Tucson Electric Power Co.
10/16/2026 | Press release | Distributed by Public on 10/16/2026 12:10
Financial Obligation (Form 8-K)
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance-Sheet Arrangement of a Registrant.
On October 15, 2026, Tucson Electric Power Company (TEP) entered into a second amended and restated credit agreement with MUFG Bank, Ltd. (MUFG), as administrative agent, and a group of lenders (2026 Credit Agreement). The 2026 Credit Agreement amends and restates in its entirety the credit facility entered into on October 15, 2021, which included a $250 million revolving credit and letter of credit facility, with a $15 million swingline sublimit and a $50 million letter of credit sublimit. The 2026 Credit Agreement provides for a $350 million revolving credit, with a $15 million swingline sublimit and a $50 million letter of credit sublimit. The 2026 Credit Agreement also permits TEP to request increases in the aggregate commitments, in an amount not to exceed $50 million, on no more than two occasions, subject to certain conditions. It expires on October 15, 2031, at which time all outstanding amounts thereunder will be due and payable. The final maturity date is subject to two one-year extensions if certain conditions are satisfied.
TEP expects that borrowings will be made from time to time under the revolving credit facility for working capital and other general corporate purposes and that letters of credit will be issued from time to time to support energy procurement and hedging activities and for other lawful purposes.
Interest rates and fees under the 2026 Credit Agreement are based on a pricing grid tied to TEP's credit ratings. Borrowings under the revolving credit facility bear interest at a variable interest rate consisting of a spread over SOFR or Alternate Base Rate. Alternate Base Rate is equal to the greater of (i) MUFG's prime rate, (ii) the federal funds rate plus ½ of 1%, or (iii) Term SOFR for an interest period of one month plus 1%, but in no event less than zero percent. The interest rate presently in effect on borrowings is Term SOFR plus 1.00% for SOFR loans or Alternate Base Rate plus 0.00% for Alternate Base Rate loans.
The 2026 Credit Agreement is unsecured and ranks pari passu with TEP's other senior unsecured debt obligations.
The 2026 Credit Agreement contains a number of covenants which restrict TEP and its subsidiaries, including restrictions on liens, mergers and sales of assets. The 2026 Credit Agreement also requires TEP not to exceed a maximum leverage ratio of 0.65 to 1.00 at the end of any fiscal quarter. Under the terms of the 2026 Credit Agreement, TEP has agreed not to pay dividends to its parent, UNS Energy Corporation (other than in additional shares of its common stock), unless it maintains compliance with the 2026 Credit Agreement.
Upon the occurrence and continuance of an event of default under the 2026 Credit Agreement, outstanding borrowings may become immediately due and payable. Events of default include the failure to make payments required thereunder or to comply with the covenants contained therein, change in control, as defined, or certain bankruptcy events with respect to TEP or certain subsidiaries. In addition, an event of default would include the failure of TEP or certain subsidiaries to make required payments on indebtedness in excess of $40 million or events giving the holders of such indebtedness the right to require repayment of such indebtedness.
The foregoing description of the 2026 Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the 2026 Credit Agreement, a copy of which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated by reference herein.
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