The following table summarizes the carrying amount and terms of recourse debt of the Company as of December 31, 2009 and 2008:
December 31,
RECOURSE DEBT Interest Rate Maturity 2009 2008
(in millions)
Senior Unsecured Note 9.50% 2009 $ — $ 154 Senior Unsecured Note 9.375% 2010 214 214 Senior Secured Term Loan LIBOR + 1.75% 2011 200 200 Senior Unsecured Note 8.875% 2011 129 129 Senior Unsecured Note 8.375% 2011 139 124 Second Priority Senior Secured Note 8.75% 2013 690 690 Senior Unsecured Note 7.75% 2014 500 500 Senior Unsecured Note 7.75% 2015 500 500 Senior Unsecured Note 9.75% 2016 535 — Senior Unsecured Note 8.00% 2017 1,500 1,500 Senior Unsecured Note 8.00% 2020 625 625 Term Convertible Trust Securities 6.75% 2029 517 517
Unamortized discounts (34) (5)
SUBTOTAL $ 5,515 $ 5,148
Less: Current maturities (214) (154)
Total $ 5,301 $ 4,994
Recourse debt as of December 31, 2009 is scheduled to reach maturity as set forth in the table below:
December 31, Annual Maturities
(in millions) 2010 $ 214 2011 468 2012 — 2013 690 2014 497 Thereafter 3,646
Total recourse debt $ 5,515
On March 26, 2009, the Parent Company and certain subsidiary guarantors amended the Parent Company’s existing senior secured credit facility pursuant to the terms of Amendment No. 1 (“Amendment No. 1”) to the Fourth Amended and Restated Credit and Reimbursement Agreement, dated as of July 29, 2008 (the “senior secured credit facility”). The senior secured credit facility previously included a $200 million term loan facility maturing on August 10, 2011 and a $750 million revolving credit facility maturing on June 23, 2010 (the “revolving credit facility”).
The principal modification set forth in Amendment No. 1 was a one-year extension of $570 million of revolving credit facility commitments from an original maturity date of June 23, 2010 to July 5, 2011. In addition, certain lenders determined that they would increase their commitment under the revolving credit facility by $35 million from March 26, 2009 through July 5, 2011. Accordingly, Amendment No. 1 increased the size of
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the revolving credit facility from $750 million to $785 million through June 23, 2010. From June 23, 2010 through July 5, 2011, the revolving credit facility size will be $605 million. No modifications were made to the amount or maturity date of the $200 million term loan facility.
The extended commitments from this amendment were subject to new pricing that included an upfront fee of 1.25% for participating in the extensions and an increase in undrawn commitment fees from 50 to 100 basis points. The annual interest rate on the drawn loans was also increased by 200 basis points to LIBOR plus 3.50%. Pricing and all other material terms remain unchanged for the revolving credit facility commitments which have not been extended.
On April 2, 2009 the Parent Company issued $535 million aggregate principal amount of 9.75% senior unsecured notes due 2016 in a private placement. The notes were priced at a discount to yield 11%. Subsequently, the Parent Company allocated a substantial portion of the proceeds to voluntarily reduce the size of its $600 million senior unsecured credit facility. The majority of the letters of credit issued under the facility supported a project under construction in Bulgaria. On October 7, 2009, the Parent Company voluntarily reduced all of the remaining commitments available under the senior unsecured credit facility and terminated the facility agreement. As a result of the termination, the Company recognized a foreign currency transaction gain of $20 million related to the sale of Euros purchased as collateral at the inception of the facility. The outstanding letters of credit under the senior unsecured credit facility were transferred to the senior secured credit facility.
Recourse Debt Covenants and Guarantees
Certain of the Company’s obligations under the senior secured credit facility are guaranteed by its direct subsidiaries through which the Company owns its interests in the Shady Point, Hawaii, Warrior Run and Eastern Energy businesses. The Company’s obligations under the senior secured credit facility and Second Priority Senior Secured Notes are, subject to certain exceptions, secured by:
(i) all of the capital stock of domestic subsidiaries owned directly by the Company and 65% of the capital stock of certain foreign subsidiaries owned directly or indirectly by the Company; and
(ii) certain intercompany receivables, certain intercompany notes and certain intercompany tax sharing agreements.
The senior secured credit facility is subject to mandatory prepayment under certain circumstances. The net cash proceeds from the sale of a Guarantor or any of its subsidiaries must be applied pro rata to repay the Term Loan using 60% of net cash proceeds, reduced to 50% when and if the parent’s recourse debt to cash flow ratio is less than 5:1. The lenders have the option to waive their pro rata redemption. In the case of sales of assets of or equity interests in IPALCO Enterprises (“IPALCO”) or any of its subsidiaries, any net cash proceeds of the asset sale remaining after application to the Term Loan facility must be used to reduce commitments under the Revolver, unless the supermajority of banks otherwise agree or unless the facilities are rated at least Ba1 from Moody’s and AES’ corporate credit rating from S&P is at least BB–.
The senior secured credit facility contains customary covenants and restrictions on the Company’s ability to engage in certain activities, including, but not limited to, limitations on other indebtedness, liens, investments and guarantees; limitations on restricted payments such as shareholder dividends and equity repurchases; restrictions on mergers and acquisitions, sales of assets, leases, transactions with affiliates and off-balance sheet or derivative arrangements; and other financial reporting requirements.
The senior secured credit facility also contains financial covenants requiring the Company to maintain certain financial ratios including a cash flow to interest coverage ratio, calculated quarterly, which provides that a
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minimum ratio of the Company’s adjusted operating cash flow to the Company’s interest charges related to recourse debt of 1.3× must be maintained at all times and a recourse debt to cash flow ratio, calculated quarterly, which provides that the ratio of the Company’s total recourse debt to the Company’s adjusted operating cash flow must not exceed a maximum at any time of calculation, or 8.5× at December 31, 2009.
The terms of the Company’s Senior Unsecured Notes, senior secured credit facility, and Second Priority Secured Notes contain certain covenants including, without limitation, limitation on the Company’s ability to incur liens or enter into sale and leaseback transactions.