8-KLeadership ChangesMaterial AgreementsFinancial Events+3

AMEREN CORP 8-K Report, Material Agreement (Oct 1, 2004)

Filed October 1, 2004For Securities:AEE

Summary

Ameren Corporation (AEE) has filed an 8-K report detailing the completion of its acquisition of Illinois Power Company (IPC) and a 20% interest in Electric Energy, Inc. (EEI) from Dynegy for a total consideration of $2.3 billion. This significant transaction includes the assumption of $1.823 billion in IPC's existing debt and $100 million placed in escrow for environmental contingencies. The acquisition reshapes Ameren's operational landscape and financial structure. In conjunction with the acquisition, several material definitive agreements were entered into. Notably, a power purchase agreement was secured by IPC with Dynegy Power Marketing, Inc., for 2,800 megawatts of firm capacity annually in 2005 and 2006, expected to cover approximately 70% of IPC's customer needs. Additionally, IPC has been added to the Ameren Corporation System Utility Money Pool Agreement for short-term borrowing, and a separate unilateral borrowing agreement allows IPC to borrow up to $500 million from Ameren. The report also highlights that the acquisition triggered a change of control for IPC's 11 1/2% Mortgage Bonds due 2010, requiring IPC to commence a tender offer for these bonds.

Key Highlights

  • 1Ameren Corporation completed the acquisition of Illinois Power Company (IPC) and a 20% stake in Electric Energy, Inc. (EEI) for $2.3 billion on September 30, 2004.
  • 2The acquisition involved assuming $1.823 billion in IPC's existing debt and a $100 million escrow for environmental liabilities.
  • 3IPC entered into a significant power purchase agreement with Dynegy Power Marketing, Inc., securing 2,800 MW of firm capacity for 2005-2006, covering roughly 70% of its customer requirements.
  • 4IPC is now part of the Ameren Corporation System Utility Money Pool Agreement for short-term borrowing.
  • 5A unilateral borrowing agreement allows IPC to secure short-term loans of up to $500 million from Ameren.
  • 6The acquisition triggered a change of control for IPC's 11 1/2% Mortgage Bonds due 2010, necessitating a tender offer.
  • 7Significant changes in IPC's Board of Directors and executive management occurred following the acquisition, with new appointments from Ameren's ranks.

Frequently Asked Questions

This 8-K filing announces the completion of Ameren Corporation's acquisition of Illinois Power Company (IPC) and a 20% interest in Electric Energy, Inc. (EEI), along with detailing the material definitive agreements entered into as a result of this transaction.

The total consideration for the acquisition was $2.3 billion. This was comprised of assuming $1.823 billion in existing IPC debt, $100 million placed in an escrow account for environmental contingencies, and the remaining balance financed with cash on hand and funds from prior Ameren common stock issuances.

Key agreements include a power purchase agreement by IPC with Dynegy Power Marketing, Inc. for 2,800 MW of capacity in 2005-2006, IPC's inclusion in the Ameren Corporation System Utility Money Pool Agreement for short-term borrowing, and a unilateral borrowing agreement allowing IPC to borrow up to $500 million from Ameren.

Yes, the acquisition triggered a change of control for IPC's 11 1/2% Mortgage Bonds due 2010, requiring IPC to commence a tender offer to purchase all outstanding bonds at 101% of their principal amount plus accrued interest. Furthermore, a Triggering Event has occurred, allowing bondholders to demand redemption under certain conditions.