8-KFinancial Events

CONSOLIDATED EDISON INC 8-K Report, Financial Obligation (Aug 12, 2010)

Filed August 12, 2010For Securities:ED

Summary

This Form 8-K filing from Consolidated Edison, Inc. (Con Edison) on August 12, 2010, details a significant debt issuance by its wholly-owned subsidiary, Orange and Rockland Utilities, Inc. (O&R). O&R has entered into a purchase agreement to sell $170 million in aggregate principal amount of debentures, divided into two series: $55 million of 2.50% debentures due in 2015 and $115 million of 5.50% debentures due in 2040. These debentures are being offered to qualified institutional buyers under Rule 144A of the Securities Act, indicating they are not publicly registered. The issuance aims to raise capital for O&R, with the proceeds likely intended for operational needs and infrastructure investments. Investors should note the differing interest rates and maturity dates, with the longer-term debentures carrying a substantially higher coupon to compensate for the extended duration and associated risks. Con Edison itself guarantees these obligations indirectly through its ownership of O&R.

Key Highlights

  • 1Orange and Rockland Utilities, Inc. (O&R), a subsidiary of Con Edison, issued $170 million in new debt.
  • 2The issuance consists of two series of debentures: $55 million of 2.50% Series 2010 A Debentures maturing August 15, 2015.
  • 3The second series comprises $115 million of 5.50% Series 2010 B Debentures maturing August 15, 2040.
  • 4The debentures were sold to Citigroup Global Markets Inc. under a purchase agreement.
  • 5The offering is made to qualified institutional buyers in reliance on Rule 144A, meaning the securities are not publicly registered.
  • 6O&R may redeem the debentures prior to maturity at a make-whole premium.
  • 7The debentures rank equally with O&R's other unsecured indebtedness.

Frequently Asked Questions

This filing primarily serves to disclose a new debt issuance by Con Edison's subsidiary, Orange and Rockland Utilities (O&R). It informs investors about the terms, amounts, and dates of this significant financing activity undertaken by O&R.

O&R issued $55 million of 2.50% debentures due in 2015 and $115 million of 5.50% debentures due in 2040, totaling $170 million. The debentures are unsecured and rank equally with O&R's other unsecured debt.

Selling under Rule 144A allows O&R to offer these securities to a select group of sophisticated investors, namely qualified institutional buyers, without the extensive registration process required for a public offering. This is a common method for large debt issuances.

This clause allows O&R to pay off the debt before its maturity date, but it will need to pay a premium that compensates the bondholders for the lost interest they would have received. This provides O&R flexibility in managing its debt structure, potentially if interest rates fall.