UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to
Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report: July 31, 2006
(Date
of Earliest
Event Reported)
EL
PASO
NATURAL GAS COMPANY
(Exact
name of
Registrant as specified in its charter)
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Delaware
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1-2700
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74-0608280
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(State
or
other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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El
Paso
Building
1001
Louisiana
Street
Houston,
Texas
77002
(Address
of
principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (713) 420-2600
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement.
On
July 31, 2006,
we, El Paso Corporation, our parent company (“El Paso”), and certain of our
pipeline affiliates, Colorado Interstate Gas Company (CIG), and Tennessee
Gas
Pipeline Company (TGP), entered into a $1.75 billion Amended and Restated
Credit
Agreement (“Credit Agreement”) and an Amended and Restated Security Agreement
(“Security Agreement”), each of which is attached as an exhibit hereto and
incorporated herein by reference. The several banks and other financial
institutions that are parties to these agreements are identified in the exhibits
hereto. These agreements amended and restated our existing $3 billion credit
facility and related security agreement, of which the $1 billion revolving
credit facility was scheduled to mature on November 23, 2007.
The
Credit
Agreement is comprised of (1) a $1.25 billion revolving credit facility,
and (2)
a $500 million funded letter of credit facility.
Pursuant
to the
terms of the Security Agreement, all obligations under the Credit Agreement
are
secured by certain inter-company receivables and by pledges of El Paso’s
interests in us, CIG, TGP, and certain other subsidiaries. El Paso and certain
of its subsidiaries guarantee all of the borrowings under the Credit
Agreement.
The
$1.25 billion
revolving credit facility matures in July 2009 and will initially have
no borrowings. The $500 million funded letter of credit facility
matures in July 2011. The entire $1.75 billion line of credit may be
used for revolving loans or the support of letters of credit. At closing,
approximately $1.1 billion of these facilities were used by El Paso for
outstanding letters of credit.
Generally,
under
the $1.25 billion revolving credit facility, revolving loans under the Credit
Agreement are priced at LIBOR plus a margin currently equal to 1.75 percent
and
outstanding letters of credit, which are considered usage of the revolving
credit facility, will be priced at 1.75 percent plus an additional fronting
fee
of 0.15 percent. An annual commitment fee of 0.375 percent is paid on any
unused
revolving credit capacity.
Under
the $500
million funded letter of credit facility, we will pay 2.10 percent on the
full
deposit amount plus an additional fronting fee of 0.05 percent on outstanding
letters of credit and outstanding borrowings will be priced at LIBOR plus
2.00
percent.
This
Credit
Agreement contains covenants restricting the ability of us, El Paso and our
affiliated pipeline company borrowers to: (1) incur certain indebtedness;
(2) grant certain liens; (3) enter into certain merger or
consolidation transactions; (4) dispose of assets; (5) enter into
certain affiliate transactions; and (6) enter into certain other
restrictive agreements.
This
Credit
Agreement also requires El Paso to satisfy certain financial covenants at
the
end of each fiscal quarter, including:
(1) its
ratio
of Debt and Guaranties to Consolidated EBITDA, each as defined in the Credit
Agreement, shall not exceed 5.75 to 1.0 at any time prior to June 30, 2007;
5.50
to 1.0 at any time on or after June 30, 2007 and prior to June 30, 2008;
and
5.25 to 1.0 at any time on or after June 30, 2008 until maturity; and
(2)
its ratio of
Consolidated EBITDA, as defined in the Credit Agreement, to interest expense
and
dividends paid shall not be less than 1.75 to 1.0 prior to December 31, 2006;
1.80 to 1.0 on or after December 31, 2006 and prior to June 30, 2008; and
2.0 to
1.0 on or after June 30, 2008 until maturity. Furthermore, the
current debt limitations on the pipeline company borrowers—us, CIG and TGP—will
continue, which includes a restriction on the pipeline company
borrowers' incurrence of incremental borrowings if such debt would cause
their ratio of Debt to Consolidated EBITDA, each as defined in the Credit
Agreement, to exceed 5.0 to 1.0.
Pursuant
to the
terms of the Credit Agreement, the following shall constitute certain events
of
default under the Credit Agreement:
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a
failure to
pay principal or interest on any loan under the credit
agreement;
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if
a
representation or warranty is proven to be incorrect when
made;
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a
change of
control or the failure to observe or perform covenants or
agreements;
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the
commencement of proceedings under federal, state or foreign bankruptcy,
insolvency, receivership or similar
laws;
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inability
or
general failure to pay debts as they become
due;
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the
entry of
one or more judgments for the payment of money in an aggregate
uninsured
amount equal to or greater than $100,000,000 that remains undischarged
for
60 days; or
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suffering
an
event of default and the lapse of any applicable grace period under
any
other Indebtedness (as defined in the Credit Agreement) in excess
of
$200,000,000.
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If
an event of
default occurs, then the lenders may: (1) terminate their commitments under
the Credit Agreement; (2) declare any outstanding loans under the Credit
Agreement to be immediately due and payable after applicable grace periods;
and
(3) foreclose on the collateral which includes El Paso’s equity interests in
us.
Item 2.03.
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
See
description
above in Item 1.01.
Item
8.01. Other Events.
A
copy of El Paso’s press release announcing the closing of the new credit
facilities is attached as Exhibit 99.A and is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit
Number
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Description
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10.A.
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Amended
and
Restated Credit Agreement dated as of July 31, 2006, among El Paso
Corporation, Colorado Interstate Gas Company, El Paso Natural Gas
Company,
Tennessee Gas Pipeline Company, the several banks and other financial
institutions from time to time parties thereto and JPMorgan Chase
Bank,
N.A., as administrative agent and as collateral agent.
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10.B
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Amended
and
Restated Security Agreement dated as of July 31, 2006, made by
among El
Paso Corporation, Colorado Interstate Gas Company, El Paso Natural
Gas
Company, Tennessee Gas Pipeline Company, the Subsidiary Grantors
and
certain other credit parties thereto and JPMorgan Chase Bank, N.A.,
not in
its individual capacity, but solely as collateral agent for the
Secured
Parties and as the depository bank.
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99.A
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El
Paso
Corporation Press Release dated August 1,
2006.
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SIGNATURES
Pursuant
to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly
caused this report to be signed on its behalf by the undersigned thereunto
duly
authorized.
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EL
PASO NATURAL GAS COMPANY
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By:
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/s/
John R. Sult
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John
R. Sult
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Senior Vice
President, Chief Financial Officer and
Controller
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(Principal Accounting
and Financial Officer)
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Dated:
August 2,
2006
EXHIBIT
INDEX
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Exhibit
Number
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Description
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10.A.
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Amended
and
Restated Credit Agreement dated as of July 31, 2006, among El Paso
Corporation, Colorado Interstate Gas Company, El Paso Natural Gas
Company,
Tennessee Gas Pipeline Company, the several banks and other financial
institutions from time to time parties thereto and JPMorgan Chase
Bank,
N.A., as administrative agent and as collateral agent.
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10.B
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Amended
and
Restated Security Agreement dated as of July 31, 2006, made by among
El
Paso Corporation, Colorado Interstate Gas Company, El Paso Natural
Gas
Company, Tennessee Gas Pipeline Company, the Subsidiary Grantors
and
certain other credit parties thereto and JPMorgan Chase Bank, N.A.,
not in
its individual capacity, but solely as collateral agent for the Secured
Parties and as the depository bank.
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99.A
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El
Paso
Corporation Press Release dated August 1,
2006.
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