8-KMaterial AgreementsExhibits & Filings

EXELON CORP 8-K Report, Material Agreement (Sep 10, 2007)

Filed September 10, 2007For Securities:EXC

Summary

Exelon Corporation announced on September 10, 2007, that it has entered into accelerated share repurchase (ASR) transactions totaling $1.25 billion with affiliates of Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. This action follows the company's earlier board approval on August 31, 2007, to repurchase up to $1.25 billion of its outstanding stock. The ASR agreements will result in Exelon purchasing its common stock from Lehman and Merrill. Both counterparties will deliver an initial tranche of shares shortly after the transaction's execution, with potential for additional deliveries. The final number of shares repurchased will be determined within a specified range for each transaction. The funding for these repurchases will primarily come from Exelon's available cash, signaling a strategic move to return capital to shareholders and potentially enhance shareholder value.

Key Highlights

  • 1Exelon Corporation executed accelerated share repurchase (ASR) transactions totaling $1.25 billion.
  • 2The ASR transactions are with affiliates of Lehman Brothers Inc. and Merrill Lynch.
  • 3This move aligns with Exelon's previously announced board approval on August 31, 2007, for a $1.25 billion share repurchase program.
  • 4The company will purchase its own common stock from the financial institutions involved.
  • 5Initial deliveries of shares are expected shortly after the transaction execution, with potential for further deliveries.
  • 6The total number of shares repurchased is subject to minimum and maximum limits.
  • 7The $1.25 billion funding for the ASR program will be primarily sourced from Exelon's available cash.

Frequently Asked Questions

An accelerated share repurchase (ASR) transaction is a contract between a company and an investment bank where the company agrees to buy back a significant amount of its own stock. The investment bank typically buys the shares on the open market and resells them to the company at a discount, or delivers shares from its own inventory. This allows the company to repurchase shares quickly and efficiently, often at a favorable price, while the exact number of shares repurchased may be adjusted based on market conditions over a period.

Exelon is undertaking this significant share repurchase program, as evidenced by the $1.25 billion ASR transactions, likely as a strategy to return capital to shareholders, potentially boost earnings per share (EPS) by reducing the number of outstanding shares, and signal confidence in the company's financial health and future prospects to the market.

The $1.25 billion repurchase will reduce Exelon's cash reserves, but the funding is stated to come primarily from available cash, suggesting the company has sufficient liquidity. A reduction in outstanding shares could lead to an increase in earnings per share (EPS) if net income remains constant or grows. The overall impact on financial ratios and balance sheet strength will depend on the company's liquidity position and the specific terms of the agreements.

The filing includes forward-looking statements and cautions that actual results could differ materially due to various risks and uncertainties. These risks are detailed in Exelon's 2006 10-K and Q2 2007 10-Q filings, and typically include factors related to regulatory changes, market conditions, operational challenges, litigation, and economic factors that could impact the company's business and financial performance.