Page 60 - SWGas Annual Report 2015

In March 2015, Southwest amended its $300 million credit and commercial paper facility. The facility was previously
scheduled to expire in March 2019, but was extended to March 2020. The Company will continue to use
$150 million of the facility as long-term debt and the remaining $150 million for working capital purposes. Interest
rates for the credit facility are calculated at either the London Interbank Offered Rate (“LIBOR”) or an “alternate
base rate,” plus in each case an applicable margin that is determined based on the Company’s senior unsecured
debt rating. At December 31, 2015, the applicable margin is 1% for loans bearing interest with reference to LIBOR
and 0% for loans bearing interest with reference to the alternative base rate. At December 31, 2015, $150 million
was outstanding on the long-term portion of the credit facility, including $50 million in commercial paper (see
commercial paper program discussion below). The effective interest rate on the long-term portion of the credit
facility was 1.45% at December 31, 2015. Borrowings under the credit facility ranged from none during the second
quarter of 2015 to a high of $180 million during the fourth quarter of 2015. With regard to the short-term portion of
the credit facility, there was $18 million outstanding at December 31, 2015 and $5 million outstanding at
December 31, 2014. (See Note 8 – Short-Term Debt).

The Company has a $50 million commercial paper program. Any issuance under the commercial paper program is
supported by the Company’s current revolving credit facility and, therefore, does not represent additional
borrowing capacity. Any borrowing under the commercial paper program will be designated as long-term debt.
Interest rates for the program are calculated at the then current commercial paper rate. At December 31, 2015, and
as noted above, $50 million was outstanding on the commercial paper program. The effective interest rate on the
commercial paper program was 1.01% at December 31, 2015.

In May 2015, the Company redeemed at par the $31.2 million 5.00% 2004 Series B IDRBs originally due in 2033.
The Company facilitated the redemption primarily from cash on hand and borrowings under its $300 million credit
facility.

In September 2015, the Company redeemed at par the $20 million 5.25% 2003 Series D IDRBs originally due in
2038. The Company facilitated the redemption primarily from cash on hand and borrowings under its $300 million
credit facility.

Centuri has a $300 million secured revolving credit and term loan facility that is scheduled to expire in October
2019. This facility includes a revolving credit facility and a term loan facility. The term loan facility had an initial limit
of approximately $150 million, which was reached in 2014 and is in the process of being repaid. No further
borrowing is permitted under the term loan facility. In January 2016, administrative amendments were made to the
revolving credit and term loan facility with no impact to borrowing capacity, due dates, or interest provisions. The
revolving credit facility has a limit of $150 million; amounts borrowed and repaid under the revolving credit facility
are available to be re-borrowed. The revolving credit and term loan facility is secured by substantially all of
Centuri’s assets except ones explicitly excluded under the terms of the agreement (including owned real estate
and certain certificated vehicles). Centuri assets securing the facility at December 31, 2015 totaled $437 million.

Interest rates for Centuri’s $300 million secured revolving credit and term loan facility are calculated at the LIBOR,
the Canadian Dealer Offered Rate (“CDOR”), or an alternate base rate or Canadian base rate, plus in each case an
applicable margin that is determined based on Centuri’s consolidated leverage ratio. The applicable margin ranges
from 1.00% to 2.25% for loans bearing interest with reference to LIBOR or CDOR and from 0.00% to 1.25% for loans
bearing interest with reference to the alternate base rate or Canadian base rate. Centuri is also required to pay a
commitment fee on the unfunded portion of the commitments based on the consolidated leverage ratio. The

Southwest Gas Corporation