-year, unsecured revolving credit facility to finance capital expansion projects, refinance bonds, and refinance maturing long-term debt.
Chugach recently entered into a credit agreement establishing an unsecured credit facility with a consortium of four banks. The credit agreement will serve as a "back stop" source of liquidity for the repayment of commercial paper at maturity in the event of a deterioration of the commercial paper trading market. The National Rural Utility Cooperative Finance Corporation – a national bank for cooperatives like Chugach – participated as lead banker in the transaction. Other banks participating in the credit facility are Key Bank N.A., CoBank ACB and US Bank N.A.
One of the major projects in development for Chugach is the construction of a new, efficient, combined-cycle, gas-fired power plant at its Anchorage headquarters complex. The 183-megawatt plant will be jointly owned with Anchorage Municipal Light & Power and is expected to be in service by 2013.
Merrill Lynch and Goldman Sachs will sell Chugach's commercial paper. US Bank N.A. will act as a depository and issuing and paying agent for Chugach. Necessary ancillary agreements will be made with The Depository Trust Company and the agencies that will rate Chugach's commercial paper and authorize the issuance and sale of Chugach's commercial notes.
Chugach's long-term credit is currently rated A– by Standard & Poor's and Fitch Ratings. Standard & Poor's reaffirmed its A-/Stable rating of Chugach's bonds Nov. 18, at the same time it issued an A-1 rating of Chugach's new commercial paper program.
After months of analysis and evaluation, Chugach moved forward on the financing action in June. It selected NRUCFC to arrange and administer the transaction. Chugach closed on the credit facility in October, and in November the cooperative utility's board of directors authorized establishing a legal mechanism for the issuance of commercial paper. The timing was good, coming before the recent deterioration in the credit markets that would make it difficult – if not impossible – to secure similar financing commitments today.
Chugach is the largest electric utility in Alaska, providing power for Alaskans throughout the Railbelt through retail, wholesale and economy energy sales.