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JEA increases revolving credit facility to $500M

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JEA increases revolving credit facility to $500M

JEA is boosting its revolving credit facility to $500 million in an effort to regain the confidence of rating agencies who downgraded the Jacksonville, Fla., municipal utility's bonds because of exposure to the Vogtle nuclear plant expansion.

JEA's board at its Oct. 16 meeting unanimously moved to increase the size of JEA's revolver to $500 million from $300 million. The utility's partner, JPMorgan, received credit approval and provided a commitment to raise the revolver by $200 million while maintaining its same terms, including a ticking fee of 27.5 basis points.

"This action demonstrates the confidence of a key lender in our ability and our willingness to pay our obligations," JEA interim CFO Ryan Wannemacher said at the meeting.

JEA is in a power purchase agreement to receive electricity from MEAG Power once two new reactors are built at the Vogtle nuclear plant in Georgia. The venture is years behind schedule and billions of dollars over budget, and Vogtle's owners in September had to vote to continue construction despite a $2.3 billion cost increase.

Following that decision, S&P Global Ratings downgraded the ratings on JEA's various debt obligations, and Moody's Investors Service downgraded the rating of the utility's electric enterprise and senior-lien electric system revenue bonds.

JEA has long attempted to exit the Vogtle contract, even going as far as suing MEAG and asking federal regulators to intervene.

Wannemacher said the rating agencies favorably view revolvers as excellent sources of liquidity. JEA has drawn down $3 million from the facility so far, mostly to fund cash flow needs for capital projects or for fuel inventory.

"Over the years, JEA has cultivated strong relationships across Wall Street and the investor community," the CFO said. "As with any relationship, the strength of the bond is most tested in turmoil."

Board member Husein Cumber pointed out the $5 million annual fee for the revolver, which Wannemacher said is a provision to have 1% of the facility be outstanding. That amount is allocated to JEA's water system as the utility provides electric, water and sewer service to its customers.

John Campion, another board member, praised JEA and JPMorgan for negotiating and securing the revolver increase in less than a week, calling it a "Herculean task."

Mark Widener, an executive director with JPMorgan who attended the meeting, said his firm "has a proud history of standing by our clients, and we appreciate the opportunity to show this support to JEA in a meaningful way ... We place great confidence in the leadership of JEA, and we believe in the health of your business."

Vogtle is also owned by Southern Co. subsidiary Georgia Power Co., Oglethorpe Power Corp. and Dalton Utilities.

S&P Global Market Intelligence and S&P Global Ratings are owned by S&P Global Inc.