8-KMaterial AgreementsFinancial Events

FIRSTENERGY CORP 8-K Report, Material Agreement (May 20, 2014)

Filed May 20, 2014For Securities:FE

Summary

On May 19, 2014, FirstEnergy Corp. (FE) announced that its wholly owned subsidiary, FirstEnergy Transmission, LLC (FET), successfully issued $1 billion in aggregate principal amount of senior notes. This issuance comprises $600 million of 4.35% Senior Notes due 2025 and $400 million of 5.45% Senior Notes due 2044. These notes are senior unsecured general obligations of FET, ranking equally with its existing and future senior unsecured and unsubordinated indebtedness. The proceeds from this debt issuance are earmarked for several key purposes: repaying borrowings under FET's revolving credit facility and money pool, funding capital contributions to its operating subsidiaries (American Transmission Systems, Incorporated and Trans-Allegheny Interstate Line Company), and for general working capital needs. This strategic move signals an effort by FirstEnergy to manage its debt structure and fund critical operational and capital expenditures.

Key Highlights

  • 1FirstEnergy Transmission, LLC (FET), a subsidiary of FirstEnergy Corp., issued $1 billion in senior notes.
  • 2The issuance consists of $600 million in 4.35% Senior Notes due 2025 and $400 million in 5.45% Senior Notes due 2044.
  • 3The notes are senior unsecured general obligations of FET.
  • 4Proceeds will be used to repay credit facility borrowings and money pool obligations.
  • 5A portion of the proceeds will fund capital contributions to operating subsidiaries.
  • 6Remaining proceeds will be allocated to working capital and general business purposes.
  • 7The issuance was conducted under Rule 144A and Regulation S, exempt from registration under the Securities Act of 1933.

Frequently Asked Questions

The primary purposes for issuing these notes are to repay existing borrowings under FET's revolving credit facility and the FirstEnergy unregulated company money pool, to fund capital contributions to its main operating subsidiaries (American Transmission Systems, Incorporated and Trans-Allegheny Interstate Line Company), and to meet general working capital needs and other business requirements.

FET issued a total of $1 billion in aggregate principal amount of senior notes. This includes $600 million of 4.35% Senior Notes due in 2025 and $400 million of 5.45% Senior Notes due in 2044. These notes are classified as senior unsecured general obligations.

The new notes are senior unsecured general obligations of FET. They rank, and will continue to rank, equally with all of FET's other existing and future senior unsecured and unsubordinated indebtedness.

Yes, the Indenture governing these notes includes a limitation on liens covenant. This restriction prevents FET from issuing, assuming, guaranteeing, or permitting debt secured by a lien on the capital stock of its subsidiaries without effectively securing these senior notes equally and ratably, subject to certain exceptions. For example, FET can issue secured debt otherwise prohibited up to 15% of its consolidated net tangible assets or 15% of its total capitalization.