8-KMaterial AgreementsFinancial EventsExhibits & Filings

EXELON CORP 8-K Report, Material Agreement (Jun 11, 2015)

Filed June 11, 2015For Securities:EXC

Summary

Exelon Corporation has filed an 8-K detailing a significant debt offering totaling $4.2 billion on June 11, 2015. This offering consists of five tranches of notes with varying maturity dates and interest rates, ranging from 1.550% to 5.100%. The primary purpose of this debt issuance is to finance a portion of Exelon's acquisition of Pepco Holdings, Inc. Any net proceeds not used for the acquisition will be allocated to general corporate purposes, potentially including debt repayment. Notably, the offering includes provisions for a special mandatory redemption for the longer-term notes (2025, 2035, and 2045) if the Pepco acquisition is not consummated by December 31, 2015, or if the merger agreement is terminated. This redemption would occur at 101% of the principal amount plus accrued interest, indicating a contingency for investors should the deal fall through. The company also retains the option to redeem these notes under specific conditions related to the merger's completion timeline. These actions underscore Exelon's strategic move to expand its operations while managing the financial implications of a major acquisition.

Key Highlights

  • 1Exelon Corporation completed a $4.2 billion debt offering on June 11, 2015.
  • 2The offering comprises notes with maturities in 2017, 2020, 2025, 2035, and 2045.
  • 3Proceeds are primarily intended to fund the acquisition of Pepco Holdings, Inc.
  • 4A special mandatory redemption clause exists for 2025, 2035, and 2045 notes if the Pepco acquisition is not completed by year-end 2015 or if the merger agreement is terminated.
  • 5The company retains an option for early redemption of these longer-term notes under certain merger-related conditions.
  • 6The notes are unsecured and unsubordinated general obligations of Exelon.
  • 7The debt issuance was facilitated through an underwriting agreement with Barclays Capital Inc. and Goldman, Sachs & Co.

Frequently Asked Questions

The primary purpose of the $4.2 billion debt offering is to finance a portion of Exelon Corporation's acquisition of Pepco Holdings, Inc. Any remaining net proceeds will be used for general corporate purposes, which may include repaying outstanding debt.

If the Pepco Holdings acquisition is not completed by December 31, 2015, or if the merger agreement is terminated, Exelon is required to redeem the 2025, 2035, and 2045 notes at a price of 101% of their principal amount plus accrued interest. This is referred to as a Special Mandatory Redemption.

The notes have the following interest rates and maturity dates: $550 million of 1.550% Notes due 2017, $900 million of 2.850% Notes due 2020, $1.25 billion of 3.950% Notes due 2025, $500 million of 4.950% Notes due 2035, and $1.0 billion of 5.100% Notes due 2045.

No, the Notes are direct unsecured general obligations of Exelon Corporation and rank equally with all of the company's existing and future unsecured and unsubordinated debt.