8-KFinancial EventsOther EventsExhibits & Filings

CONSOLIDATED EDISON INC 8-K Report, Financial Obligation (Jun 23, 2008)

Filed June 23, 2008For Securities:ED

Summary

This Form 8-K filing by Consolidated Edison, Inc. (Con Edison) reports on two significant events that occurred around June 20-23, 2008. Firstly, Con Edison issued $326.3 million of 8.71% unsecured notes due in 2022 in exchange for project debt related to a 525 MW generating project in Newington, New Hampshire. This transaction effectively refinanced the debt associated with the project and brought it onto Con Edison's balance sheet under new terms, including a make-whole premium for prepayments and specific covenants related to asset ownership and financial ratios. Secondly, and importantly for investors, Con Edison Development, a subsidiary, completed the sale of its ownership interest in the Newington Project on June 23, 2008. This sale marks the final step in Con Edison Development's divestiture of its power generating project portfolio, totaling 1,706 MW. The report details the net cash proceeds and after-tax gains from these sales, which amounted to $500 million and $232 million respectively for the Newington Project sale, and a total of $1.075 billion in net cash proceeds and $411 million in net after-tax gains from the entire divestiture program.

Key Highlights

  • 1Con Edison issued $326.3 million in new 8.71% unsecured notes maturing in 2022.
  • 2The new notes were issued in exchange for project debt related to a 525 MW generating project in Newington, NH.
  • 3The Newington Project debt was effectively refinanced and is now part of Con Edison's consolidated balance sheet.
  • 4Con Edison Development completed the sale of its ownership interest in the Newington Project on June 23, 2008.
  • 5The sale of the Newington Project is the final stage of Con Edison Development's exit from its power generating project portfolio (totaling 1,706 MW).
  • 6The Newington Project sale generated an estimated $500 million in net cash proceeds and $232 million in net after-tax gain.
  • 7The total divestiture of power generating projects yielded an estimated $1.075 billion in net cash proceeds and $411 million in net after-tax gain.

Frequently Asked Questions

The issuance of $326.3 million in 8.71% unsecured notes due in 2022 signifies a refinancing of existing project debt related to the Newington generating project. This debt is now consolidated on Con Edison's balance sheet and is subject to specific terms, including default triggers related to asset ownership and financial leverage.

While not explicitly detailed as a strategy in this filing, the completion of the sale of Con Edison Development's power generating assets suggests a strategic shift. The company is divesting its ownership interests in these projects, totaling 1,706 MW, as evidenced by the completed sales in May and June 2008, which generated significant cash proceeds and after-tax gains.

The sale of the Newington Project alone resulted in estimated net cash proceeds of $500 million and a net after-tax gain of $232 million. Cumulatively, the entire divestiture program for Con Edison Development's generating projects yielded approximately $1.075 billion in net cash proceeds and $411 million in net after-tax gains.

Yes, the new notes have terms similar to the previous project debt, including a make-whole premium for prepayments. Importantly, events of default include Con Edison failing to maintain at least 51% ownership of its New York City electricity distribution business, its debt-to-capital ratio exceeding 0.675 to 1, or defaults on other significant indebtedness.