EXHIBIT B.3
[INDICATIVE TERMS FOR DISCUSSION ONLY. THE SUMMARY THAT FOLLOWS
IS SUBJECT TO CREDIT APPROVAL AND DOES NOT CONSTITUTE
AN OFFER OR COMMITMENT]
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
WESTERN MASSACHUSETTS ELECTRIC COMPANY
Summary of Terms
First Amendment and Waiver
$313,750,000 Three-Year Revolving Credit Facility
Facility: $313,750,000 Credit Agreement, dated as of November 21,
1996 (the "Original Credit Agreement"), among Northeast
Utilities, The Connecticut Light and Power Company and
Western Massachusetts Electric Company (the "Borrowers";
individually, a "Borrower"), the banks and co-agents
named therein and Citibank, N.A., as administrative
agent, as amended by the First Amendment and Waiver
described in this Summary of Terms. Capitalized terms
used in this Summary of Terms and not otherwise defined
shall have the meanings ascribed thereto in the Original
Credit Agreement.
Waivers: Under the First Amendment and Waiver, the Lenders will
waive, on a permanent basis, compliance by NU with the
interest coverage ratio set forth in Section 7.03(b) of
the Original Credit Agreement for the fiscal quarter
ended December 31, 1996. Through amendments to Sections
7.03(a) (Common Equity Ratio) and 7.03(b) (Interest
Coverage Ratio), the Lenders will effectively waive
anticipated future non-compliances with those ratios.
Amendment Fee: In consideration of the Majority Lenders entering into
the First Amendment and Waiver, an Amendment Fee to each
Lender executing the First Amendment and Waiver equal to
25 basis points of each such ▇▇▇▇▇▇'s commitment,
payable to the Agent on behalf of such Lenders on the
Closing Date.
Borrower
Sublimits: Upon execution and delivery of the First Amendment and
Waiver, the Borrower Sublimit for NU will be reduced
from $150,000,000 to zero, and all outstanding Advances
to NU will be repaid. If, for any two consecutive fiscal
quarters, each Borrower shall maintain an interest
coverage ratio of at least 2.50:1.0, the NU Sublimit
shall be reinstated to $50,000,000.
The Borrower Sublimit for WMECO and CL&P will be
$150,000,000 and $313,750,000 respectively, provided,
however, such Borrower Sublimits shall be reduced from
time to time as necessary such that at all times the
Borrower Sublimit of CL&P or WMECO, as the case may be,
does not exceed the aggregate principal amount of the
Collateral FMBs (as defined below) of CL&P or WMECO,
respectively, securing the Facility.
Closing Date: May 30, 1997, or such other date as may be agreed upon
by the Borrowers and the Agents.
Security: NU's obligations under the Facility will be unsecured.
The obligations of CL&P and WMECO under the Facility
will be secured by special series of first mortgage
bonds of those Borrowers on the terms and in the manner
set forth on Annex A to this Summary of Terms (the
"Collateral FMBs").
Financial
Covenants: Each of the following Financial Covenants shall be
amended and restated as follows:
Common Equity
Ratio: Each of the Borrowers will be required to maintain at
all times a ratio of Common Equity to Total
Capitalization as follows:
1997 1998 and Thereafter
NU (Consol.) 0.31:1.00 0.32:1.00
CL&P 0.31:1.00 0.32:1.00
WMECO 0.31:1.00 0.32:1.00
Interest Coverage Ratio: Each of the Borrowers will be required to maintain
for each fiscal quarter in each fiscal year a ratio of Operating Income to
Interest Expense as follows:
4Q 1Q and 2Q 3Q 1998 and 4Q and
1997 1998 thereafter thereafter
NU --- 1.75:1.00 2.00:1.00 2:50:1:00
(Consol.)
CL&P 1.25:1.00 1.50:1.00 2.00:1.00 2:50:1.00
WMECO 1.25:1.00 1.50:1.00 2.00:1.00 2.50:1.00
Dividend Paying Availability: Section 7.03(c) of the
Original Credit Agreement will not be amended.
Other Covenants: NU Debt. Section 7.02(d) of the Original Credit
Agreement will be amended by increasing the amount of
Debt permitted under clause (iii) thereof from
$50,000,000 to $100,000,000. Furthermore, Schedule III
(NU Debt) to the Original Credit Agreement will be
amended to include NU's guarantee of the obligations of
The Rocky River Realty Company under (i) the 8.81% Cigna
Investments, Inc. Series A Note due 2007 and (ii)
the 8.82% Cigna Investments, Inc. Series B Note due
2017. The aggregate amount outstanding under the
aforementioned Notes as of December 31, 1996 was
$38,444,385. The aforementioned Debt was inadvertently
omitted from Schedule III at the time of the initial
closing of the Original Credit Agreement.
