Why is Exelon repurchasing its 2011 Senior Notes?

Exelon and Exelon Generation are repurchasing their 2011 Senior Notes to proactively manage their debt maturities. This strategy aims to take advantage of favorable financing conditions in the current market and mitigate refinancing risk associated with these notes maturing in 2011.

How is Exelon financing these repurchases?

Exelon Generation is financing these repurchases through the issuance of $1.5 billion in new Senior Notes maturing in 2019 and 2039. The net proceeds from this new debt sale will be used to fund the tender offers, with a portion also allocated for general corporate purposes and a significant distribution to Exelon to support its note repurchase.

What is the financial impact of these transactions on Exelon?

Exelon expects to record a non-recurring after-tax charge of approximately $75 million, or $0.11 per diluted share, in the third quarter of 2009 due to debt redemption costs associated with the tender offers. This charge will be excluded from the company's adjusted (non-GAAP) operating earnings for 2009.

What are the details of the new Senior Notes being issued?

Exelon Generation is selling $600 million of Senior Notes due October 1, 2019, with a coupon rate of 5.20%, and $900 million of Senior Notes due October 1, 2039, with a coupon rate of 6.25%. The sale was expected to close on September 23, 2009.

EXC 8-K SEC Disclosure — Sep 17, 2009

Summary

Exelon Corporation (EXC) and its subsidiary Exelon Generation Company, LLC, filed an 8-K on September 17, 2009, detailing significant debt management activities. Exelon announced a cash tender offer to repurchase all of its outstanding 6.75% Senior Notes due in 2011. Concurrently, Exelon Generation launched a similar tender offer for its 6.95% Senior Notes due in 2011. These actions are designed to proactively address upcoming debt maturities and take advantage of favorable financing conditions in the market. To support these repurchases and for general corporate purposes, Exelon Generation announced the sale of $1.5 billion in new Senior Notes. Specifically, $600 million of notes will mature in 2019 with a 5.20% coupon, and $900 million will mature in 2039 with a 6.25% coupon. The proceeds from this sale will be used to fund the tender offers, including a significant distribution to Exelon to facilitate its note repurchase. This strategic refinancing is expected to result in a one-time after-tax charge of approximately $75 million, or $0.11 per diluted share, for the third quarter of 2009, which will be excluded from adjusted operating earnings.

Key Highlights

1Exelon Corporation initiated a tender offer to repurchase all of its outstanding 6.75% Senior Notes due May 1, 2011.
2Exelon Generation Company, LLC launched a concurrent tender offer to repurchase all of its outstanding 6.95% Senior Notes due June 15, 2011.
3Exelon Generation plans to sell $1.5 billion in new Senior Notes: $600 million maturing in 2019 (5.20% coupon) and $900 million maturing in 2039 (6.25% coupon).
4The proceeds from the new debt issuance will be used to finance the tender offers and for general corporate purposes.
5A substantial portion of the new note proceeds ($550 million) will be distributed to Exelon to fund its tender offer for the 2011 notes.
6The company expects to incur a one-time, after-tax debt redemption cost of approximately $75 million ($0.11 per diluted share) in Q3 2009 related to these tender offers.
7This charge will be excluded from Exelon's 2009 adjusted (non-GAAP) operating earnings.

EXELON CORP 8-K Report, Corporate Update (Sep 17, 2009)

Summary

Key Highlights

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