TXNM Energy Subsidiary Secures $195 Million Term Loan to Refinance Maturing Debt

New Mexico Utility Refinances Maturing Term Facility

On July 21, 2026, Public Service Company of New Mexico, a subsidiary of TXNM Energy Inc., completed execution of a $195.0 million term loan agreement with Canadian Imperial Bank of Commerce serving as administrative agent. The transaction was structured to address the maturity of an earlier term loan facility due on the same day. According to the disclosure, PNM expects to deploy the proceeds exclusively toward refinancing the outstanding balance under its 2025 term loan agreement with the same lender group.

The timing of the new facility demonstrates coordination between the utility and its lending syndicate to ensure continuity of borrowing capacity without operational disruption. The agreement became effective immediately upon execution, providing PNM with access to capital on the refinancing date. This refinancing activity is routine for utilities managing their debt portfolios, particularly when maturing obligations approach their due dates.

Term Loan Structure and Repayment Obligations

The $195.0 million term loan carries a maturity date of January 21, 2028, providing a 18-month borrowing window from the funding date. PNM is obligated to pay interest on the outstanding balance from the funding date forward and must repay all principal and accrued interest by the maturity date. The disclosure does not specify the interest rate, fee structure, or any optional prepayment terms associated with the facility.

The loan documents impose standard repayment schedules and interest calculation methodologies typical of institutional credit facilities. The company did not disclose the specific interest rate or pricing grid applicable to the borrowing. Lenders under the arrangement will receive customary fees and expenses for their administration and participation in the facility.

Financial Covenants and Debt-to-Capitalization Requirements

The term loan agreement includes a material financial covenant requiring PNM to maintain a consolidated debt-to-consolidated capitalization ratio not exceeding 0.65 to 1.00 as of the last business day of each fiscal quarter. This leverage metric is a standard measure used by regulated utilities and their lenders to monitor balance sheet strength and financial stability. The covenant provides lenders with a quantifiable threshold for assessing credit risk across the operating cycle.

Compliance with this ratio constraint reflects PNM's obligation to maintain prudent debt levels relative to its total capitalization, including both debt and equity components. The quarterly testing schedule allows lenders to monitor the utility's financial position throughout each year. Breaches of this covenant could trigger default provisions and potentially accelerate the loan maturity, making ongoing compliance integral to the utility's operational and financial planning.

Default Provisions and Change of Control Language

The term loan documentation incorporates customary default mechanisms and acceleration rights standard in commercial lending agreements. Events of default permit lenders to declare all outstanding obligations immediately due and payable upon the occurrence of specified triggering events. The agreement includes a cross-default provision, meaning failure to perform under other material credit facilities could constitute a default under this term loan.

The loan also contains a change of control provision, which would be triggered if control of PNM or its parent company TXNM Energy transfers to parties outside the current ownership structure. Automatic acceleration of the loan obligation occurs upon an insolvency or bankruptcy default without requiring notice or additional lender action. These standard protections give lenders expedited remedies if the borrower's credit condition deteriorates materially or ownership changes unexpectedly.

Public Service Company of New Mexico Business Overview

Public Service Company of New Mexico operates as a regulated electric and gas utility serving customers across the state of New Mexico. The company is wholly owned by TXNM Energy Inc., a New Mexico corporation traded on the New York Stock Exchange under the ticker symbol TXNM. PNM's primary operations involve the generation, transmission, distribution, and sale of electricity and the distribution and sale of natural gas to residential, commercial, and industrial customers.

The utility is subject to regulatory oversight by the New Mexico Public Regulation Commission, which approves rates, service territories, and major capital investments. PNM's capital structure includes both debt and equity financing to fund infrastructure investments, maintenance, and operations. The company manages a portfolio of generation assets and operates within a regulated cost-recovery framework typical of investor-owned utilities in the Southwest region.

Administrative Agent Role and Relationship with Lenders

Canadian Imperial Bank of Commerce, New York Branch, serves as the administrative agent for the term loan facility. In this capacity, CIBC is responsible for loan administration, payment processing, covenant monitoring, and communication among the lender syndicate. The administrative agent role is a standard position in multi-bank lending arrangements, ensuring centralized coordination and consistent management of the credit facility.

The disclosure notes that CIBC and other syndicate participants perform normal banking, investment banking, and advisory services for PNM and its affiliates from time to time. These services are provided on customary commercial terms with standard compensation arrangements. The relationship between lenders and the borrower extends beyond the term loan, potentially including cash management, derivative services, and capital markets advisory activities typical of relationships between major financial institutions and large utility companies.

Refinancing Timeline and Debt Management Strategy

The synchronization of the new $195.0 million facility with the July 21, 2026 maturity of the prior term loan demonstrates active debt management to prevent any gap in liquidity or borrowing capacity. PNM structured the refinancing to occur on the maturity date itself, minimizing any interim period where the company would lack access to the refinancing proceeds. This sequencing reflects coordination between the utility's treasury operations and its banking relationships.

The 18-month maturity of the new facility extends the repayment obligation to January 21, 2028. By refinancing before the original term loan matured, PNM maintained operational continuity and avoided potential disruption to its working capital management. The company's approach to this refinancing is consistent with standard practices for utilities managing regular debt roll-overs and capital structure adjustments.

Regulatory and Capital Adequacy Considerations for Regulated Utilities

As a regulated utility, PNM's capital structure decisions operate within a framework established by state regulatory authorities and credit rating agencies. The maintenance of appropriate leverage ratios, as required by the term loan covenant, aligns with regulatory expectations for financial stability and creditworthiness. Utilities typically maintain debt-to-capitalization ratios in ranges acceptable to both regulators and investment-grade credit rating agencies.

The $195.0 million refinancing facility represents a portion of PNM's total capitalization and debt portfolio. Regulated utilities regularly access capital markets and bank credit facilities to fund infrastructure investments required to maintain and expand service capabilities. The company's ability to access institutional credit at competitive terms reflects market confidence in its regulatory relationships and revenue stability derived from cost-recovery utility operations.

Disclosure Requirements and Filing Status

TXNM Energy Inc. and Public Service Company of New Mexico jointly filed this disclosure to satisfy reporting obligations under securities laws. The disclosure identifies the material definitive agreement entered into by PNM, triggering mandatory reporting under Item 1.01 of regulatory requirements for public companies. The report also addresses the creation of a direct financial obligation under Item 2.03, confirming PNM's liability to repay the $195.0 million principal amount plus accrued interest.

The filing indicates that the complete term loan agreement is attached as an exhibit for reference by investors and market participants. This exhibits-based approach allows interested parties to review the full documentation, including detailed terms, conditions, schedules, and appendices not summarized in the announcement. The disclosure was executed by Gerald R. Bischoff, Vice President and Corporate Controller, on behalf of both registrants.