8-KMaterial AgreementsFinancial EventsOther Events+1

EXELON CORP 8-K Report, Material Agreement (Sep 23, 2009)

Filed September 23, 2009For Securities:EXC

Summary

This 8-K filing from Exelon Corporation (EXC) and its subsidiary Exelon Generation Company, LLC, dated September 23, 2009, primarily details a significant debt issuance and refinancing strategy. Exelon Generation successfully issued and sold $1.5 billion in aggregate principal amount of senior notes. These notes are divided into two tranches: $600 million of 5.20% notes due 2019 and $900 million of 6.25% notes due 2039. The proceeds from this issuance are intended to fund the repurchase (tender offer) of existing senior notes by both Exelon Corporation and Exelon Generation, with a portion also allocated for general corporate purposes. This transaction represents a strategic move to manage debt maturities and potentially lower borrowing costs, especially in the context of the financial environment of 2009. The company is actively managing its capital structure by replacing older, potentially higher-coupon debt with new issuances. Investors should note the specific terms of the new senior notes, including their interest rates, maturity dates, and redemption provisions, as well as the covenants that govern future debt and asset-related transactions by Exelon Generation.

Key Highlights

  • 1Exelon Generation Company, LLC issued and sold $1.5 billion in aggregate principal amount of new senior notes.
  • 2The new notes are structured as $600 million of 5.20% Senior Notes due 2019 and $900 million of 6.25% Senior Notes due 2039.
  • 3Proceeds from the new issuance are primarily used to finance tender offers for existing senior notes of both Exelon Corporation and Exelon Generation.
  • 4Exelon Corporation's tender offer for its 6.75% Senior Notes due May 1, 2011 expired with $386.57 million tendered, and remaining notes will be redeemed.
  • 5Exelon Generation's tender offer for its 6.95% Senior Notes due June 15, 2011 expired with $555.34 million tendered, and remaining notes will be redeemed.
  • 6The new senior notes are redeemable at Generation's option under specific conditions related to the Treasury Rate plus a spread.
  • 7The filing outlines several restrictive covenants for Exelon Generation, including limitations on mergers, consolidations, liens, and sale-and-leaseback transactions to protect noteholders.

Frequently Asked Questions

This 8-K filing announces the issuance and sale of $1.5 billion in new senior notes by Exelon Generation Company, LLC. The primary purpose of these proceeds is to fund the repurchase of existing outstanding senior notes through concurrent tender offers by both Exelon Corporation and Exelon Generation, indicating a debt refinancing and capital structure management strategy.

Exelon Generation issued two series of senior notes: $600 million of 5.20% Senior Notes due 2019 and $900 million of 6.25% Senior Notes due 2039. Interest is payable semi-annually, and the notes are redeemable at Generation's option based on a calculation involving the Treasury Rate.

The proceeds, after deducting fees, will be used to finance Exelon Generation's purchase of its 6.95% Senior Notes due June 15, 2011, and to fund a distribution to Exelon Corporation to help finance its purchase of its 6.75% Senior Notes due May 1, 2011. Any remaining proceeds will be used for general corporate purposes.

Exelon Generation is subject to several covenants designed to protect noteholders. These include restrictions on consolidating with or merging into other entities, limitations on incurring secured indebtedness (unless the new notes are effectively secured equally and ratably), and restrictions on sale and leaseback transactions. These covenants aim to maintain the company's financial stability and the security of the debt.