ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF BALANCE SHEET ARRANGEMENT OF A REGISTRANT
On March 31, 2023, American Electric Power Company, Inc. (“AEP”) amended and extended an existing credit agreement, a two-year $1,000,000,000 facility, by extending the maturity from March 2024 to March 2025 (the “Credit Agreement”).
AEP amended and extended the Credit Agreement, dated March 31, 2021, as amended by that certain First Amendment to Credit Agreement, dated as of April 7, 2022, among AEP, the certain Lenders named therein, and Wells Fargo Bank, National Association, as Administrative Agent. The Credit Agreement contains a sustainability-linked pricing metric which permits an interest rate increase or reduction by meeting or missing targets related to environmental sustainability, specifically renewable energy generation.
Borrowings and letters of credit issued under the Credit Agreement are subject to a variable interest rate and are available upon customary terms and conditions for facilities of this type. The Credit Agreement contain certain covenants and requires AEP to maintain its percentage of debt to total capitalization at a level that does not exceed 67.5%. The method for calculating outstanding debt and other capital is contractually defined in the Credit Agreement. Nonperformance by AEP of any covenant could result in an event of default under the Credit Agreement. The acceleration of AEP’s payment obligations, or the obligations of certain of its respective subsidiaries, prior to maturity under any other agreement or instrument relating to debt outstanding in excess of $50 million would cause an event of default under the Credit Agreement and permit the lenders to declare AEP’s outstanding amounts payable. The Credit Agreement does not permit the lenders to refuse a draw on either facility if a material adverse change occurs.