Limitations on First Mortgage Bonds, etc. Section
7.02(e) and such other sections of the Original Credit
Agreement as determined by the Agents shall each be
amended to permit CL&P and WMECO to issue the Collateral
FMBs.
Representations and
Warranties: Section 6.01 of the Original Credit Agreement will be
amended by adding appropriate representations and
warranties of CL&P and WMECO concerning the validity,
enforceability and lien priority of the Collateral FMBs
(and such representations and warranties shall be
accurate as of the Closing Date).
Events of Default: Section 8.01 of the Original Credit Agreement will be
amended by inserting the following additional Events of
Default:
(a) any Collateral FMB shall for any reason (iii)
cease to be entitled to the benefits and security
of the first mortgage indenture to which WMECO or
CL&P, as the case may be, is a party, equally
and ratably with all other mortgage bonds
outstanding under such first mortgage indenture,
(iv) become subject to any Lien, except
for any Lien in favor of the Collateral Agent for
the benefit of the Lenders, or (v) cease to be a
legal, valid and binding obligation of WMECO or
CL&P, as the case may be; or
(b) at any time the first mortgage indenture to which
WMECO or CL&P, as the case may be, is a party,
shall for any reason fail to constitute a valid
and direct first priority Lien, upon
substantially all the properties referred to in
the granting clauses of such first mortgage
indenture; or the Collateral Agent shall for any
reason fail to have a valid and perfected first
priority security interest in the related
Collateral FMB.
Conditions Precedent
to Effectiveness: (a) Finalized and fully-executed definitive First
Amendment and Waiver, duly issued Collateral FMBs
and other related documents (the "Amendment
Documents") satisfactory to the Agents and the
Majority Lenders.
(b) Certified copies of the resolutions of the Board
of Directors of each Borrower authorizing the
execution, delivery and performance of the
Amendment Documents to be delivered by it.
(c) A certificate of incumbency signed by the
Secretary or an Assistant Secretary of each
Borrower certifying the names and true signatures
of the officers of such Borrower authorized to
sign the Amendment Documents to be delivered by
it.
(d) Certified copies of the orders of the Securities
and Exchange Commission ("SEC"), the Connecticut
DPUC and the Massachusetts DPU approving the
transactions contemplated by the Amendment
Documents, and any other governmental and
regulatory approval, order, etc., necessary for
the consummation of the transactions contemplated
by the Amendment Documents.
(e) Opinions of counsel for the Borrowers acceptable
to the Agents, as to such matters as the Majority
Lenders may reasonably request.
(f) Copies of audited consolidated financial
statements of each Borrower, as at and for the
fiscal year ended December 31, 1996, which shall
be satisfactory to the Majority Lenders.
Governing Law: State of New York except that the Collateral FMBs will
be governed by the laws of Connecticut (in the case of
CL&P) and Massachusetts (in the case of WMECO).
Counsel to the
Administrative Agent: King & Spalding.
Expenses: The Borrowers shall reimburse the Administrative Agent
for all of its reasonable out-of-pocket expenses
(including fees and expenses of counsel to the
Administrative Agent) incurred in the negotiation and
execution of the Amendment Documents, whether the
transaction contemplated is actually completed or the
Amendment Documents are signed.
All other terms and conditions of the Amendment Documents shall be subject to
further discussion and mutual agreement.
ANNEX A
Security: The obligations of CL&P and WMECO under the Facility will be
secured as follows:
(a) Each of CL&P and WMECO will cause to be issued to
Citibank, N.A., as collateral agent (the "Collateral
Agent"), a single First Mortgage Bond of a special
series created for the purpose of securing such
Borrower's principal, interest and Facility Fee
obligations under the Facility (in each case a
"Collateral FMB") in a principal amount equal
to the Borrower Sublimit of CL&P or WMECO, as
applicable.
(b) Each Collateral FMB will rank pari passu with all other
first mortgage bonds of CL&P or WMECO, as the case may
be, and be entitled to the benefits of the relevant
first mortgage indenture.
(c) Each Collateral FMB will bear interest in such amounts
and be payable at such times as is sufficient to pay all
interest on the Advances made to CL&P or WMECO, as the
case may be, under the Facility and each such ▇▇▇▇▇▇▇▇'s
share of the Facility Fee payable under the Facility.
(d) Payments by CL&P or WMECO, as the case may be, of its
principal, interest or Facility Fee obligations under
the Facility shall be deemed to satisfy the
corresponding payment obligations under the related
Collateral FMB and vice versa.
(e) Upon any acceleration of the Advances made to CL&P or
WMECO, a like principal amount of the related Collateral
FMB shall become immediately due and payable.