8-KMaterial AgreementsFinancial EventsExhibits & Filings

FIRSTENERGY CORP 8-K Report, Material Agreement (Aug 24, 2006)

Filed August 24, 2006For Securities:FE

Summary

FirstEnergy Corp. (FE) has filed an 8-K report on August 24, 2006, to announce the entry into a new $2.75 billion syndicated credit facility. This new facility replaces a previous $2 billion facility and was utilized to pay off outstanding obligations under the older agreement. The new credit line is available to FirstEnergy and several of its subsidiary borrowers, including various electric utility companies and energy service providers. The facility has a commitment termination date of August 24, 2011, with potential for two one-year extensions, and borrowings generally mature within 364 days or by the commitment termination date. The credit facility is designed to support working capital and general corporate purposes for the borrowers. The terms and conditions are largely similar to the previous facility, with adjustments to commitment amounts, applicable margins, and fees based on lender agreements and borrower credit ratings. Notably, the facility allows for potential increases in total commitments up to $3.25 billion under certain conditions, indicating flexibility for future financing needs.

Key Highlights

  • 1FirstEnergy Corp. entered into a new $2.75 billion syndicated credit facility on August 24, 2006.
  • 2This new facility replaces a prior $2 billion credit facility, with borrowings from the new facility used to pay off the existing one.
  • 3The credit facility has a maturity date of August 24, 2011, with potential for two one-year extensions.
  • 4Proceeds from the new facility are designated for working capital and general corporate purposes for FirstEnergy and its subsidiaries.
  • 5Borrowing sub-limits are defined for each subsidiary borrower, subject to regulatory and charter limitations.
  • 6The facility allows for an increase in total commitments to a maximum of $3.25 billion under specific conditions.
  • 7Interest rates on borrowings are tied to alternate base rates or Eurodollar rates, plus an applicable margin that varies with the borrower's senior unsecured debt ratings.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce FirstEnergy Corp.'s entry into a new $2.75 billion syndicated credit facility, which replaces a previous $2 billion facility. It details the key terms, borrowers, and financial arrangements associated with this new credit agreement.

The new syndicated credit facility has a total amount of $2.75 billion and its initial commitment termination date is August 24, 2011. The facility may be extended for two additional one-year periods, subject to lender agreement.

The proceeds from borrowings under the new credit facility are available for working capital and other general corporate purposes of FirstEnergy Corp. and the specified subsidiary borrowers.

Yes, the interest rates, specifically the applicable margin for Eurodollar Rate Advances, are determined by the borrower's senior unsecured debt ratings. Changes in these ratings can lead to adjustments in borrowing costs. Additionally, a utilization fee may apply if total outstanding borrowings and letters of credit exceed half of the aggregate commitments, depending on the borrower's credit rating.