8-KMaterial Agreements

FIRSTENERGY CORP 8-K Report, Agreement Terminated (Aug 25, 2009)

Filed August 25, 2009For Securities:FE

Summary

FirstEnergy Corp. (FE) subsidiary, FirstEnergy Generation Corp. (FGCO), has proactively terminated its $300 million secured term loan facility with Credit Suisse (CS) ahead of its scheduled maturity on October 7, 2009. The termination became effective on August 24, 2009, and importantly, there are no associated penalties for this early exit. This move is financially prudent as FGCO had not drawn any funds from the facility since its inception. The primary benefit of this termination is the elimination of unused commitment fees. FGCO was obligated to pay a 0.75% annual fee on the undrawn portion of the credit line. By terminating the facility early, the company will save on these ongoing expenses, improving its cash flow management. This action signals a focus on cost optimization and efficient capital structure by FirstEnergy.

Key Highlights

  • 1FirstEnergy's subsidiary, FGCO, terminated a $300 million secured term loan facility early.
  • 2The termination was effective August 24, 2009, prior to the October 7, 2009 maturity date.
  • 3No penalties were incurred for the early termination.
  • 4The facility was never drawn upon by FGCO.
  • 5Early termination eliminates future unused commitment fees, which were 0.75% per annum on the undrawn amount.
  • 6This action demonstrates a focus on cost reduction and efficient capital management.

Frequently Asked Questions

FirstEnergy terminated the loan facility early because it was no longer needed. The company had not drawn any funds from the $300 million facility since it was established, and terminating it early eliminates the obligation to pay ongoing unused commitment fees.

No, the filing explicitly states that there are no penalties associated with the early termination of the facility.

The primary financial impact is the cessation of unused commitment fees. FGCO was paying a 0.75% annual fee on the undrawn portion of the loan. By terminating, FirstEnergy will save these fees, improving its cash flow and reducing operational expenses.

The fact that FGCO did not draw on the $300 million facility and chose to terminate it suggests that the company has sufficient liquidity and access to capital through other means, or that its financing needs have changed, making this specific facility redundant.