FirstEnergy Generation gets $300 million one-year term loan

By Angela McDaniels

Tacoma, Wash., Oct. 15 - FirstEnergy Corp. subsidiary FirstEnergy Generation Corp. obtained a $300 million secured term loan facility on Oct. 8, according to an 8-K filing with the Securities and Exchange Commission.

FirstEnergy and FirstEnergy Solutions Corp. are guarantors, and Credit Suisse is the administrative agent.

For eurodollar rate loans, interest is equal to Libor plus the greater of 300 basis points and a rate determined on the basis of FirstEnergy's and Credit Suisse's applicable credit default swap spread.

For alternate base rate loans, interest will equal the higher of Credit Suisse's prime rate and the Federal Funds Effective Rate plus 50 basis points plus the applicable margin, which is the higher of 200 bps and a rate determined on the basis of FirstEnergy's and Credit Suisse's applicable credit default swap spread.

The unused commitment fee is 75 bps.

Each drawdown under the facility will mature on the earlier of 30 days or Oct. 7, 2009, excluding any "blackout periods" agreed to in order to issue securities.

Blackout periods will begin on the first day following the end of a fiscal quarter and will end not later than two days following the date on which FirstEnergy publicly releases its earnings for that quarter, the filing stated.

The loans must be prepaid if FirstEnergy or any subsidiary incurs or issues debt for borrowed money owed to, or issues equity to, anyone other than FirstEnergy or its subsidiaries.

In addition to customary conditions, FirstEnergy Generation must issue to the administrative agent a first mortgage bond under its general mortgage indenture, and the outstanding amount of first mortgage bonds cannot exceed 60% of all property additions.

Also, some of FirstEnergy's existing credit facilities must be drawn in full, and FirstEnergy must publicly sell or privately place debt or equity securities and put the proceeds toward the term loan.

The company said the term loan will be used to enhance its liquidity position "in the face of the turbulent credit and bond markets."

FirstEnergy is an energy company based in Akron, Ohio.

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