Summary
FirstEnergy Corp. (FE) filed an 8-K on March 5, 2013, reporting on the issuance of $1.5 billion in aggregate principal amount of new debt notes. Specifically, the company issued $650 million of 2.75% Notes, Series A, due 2018, and $850 million of 4.25% Notes, Series B, due 2023. These notes were issued under an existing shelf registration statement and registered under an indenture dated November 15, 2001, as amended. The net proceeds from this offering are intended to fund tender offers for outstanding long-term debt securities of its subsidiaries, FirstEnergy Solutions Corp. (FES) and Allegheny Energy Supply Company, LLC (AE Supply). Pending this, proceeds may be used for short-term borrowings and general corporate purposes.
Key Highlights
- 1FirstEnergy Corp. issued $1.5 billion in aggregate principal amount of new debt notes.
- 2The new debt comprises $650 million of 2.75% Notes, Series A, due 2018, and $850 million of 4.25% Notes, Series B, due 2023.
- 3Net proceeds of approximately $1.489 billion were raised after deducting underwriter discounts and expenses.
- 4The primary use of proceeds is to fund tender offers for outstanding debt of subsidiaries FES and AE Supply.
- 5The notes were issued under FirstEnergy's automatic shelf registration statement on Form S-3.
- 6The debt issuance occurred on March 5, 2013, with the underwriting agreement dated February 28, 2013.
- 7The company announced the satisfaction of financing conditions for subsidiary tender offers on March 1, 2013.
Frequently Asked Questions
The primary purpose of this debt issuance is to fund all or a portion of the amounts necessary for FirstEnergy's subsidiaries, FirstEnergy Solutions Corp. (FES) and Allegheny Energy Supply Company, LLC (AE Supply), to complete previously announced cash tender offers for certain series of their respective outstanding long-term debt securities.
FirstEnergy raised approximately $1.489 billion in net proceeds after deducting underwriters' discounts and estimated expenses from the sale of $650 million in Series A Notes and $850 million in Series B Notes, totaling $1.5 billion in aggregate principal amount.
The Series A Notes have a principal amount of $650 million, mature on March 15, 2018, and bear interest at 2.75% per annum. The Series B Notes have a principal amount of $850 million, mature on March 15, 2023, and bear interest at 4.25% per annum. Interest is payable semi-annually on March 15 and September 15, starting September 15, 2013. Both series are redeemable at a "make-whole" price before certain dates prior to maturity and at par thereafter.
Pending their use for the tender offers, FirstEnergy may use the net proceeds to temporarily repay its short-term borrowings under the money pool for its unregulated companies and its revolving credit facility. Any remaining funds will be invested in that money pool. In addition, to the extent available, net proceeds will be used for general corporate purposes.