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FE > SEC Filings for FE > Form 8-K on 26-Nov-2013All Recent SEC Filings

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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On November 20, 2013, Monongahela Power Company (MP), a wholly owned subsidiary of FirstEnergy Corp. (FE), entered into a supplemental indenture, dated as of November 20, 2013, to its Indenture dated as of August 1, 1945, as amended and supplemented, including by such supplemental indenture (Indenture), with Citibank, N.A., as successor trustee, relating to its first mortgage bonds.

MP expects to close the issuance and sale of $400 million aggregate principal amount of its First Mortgage Bonds, 4.10% Series due 2024 (2024 Bonds) and $600 million aggregate principal amount of its First Mortgage Bonds, 5.40% Series due 2043 (2043 Bonds and, together with the 2024 Bonds, the Bonds) on November 27, 2013. The Bonds will be secured by the first priority lien of the Indenture on substantially all of MP's real estate, physical plant, transmission and distribution systems and franchises, subject to certain exceptions. The 2024 Bonds will mature on April 15, 2024 and the 2043 Bonds will mature on December 15, 2043. Interest on the 2024 Bonds will be payable on April 15 and October 15 of each year, beginning on April 15, 2014 until maturity and will bear interest at a rate of 4.10% per annum. Interest on the 2043 Bonds will be payable on June 15 and December 15 of each year, beginning on June 15, 2014 until maturity and will bear interest at a rate of 5.40% per annum. The Bonds are redeemable, in whole or in part from time to time, at MP's option, at any time prior to January 15, 2024 for the 2024 Bonds and June 15, 2043 for the 2043 Bonds, respectively, at a "make-whole" redemption price. After January 15, 2024 for the 2024 Bonds and June 15, 2043 for the 2043 Bonds, the Bonds are redeemable at par. The Indenture contains customary conditions and events of default.

MP will use the net proceeds from the issuance and sale of the Bonds to:

(i) repay at maturity $300 million of its First Mortgage Bonds, 7.95% Series due December 15, 2013,

(ii) redeem $120 million of its First Mortgage Bonds, 6.70% Series due June 15, 2014 (2014 Bonds),

(iii) repay a $572.7 million short-term promissory note originally issued on October 9, 2013 to its affiliate, Allegheny Energy Supply Company, LLC in connection with MP's acquisition of the remaining ownership of the Harrison Power Station, and

(iv) for working capital needs and other general corporate purposes.

Notice of a make-whole redemption on December 20, 2013 for the 2014 Bonds was sent to holders on November 20, 2013.

The Bonds are being offered in a transaction exempt from registration under the Securities Act of 1933, as amended, pursuant to Rule 144A and Regulation S thereunder and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration. This Form 8-K is not an offer to sell the Bonds and it is not soliciting an offer to buy the Bonds in any jurisdiction where the offer or sale is not permitted.

Forward-Looking Statements: This Form 8-K includes forward-looking statements based on information currently available to management. Such statements are subject to certain risks and uncertainties. These statements include declarations regarding management's intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "will," "intend," "believe," "estimate" and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results may differ materially due to the speed and nature of increased competition in the electric utility industry, in general, and the retail sales market in particular; the impact of the regulatory process on the pending matters before the Federal Energy Regulatory Commission and in the various states in which we do business including, but not limited to, matters related to rates and pending rate cases; the uncertainties of various cost recovery and cost allocation issues resulting from American Transmission Systems, Incorporated's realignment into PJM Interconnection LLC; economic or weather conditions affecting future sales and margins; regulatory outcomes associated with storm restoration, including but not limited to Hurricane Sandy, Hurricane Irene and the October snowstorm of 2011; changing energy, capacity and commodity market prices including, but not limited to, coal, natural gas and oil, and availability and their impact on retail margins; the continued ability of our regulated utilities to recover their costs; costs being higher than anticipated and the success of our policies to control costs and to mitigate low energy, capacity and market prices; other legislative and regulatory changes, and revised environmental requirements, including possible greenhouse gas emission, water discharge, water intake and coal combustion residual regulations, the potential impacts of Cross-State Air Pollution Rule, Clean Air Interstate Rule (CAIR), and/or any laws, rules or regulations that ultimately replace CAIR, and the effects of the United States Environmental Protection Agency's Mercury and Air Toxics Standards rules including our estimated costs of compliance; the uncertainty of the timing and amounts of the capital expenditures that may arise in connection with any litigation, including New Source Review litigation or potential regulatory initiatives or rulemakings (including that such expenditures could result in our decision to deactivate or idle certain generating units); the uncertainties associated with the deactivation of certain older regulated and competitive fossil units including the impact on vendor commitments, and the timing thereof as they relate to, among other things, Reliability Must-Run arrangements and the reliability of the transmission grid; adverse regulatory or legal decisions and outcomes with respect to our nuclear operations (including, but not limited to the revocation or non-renewal of necessary licenses, approvals or operating permits by the Nuclear Regulatory Commission or as a result of the incident at Japan's Fukushima Daiichi Nuclear Plant); issues arising from the indications of cracking in the shield building at the Davis-Besse nuclear power plant; the impact of future changes to the operational status or availability of our generating units; the risks and uncertainties associated with litigation, arbitration, mediation and like proceedings, including, but not limited to, any such proceedings related to vendor commitments; replacement power costs being higher than anticipated or not fully hedged; the ability to comply with applicable state and federal reliability standards and energy efficiency and peak demand reduction mandates; changes in customers' demand for power, including but not limited to, changes resulting from the implementation of state and federal energy efficiency and peak demand reduction mandates; the ability to accomplish or realize anticipated benefits from strategic and financial goals including, but not limited to, the ability to reduce costs and to successfully complete our announced financial plans designed to improve our credit metrics and strengthen our balance sheet, including but not limited to, proposed capital raising and debt reduction initiatives, and the proposed sale of non-core hydro assets; our ability to improve electric commodity margins and the impact of, among other factors, the increased cost of fuel and fuel transportation on such margins; the ability to experience growth in the Regulated Distribution and Regulated Transmission segments and to continue to successfully implement our direct retail sales strategy in the Competitive Energy Services segment; changing market conditions that could affect the measurement of liabilities and the value of assets held in our Nuclear Decommissioning Trusts, pension trusts and other trust funds, and cause us and our subsidiaries to make additional contributions sooner, or in amounts that are larger than currently anticipated; the impact of changes to material accounting policies; the ability to access the public securities and other capital and credit markets in accordance with our announced financial plan, the cost of such capital and overall condition of the capital and credit markets affecting us and our subsidiaries; actions that may be taken by credit rating agencies that could negatively affect us and our subsidiaries' access to financing, increase the costs thereof, and increase requirements to post additional collateral to support outstanding commodity positions, letters of credit and other financial guarantees; changes in national and regional economic conditions affecting us, our subsidiaries and our major industrial and commercial customers, and other counterparties including fuel suppliers, with which we do business; issues concerning the stability of domestic and foreign financial institutions and counterparties with which we do business; the risks and other factors discussed from time to time in our United States Securities and Exchange Commission filings, and other similar factors. Dividends declared from time to time on FirstEnergy Corp.'s common stock during any period may in the aggregate vary from prior periods due to circumstances considered by FirstEnergy Corp.'s Board of Directors at the time of the actual declarations. A security rating is not a recommendation to buy or hold securities and is subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. The foregoing review of factors should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor assess the impact of any such factor on FirstEnergy's business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. FirstEnergy expressly disclaims any current intention to update, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.

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