Bank of China contributes $57.69 million USD to a $150 million USD syndicated revolving credit facility to American States Water Company for refinancing, working capital, and general corporate purposes

Project narrative

On June 28, 2023, a syndicate of three banks — the Los Angeles Branch of the Bank of China (BOC), Wells Fargo Bank, N.A., and The Northern Trust Company — entered into a $150,000,000.00 USD syndicated revolving credit facility (RCF) agreement with American States Water Company — a California-incorporated American water and electricity utility company headquartered in San Dimas, California and listed on the New York Stock Exchange — for refinancing, working capital, and general corporate purposes. This RCF was unsecured and carried a maturity period of five years and a final maturity date of June 28, 2028 and a variable interest rate based on Term SOFR (SOFR plus 0.10%) or a base rate (the highest of a prime rate, the federal funds rate plus 0.50%, adjusted term SOFR for a one-month tenor plus 1.00%) and a margin dependent on the borrower's debt rating from Moody's and S&P's ranging for 0.750% for SOFR and 0.000% for base rates if equal or greater than Aa3 or AA- to 1.250% for SOFR and 0.250% for base rates if less than or equal to Baa1 or BBB+. The commitment fee ranged from 0.060% if greater than or equal to Aa3 or AA- to 0.175% if equal to or less than Baa1 or BBB+. The initial rating was A2 / A, so the initial margin for SOFR was 1.000% (when including Term SOFR, the margin was 1.100%) and for base rate it was 0.000%, while for the commitment fee it was 0.100%. This RCF could be up-sized to $75 million USD subject to lenders' approval and had a $10 million USD letter of credit sublimit. This RCF featured a financial covenant that the borrower (excluding its electric subsidiary) must not to have a consolidated total capitalization ratio greater than 0.65 to 1.00 at the end of any quarter and affirmative covenants for compliance with law and material contracts, and negative covenants relating to additional indebtedness, liens, investments, restricted payments and asset sales by the borrower and its subsidiaries, except its electric subsidiary. The proceeds were to be used by the borrower to refinance debt under an existing credit agreement dated June 3, 2005, pay fees and expenses in connection with the RCF, and to finance ongoing working capital requirements and other general corporate purposes of the borrower and its contracted services subsidiary, American States Utility Services, Inc., such as supporting its infrastructure investment programs. The borrower was also permitted to draw down to make equity contributions its regulated water utility subsidiary Golden State Water Company and its electric utility subsidiary Bear Valley Electric Service, Inc. (BVES). BOC committed $57,692,307.69 USD, while Wells Fargo Bank committed $77,884,615.39 USD and Northern Trust committed $14,423,076.92 USD. On November 6, 2023, the lending syndicate entered into an amendment agreement with the borrower for the RCF; in the amendment, the borrowing capacity was increased by $15.0 million USD to $165.0 million USD, with a new bank joining the syndicate. As of December 31, 2023, the borrower had drawn down $141.5 million USD under the RCF.