8-KMaterial AgreementsFinancial Events

FIRSTENERGY CORP 8-K Report, Material Agreement (Dec 6, 2006)

Filed December 6, 2006For Securities:FE

Summary

FirstEnergy Corp. (FE) filed an 8-K on December 6, 2006, reporting on the entry into material definitive agreements related to the issuance of new pollution control revenue refunding bonds. These bonds, totaling approximately $877.67 million, are issued by various Ohio and Pennsylvania authorities on behalf of FirstEnergy's subsidiaries, FirstEnergy Nuclear Generation Corp. (NGC) and FirstEnergy Generation Corp. (FGCO). The primary purpose of this bond issuance is to refund a similar aggregate amount of previously issued pollution control bonds. This refinancing is expected to result in a corresponding reduction in affiliate notes payable for FirstEnergy's utility operating subsidiaries, including Ohio Edison Company, Pennsylvania Power Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company, relating to generation asset transfers from 2005. The new bonds are secured by letters of credit provided by Wachovia Bank and Barclays Bank.

Key Highlights

  • 1FirstEnergy Corp. issued approximately $877.67 million in new pollution control revenue refunding bonds through its subsidiaries NGC and FGCO.
  • 2The bond issuance involves eight separate series issued by the Ohio Air Quality Development Authority, Ohio Water Development Authority, and Beaver County Industrial Development Authority.
  • 3The principal purpose of the issuance is to refund existing pollution control bonds.
  • 4This refunding is expected to reduce affiliate notes payable for FirstEnergy's utility operating subsidiaries.
  • 5The new bonds are secured by irrevocable, direct-pay letters of credit issued by Wachovia Bank and Barclays Bank.
  • 6FirstEnergy provided a guaranty to Wachovia for NGC's obligations under its reimbursement agreement.
  • 7The bonds carry variable interest rates (Daily or Weekly Rate initially) and are subject to various redemption and tender provisions as outlined in the respective trust indentures.

Frequently Asked Questions

The total principal amount of the eight new series of pollution control revenue refunding bonds issued is $877,670,000.

The primary purpose is to refund an equal aggregate amount of previously issued pollution control bonds. This is expected to lead to a reduction in affiliate notes payable for FirstEnergy's utility operating subsidiaries.

Each series of bonds is secured by a separate irrevocable, direct-pay letter of credit issued by Wachovia Bank (for NGC bonds) and Barclays Bank (for FGCO bonds) to the respective bond trustees.

FirstEnergy provided a guaranty to Wachovia for its subsidiary NGC's payment and performance obligations under the NGC Reimbursement Agreement. Additionally, FGCO has agreed to guaranty FirstEnergy's obligations under the Credit Agreement related to the FGCO letters of credit.