8-KFinancial EventsExhibits & Filings

FIRSTENERGY CORP 8-K Report, Financial Obligation (Dec 21, 2016)

Filed December 21, 2016For Securities:FE

Summary

FirstEnergy Corp. (FE) has disclosed the creation of a new credit facility, the "New FES Secured Facility," established on December 6, 2016. Under this facility, FE has committed to provide revolving loans of up to $500 million and up to $200 million in surety credit support to its subsidiary, FirstEnergy Solutions Corp. (FES). As a condition for the initial borrowing by FES, its subsidiaries FirstEnergy Generation, LLC (FG) and FirstEnergy Nuclear Generation, LLC (NG) agreed to issue $700 million in First Mortgage Bonds (FMBs) to FE. The filing details the issuance of these FMBs on December 19, 2016: NG issued $450 million and FG issued $250 million, both due December 31, 2018. These bonds are secured by liens on substantially all of each subsidiary's property used in electricity generation. The FMBs will bear interest at the same rate as the New FES Secured Facility, capped at 10% annually, and can only be accelerated upon an Event of Default as defined in the credit agreement. As of the filing date, no amounts had been drawn under the FES Secured Facility or surety credit support.

Key Highlights

  • 1FirstEnergy Corp. (FE) established a new $700 million credit facility for its subsidiary FirstEnergy Solutions Corp. (FES).
  • 2The facility includes $500 million in revolving loans and $200 million in surety credit support.
  • 3FES's subsidiaries, FirstEnergy Generation, LLC (FG) and FirstEnergy Nuclear Generation, LLC (NG), issued $700 million in First Mortgage Bonds (FMBs) to FE as collateral.
  • 4NG issued $450 million and FG issued $250 million in FMBs, both maturing on December 31, 2018.
  • 5The FMBs are secured by liens on substantially all of FG's and NG's generation property.
  • 6Interest on the FMBs will match the FES Secured Facility rate, not exceeding 10% per annum.
  • 7As of the filing date, no funds had been drawn from the new facility or surety support.

Frequently Asked Questions

The "New FES Secured Facility" is designed to provide financial support to FirstEnergy Solutions Corp. (FES). The issuance of First Mortgage Bonds by FES's subsidiaries (FG and NG) to FirstEnergy Corp. (FE) serves as collateral for this facility, securing the loans and surety credit support provided by FE.

FirstEnergy Corp. has committed to provide up to $500 million in revolving loans and up to $200 million in surety credit support to FES, totaling $700 million. This commitment is backed by the $700 million in First Mortgage Bonds issued by FG and NG.

The bonds issued by NG total $450 million and by FG total $250 million, with both series maturing on December 31, 2018. They are secured by a first lien on substantially all of the respective subsidiaries' electricity generation property and will bear interest at the rate of the FES Secured Facility, capped at 10% per annum. Acceleration of these bonds is contingent on an Event of Default as defined in the credit agreement.

According to the filing on December 21, 2016, there were no amounts drawn under the FES Secured Facility or the surety credit support as of the date of the report.