FirstEnergy enters into four credit facilities totaling $6.9 billion

By Marisa Wong

Morgantown, W.Va., Dec. 6 – FirstEnergy Corp. and some of its subsidiaries entered into four new credit facilities on Tuesday, according to an 8-K filing with the Securities and Exchange Commission.

The new facilities include:

• A $4 billion five-year syndicated revolving credit agreement among FirstEnergy, Cleveland Electric Illuminating Co., Metropolitan Edison Co., Ohio Edison Co., Pennsylvania Power Co., Toledo Edison Co., Jersey Central Power & Light Co., Monongahela Power Co., Pennsylvania Electric Co., Potomac Edison Co. and West Pennsylvania Power Co. as borrowers.

Mizuho Bank, Ltd., JPMorgan Chase Bank, NA, Merrill Lynch, Pierce, Fenner & Smith Inc., PNC Capital Markets LLC, MUFG, Bank of Nova Scotia, Citigroup Global Markets Inc. and Barclays Bank plc are joint lead arrangers with Merrill Lynch, JPMorgan and PNC as syndication agents and Mizuho as administrative agent;

• A $1 billion five-year syndicated revolving credit agreement among FirstEnergy Transmission, LLC, American Transmission Systems, Inc., Mid-Atlantic Interstate Transmission, LLC and Trans-Allegheny Interstate Line Co. as borrowers.

PNC, JPMorgan, Merrill Lynch, Mizuho, MUFG, Scotiabank, Citigroup and Barclays are joint lead arrangers with Merrill Lynch, JPMorgan and Mizuho as syndication agents and PNC Bank, NA as administrative agent;

• A $1.2 billion five-year syndicated term loan credit agreement among FirstEnergy as borrower.

Merrill Lynch, Mizuho, JPMorgan, PNC, MUFG, Scotiabank, Citigroup and Barclays are joint lead arrangers with JPMorgan, Mizuho and PNC as syndication agents and Bank of America, NA as administrative agent; and

• A $700 million two-year secured revolving credit and surety credit support agreement among FirstEnergy Solutions Corp. as borrower, FirstEnergy Generation, LLC and FirstEnergy Nuclear Generation, LLC as guarantors and FirstEnergy as lender.

Concurrently, FirstEnergy terminated the following existing syndicated credit facilities that were set to expire on March 31, 2019:

• The $3.5 billion revolving credit agreement dated June 17, 2011 among FirstEnergy, Cleveland Electric, Metropolitan Edison, Ohio Edison, Penn, Toledo Edison, Jersey Central Power, Monongahela Power, Pennsylvania Electric, Potomac Edison and West Penn Power as borrowers and Mizuho as successor administrative agent;

• The $1.5 billion revolving credit agreement dated June 17, 2011 among FirstEnergy Solutions and Allegheny Energy Supply Co. LLC as borrowers and JPMorgan as administrative agent;

• The $1 billion revolving credit agreement dated May 8, 2012 among FirstEnergy Transmission, American Transmission and Trans-Allegheny as borrowers and PNC as administrative agent;

• The $1 billion term loan credit agreement dated March 31, 2014, among FirstEnergy as borrower and Mizuho as successor administrative agent; and

• The $200 million term loan credit agreement dated May 29, 2015 among FirstEnergy as borrower and BofA as administrative agent.

At the time of its termination, the prior $1.5 billion FirstEnergy Solutions revolver was undrawn. Amounts outstanding under the other prior facilities at the time of their termination were repaid with borrowings under the corresponding new facilities.

New syndicated revolvers

Commitments under each of the new revolvers will be available until Dec. 6, 2021, subject to two one-year extensions.

Generally, borrowings under the new syndicated revolvers are available to each borrower separately and will mature on the earlier of 364 days from the date of borrowing (or 10 days in the case of swingline advances under the FirstEnergy facility) and the commitment termination date.

Borrowings will bear interest at Libor plus 112.5 basis points to 250 bps, depending on FirstEnergy’s ratings.

The commitment fee ranges from 12.5 bps to 50 bps, also based on ratings.

Under the revolvers, each borrower is required to maintain a consolidated debt to total capitalization ratio of no more than 0.65 times, or in the case of FirstEnergy Transmission, 0.75 times.

Under the FirstEnergy facility, FirstEnergy is now also required to maintain a minimum interest coverage ratio of 1.75 times until Dec. 31, 2017, 2 times beginning Jan. 1, 2018 until Dec. 31, 2018, 2.25 times beginning Jan. 1, 2019 until Dec. 31, 2019 and 2.5 times beginning Jan. 1, 2020 until Dec. 31, 2021.

Term loan

FirstEnergy’s new term loan matures on Dec. 6, 2021.

Interest is equal to Libor plus 112.5 bps to 250 bps, depending on the company’s ratings.

The covenants and default provisions under the term loan are the same as those applicable to FirstEnergy under its new revolver, including the debt to total capitalization ratio and interest coverage ratio financial covenants.

FirstEnergy Solutions facility

Under the new FirstEnergy Solutions facility, FirstEnergy agreed to make revolving loans to FirstEnergy Solutions of $500 million and additional secured credit support of $200 million.

Borrowings and the credit support will be available until Dec. 31, 2018.

Other amendments

FirstEnergy is a guarantor under a syndicated senior secured term loan facility due March 3, 2020, under which Global Mining Holding Co. LLC borrowed $300 million. Global Mining is a joint venture between FirstEnergy and some third parties that owns the Signal Peak mining operations.

FirstEnergy and the other parties to the Global Mining facility entered into amendments to conform, restate and amend definitions, covenants and other provisions of the existing facility and related guaranties to align them with the provisions of the new facility.

FirstEnergy is a diversified energy company based in Akron, Ohio.

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