Pinnacle West Capital Corporation Announces Major Five-Year Credit Facility Amendments

Key Points for Investors

• Pinnacle West Capital Corporation (“Pinnacle West”) has entered into a significant Third Amended and Restated Five-Year Unsecured Revolving Credit Facility as of February 18, 2026, totaling \$300 million.
• Simultaneously, Arizona Public Service Company (APS), its major subsidiary, has executed a parallel Amended and Restated Five-Year Credit Agreement.
• The facilities involve a syndicate of major financial institutions including Barclays Bank PLC (as Agent and Issuing Bank), PNC Bank, Wells Fargo, Bank of America, JPMorgan, Mizuho, MUFG, and Truist Bank, among others.
• These agreements replace and supersede existing credit arrangements, resetting the terms through 2031.
• The agreements allow for both traditional revolving borrowings and the issuance of letters of credit, providing important liquidity and flexibility to fund ongoing operations, capital expenditures, and other strategic needs.
• Facility terms include variable interest rates tied to the company’s public debt ratings, with detailed provisions for events of default, covenants, and possible increases in the aggregate commitments.
• The agreements contain price-sensitive covenants and financial ratios that, if breached, could trigger default and accelerate repayment obligations.

Details of the Credit Facility

The new Third Amended and Restated Facility for Pinnacle West is a five-year unsecured revolving credit line with a commitment of \$300 million. The syndicate structure means risk is distributed among many of the world’s leading banks, helping ensure financial stability and access to capital even in changing market conditions.

The interest rates under the facility are tiered based on the company’s public debt ratings from Standard & Poor’s and Moody’s, ranging from 0.750% to higher, depending on the rating band. The facility also includes a commitment fee, again tied to the public debt ratings, ensuring the cost of capital is closely aligned with the company’s perceived risk profile.

Letters of Credit: The facility enables Pinnacle West to request the issuance of letters of credit, which are crucial for supporting projects, hedging, and other operational needs.

The credit agreement contains customary representations, warranties, covenants, and events of default. These include:

• Affirmative covenants (such as maintaining certain financial reporting and compliance standards)
• Negative covenants (such as restrictions on indebtedness, liens, mergers, and asset sales)
• A specific financial covenant that Pinnacle West must maintain, critical for ongoing compliance
• Events of default that could lead to immediate acceleration of repayments and termination of borrowing rights

APS’s Amended Facility: APS, as the principal electric utility subsidiary, has a parallel amended and restated five-year revolving credit agreement with similar terms, further strengthening group liquidity and operational flexibility.

Implications for Shareholders

• Liquidity and Financial Flexibility: These new agreements significantly enhance Pinnacle West’s and APS’s access to liquidity, supporting future investments, potential acquisitions, and operational needs.
• Credit Ratings Sensitivity: The cost of borrowing under these facilities is directly tied to the company’s public debt ratings. Any change in ratings—up or down—will directly affect interest costs, with potential implications for net income and share valuation.
• Covenant Compliance: The agreements’ financial and operational covenants are price-sensitive. Breaches (such as exceeding debt ratios or failing to maintain required coverage) could trigger default clauses, accelerate repayments, and disrupt access to capital, all of which could have a material adverse effect on shareholder value.
• Potential for Share Price Movement: News of new or amended credit facilities, especially those that improve liquidity and extend tenor, is typically viewed positively by market participants as it reduces refinancing risk. However, any signs of covenant stress or future rating downgrades would be negative catalysts.

Board and Executive Acknowledgment

The agreements were executed and the Form 8-K was signed by Andrew Cooper, Senior Vice President and Chief Financial Officer for both Pinnacle West and Arizona Public Service Company, indicating the high-level endorsement and legal commitment of the companies to the terms of these facilities.

Exhibits and Full Documents

• Full text of the Third Amended and Restated Five-Year Credit Agreement is available as Exhibit 10.1 to the Form 8-K.
• The parallel APS agreement is filed as Exhibit 10.2.

Bottom Line

The execution of these new and amended five-year credit facilities is a significant, potentially price-sensitive event for Pinnacle West Capital Corporation and its shareholders. It improves financial flexibility, secures liquidity for the medium term, and sets new terms that link borrowing costs directly to the company’s credit rating and financial performance. Investors should monitor the company’s compliance with covenants and any movement in public debt ratings, as these will directly impact borrowing costs and could become catalysts for share price changes.

View PINNACLE WEST CAPITAL CORP Historical chart here