PPL Energy Supply begins exchange offer for PPL Ironwood 8.857% bonds

By Angela McDaniels

Tacoma, Wash., Jan. 11 - PPL Energy Supply, LLC began an exchange offer and consent solicitation for PPL Ironwood, LLC's 8.857% senior secured bonds due 2025, according to an S-4 filing with the Securities and Exchange Commission.

Holders are being offered $1,270 principal amount of series 4.6% senior notes due 2021 in exchange for each $1,000 principal amount of PPL Ironwood bonds.

The company will not accept any tender that would result in the issuance of less than $1,000 principal amount of new notes. Any bonds that are not tendered or accepted for exchange must be in a minimum denomination of $100,000.

The new notes will be fungible with the $500 million principal amount of series 4.6% senior notes due 2021 issued by PPL Energy Supply on Dec. 16, 2011.

The new notes will be issued with accrued interest from Dec. 15, the most recent interest payment date. An amount equal to the accrued interest on the new notes will be subtracted from the payment to be made on the settlement date in respect of the accrued interest on the PPL Ironwood bonds accepted for exchange.

The exchange offer will end at 11:59 p.m. ET on Feb. 8. It is conditioned on the receipt of tenders for at least a majority of the bonds.

Consent solicitation

PPL Energy Supply is also soliciting consents to proposed amendments that would eliminate substantially all of the restrictive covenants in the indenture governing the PPL Ironwood bonds and direct the trustee, collateral agent and depositary bank to execute an amended and restated collateral agency agreement, which will no longer include certain provisions relating to the operation and financing of the Ironwood generating facility owned by PPL Ironwood.

In order to amend the indenture, consents are needed from the holders of at least a majority of the outstanding PPL Ironwood bonds. In order to amend the collateral agency agreement, consents are needed from the holders of at least a majority of the outstanding debt of PPL Ironwood.

If the necessary consents are obtained, any outstanding debt of PPL Ironwood (other than the 8.857% bonds) is expected to be repaid prior to the exchange offer's settlement date, which will occur promptly following the expiration date.

Tenders will be deemed to include consents to the proposed amendments, and holders may not deliver consents without tendering their PPL Ironwood bonds.

On Feb. 28, PPL Ironwood will make a principal and interest payment on any outstanding 8.857% bonds to holders of record as of Feb. 1. Holders who exchange their bonds will not be entitled to receive this payment.

The dealer manager is J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811). The information agent is D.F. King & Co., Inc. (212 269-5550 for banks and brokers, 800 488-8075 or PPL@dfking.com).

PPL Energy Supply is an energy company based in Allentown, Pa.

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