| Item 1.01. | Entry Into a Material Definitive Agreement. |
Credit Agreement
On June 30, 2022, National Fuel Gas Company (the “Company”) entered into a 364-Day Credit Agreement (the “Credit Agreement”), with Wells Fargo Bank, National Association, as administrative agent, and the following lenders: Wells Fargo Bank, National Association; Bank of America, N.A.; PNC Bank, National Association; U.S. Bank National Association; and The Toronto-Dominion Bank, New York Branch.
The Credit Agreement provides a $250 million unsecured committed delayed draw term loan credit facility with a maturity date of June 29, 2023. The Company may use the proceeds of loans under the Credit Agreement (a) to repay its (i) obligations under its commercial paper program, (ii) other short term credit facilities and (iii) maturing long-term debt obligations, (b) for general corporate purposes of the Company and its subsidiaries in the ordinary course of business, including for working capital, capital expenditure and other lawful corporate purposes and (c) to fund certain permitted acquisitions and other investments.
Rates for borrowing under the Credit Agreement are based, at the Company’s election, upon whether the borrowing is a Term SOFR loan or a Base Rate loan. Term SOFR loans will bear interest at an adjusted term secured overnight financing rate (“SOFR”) (calculated based on one-month, three-month or six-month term SOFR as of a specified date, plus an adjustment of 0.10%) plus an applicable margin of 1.125%. Base Rate loans will bear interest at a rate per annum equal to the sum of (1) the greatest of (a) the prime rate, (b) the New York Federal Reserve Bank rate plus 1/2 of 1%, and (c) an adjusted SOFR rate for a one-month interest period plus 1%, and (2) an applicable margin of 0.125%. In addition, under the terms of the Credit Agreement, the Company agrees to pay the lenders a 0.10% ticking fee in respect of unfunded term loan commitments.
The Credit Agreement contains representations and affirmative, negative and financial covenants usual and customary for agreements of this type, including among others covenants that place conditions upon the Company’s ability to merge or consolidate with other companies, sell any material part of its business or property, and incur liens. The Credit Agreement includes a covenant that the Company will not permit its debt to capitalization ratio to exceed 0.65 at the last day of any fiscal quarter. For purposes of calculating the debt to capitalization ratio, the Company’s capitalization means the sum of (a) its net worth, (b) its indebtedness, and (c) 50% of the aggregate after-tax amount of non-cash charges directly arising from any ceiling test impairment occurring on or after July 1, 2018, provided that the amount determined pursuant to clause (c) may not exceed $400.0 million.
The Credit Agreement contains a cross-default provision whereby the failure by the Company or any of its significant subsidiaries to make payments under other borrowing arrangements aggregating $40.0 million or more, or the occurrence of certain events affecting those other borrowing arrangements, could trigger an obligation to repay any amounts outstanding under the committed credit facilities. The Credit Agreement also contains additional customary events of default including, without limitation, payment defaults, material inaccuracy of representations and warranties, covenant defaults, certain bankruptcy and insolvency events, certain judgment defaults, certain defaults relating to nullification or revocation of the Credit Agreement, change in control and certain ERISA events.
In the event of a default by the Company under the Credit Agreement, including a cross-default by the Company or any of its significant subsidiaries, the lenders may terminate the commitments made under the Credit Agreement and declare any principal amount then outstanding, and all accrued interest and other amounts payable by the Company under the Credit Agreement, to be immediately due and payable.
In addition to the Credit Agreement, the Company maintains individual uncommitted or discretionary lines of credit with a number of financial institutions, including certain parties to the Credit Agreement, for general corporate purposes. Other financial institutions may also provide the Company with uncommitted or discretionary lines of credit in the future. In addition, in the ordinary course of their respective businesses, certain lenders under the Credit Agreement, or their affiliates, perform, or may in the future perform, financial services for the Company or its affiliates, including investment banking, underwriting, lending, commercial banking, trust and other administrative and advisory services.
