Item 2.03 Creation of a Direct Financial Obligation under an Off-Balance Sheet Arrangement of a Registrant
PPL Corporation
On July 29, 2022, PPL Corporation's subsidiaries, Louisville Gas and Electric Company ("LG&E") and Kentucky Utilities Company ("KU"), each entered into separate term loan agreements.
Louisville Gas and Electric Company
On July 29, 2022, LG&E, entered into a $300 million term loan credit agreement, with U.S. Bank National Association, as Administrative Agent, and the other Lenders party thereto (the "LG&E Credit Agreement"). The LG&E Credit Agreement is filed as Exhibit 10.1 to this Report.
On July 29, 2022, LG&E borrowed the full principal amount of $300 million under the LG&E Credit Agreement. All principal and unpaid interest under the term loan is due and payable on July 29, 2024.
The term loan will, at the option of LG&E and except as otherwise provided in the LG&E Credit Agreement, be incurred and maintained as a loan that bears interest at a fluctuating per annum rate of interest based on the applicable secured overnight financing rate ("SOFR"), the lender's prime rate or the federal funds rate as provided in the credit agreement. LG&E may prepay the principal and interest on the term loan and amounts prepaid may not be reborrowed.
The LG&E Credit Agreement contains customary representations, covenants and events of default. Under the LG&E Credit Agreement, LG&E is required to maintain a Consolidated Debt to total Consolidated Capitalization ratio (as defined in the LG&E Credit Agreement) not to exceed 70 percent. Failure to comply with this covenant is an event of default.
Kentucky Utilities Company
On July 29, 2022, KU, entered into a $300 million term loan credit agreement, with U.S. Bank National Association, as Administrative Agent, and the other Lenders party thereto (the "KU Credit Agreement"). The KU Credit Agreement is filed as Exhibit 10.2 to this Report.
On July 29, 2022, KU borrowed the full principal amount of $300 million under the KU Credit Agreement. All principal and unpaid interest under the term loan is due and payable on July 29, 2024.
The term loan will, at the option of KU and except as otherwise provided in the KU Credit Agreement, be incurred and maintained as a loan that bears interest at a fluctuating per annum rate of interest based on the applicable SOFR rate, the lender's prime rate or the federal funds rate as provided in the credit agreement. KU may prepay the principal and interest on the term loan and amounts prepaid may not be reborrowed.
The KU Credit Agreement contains customary representations, covenants and events of default. Under the KU Credit Agreement, KU is required to maintain a Consolidated Debt to total Consolidated Capitalization ratio (as defined in the KU Credit Agreement) not to exceed 70 percent. Failure to comply with this covenant is an event of default.