8-KOther EventsExhibits & Filings

FIRSTENERGY CORP 8-K Report, Corporate Update (Feb 20, 2020)

Filed February 20, 2020For Securities:FE

Summary

On February 20, 2020, FirstEnergy Corp. (FE) announced the issuance of $1.75 billion in senior notes across three series: Series A (2.050% due 2025), Series B (2.650% due 2030), and Series C (3.400% due 2050). The net proceeds of approximately $1.731 billion are earmarked for several significant financial actions, including repaying outstanding term loan debt, making substantial cash and tax payments related to the FirstEnergy Solutions Corp. (FES) bankruptcy settlement, and addressing general working capital and corporate needs. This debt issuance represents a strategic move by FirstEnergy to manage its capital structure and fulfill obligations stemming from the FES bankruptcy. This offering diversifies FirstEnergy's debt maturity profile with the new notes maturing in 2025, 2030, and 2050, offering longer-term financing. The company has filed a shelf registration statement to facilitate these issuances. Investors should note the specific interest rates and maturity dates, as well as the redemption provisions and the intended use of proceeds, which primarily focus on debt reduction and a significant settlement payment. The company's forward-looking statements highlight ongoing strategic goals, including operating as a fully regulated business and improving credit metrics, alongside various risks and uncertainties.

Key Highlights

  • 1FirstEnergy Corp. issued $1.75 billion in senior notes on February 20, 2020.
  • 2The notes are divided into three series: $300 million of 2.050% Notes due 2025 (Series A), $600 million of 2.650% Notes due 2030 (Series B), and $850 million of 3.400% Notes due 2050 (Series C).
  • 3Net proceeds of approximately $1.731 billion will be used to repay outstanding term loans, make significant payments related to the FirstEnergy Solutions Corp. bankruptcy settlement, and for general corporate purposes.
  • 4The issuance is registered under an automatic shelf registration statement filed on Form S-3.
  • 5The new notes offer a range of maturity dates, extending to 2050.
  • 6The notes are redeemable at the company's option prior to maturity, subject to specified make-whole provisions or redemption at par.

Frequently Asked Questions

The primary purpose is to refinance existing debt, specifically repaying outstanding amounts under term loan credit agreements, and to fund significant cash and tax payments related to the FirstEnergy Solutions Corp. bankruptcy settlement. The remaining proceeds are allocated for working capital and general corporate purposes.

The notes consist of $300 million of 2.050% Notes due 2025 (Series A), $600 million of 2.650% Notes due 2030 (Series B), and $850 million of 3.400% Notes due 2050 (Series C). Interest is payable semi-annually on March 1 and September 1.

The proceeds will reduce outstanding term loan debt and address financial obligations stemming from the FES bankruptcy. This is expected to strengthen the company's balance sheet by improving its capital structure and reducing near-term debt maturities, while also fulfilling a significant settlement obligation.

Yes, the notes are redeemable at FirstEnergy's option. Prior to certain dates before maturity (depending on the series), redemption occurs at a 'make-whole' price. On or after those dates, redemption is at 100% of the principal amount plus accrued interest.