CMS $1.4B credit agreement first to link lower interest rates with more renewables
- CMS Energy, the parent company of Consumers Energy, announced Wednesday that it has new $1.4 billion revolving credit facilities that come with a unique twist — the company is able to reduce its interest rates through the addition of more renewable energy.
- Barclays, J.P. Morgan, MUFG, Mizuho and BofA Merrill Lynch acted as joint lead arrangers. Barclays also acted as the sustainability structuring agent. According to CMS, these are the first syndicated sustainability-linked revolving credit facilities for a U.S. borrower.
- In a Form 8-K filing with the Securities and Exchange Commission, CMS told regulators the financial arrangements included a "sustainability-linked pricing metric." Company officials say they want to see sustainability linked to financial results.
Advanced energy and finance are becoming increasingly linked as sustainability concerns grow. CMS says the arrangement is unique, but more could be in the works.
"A credit facility is a type of loan made in a business or corporate finance context, including revolving credit, term loans, committed facilities, letters of credit and most retail credit accounts," According to Investopedia,
The $1.4 billion in this case is in two credit facilities between CMS Energy and Consumers. Both have five-year terms that expire on June 5, 2023, each with one-year extension options.
CMS has announced several clean energy goals this year, including phasing out coal, reducing carbon emissions 80% and meeting a renewables standard of 40% by 2040. The company also has five-year environmental goals, including saving 1 billion gallons of water and reducing waste to landfills by 35%.
Exactly how it will meet those goals will be revealed in the utility's integrated resource plan, which is due to regulators next week.
- lawinsider.com FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
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