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

By Susanna Moon

Chicago, Feb. 11 - PPL Energy Supply, LLC said investors tendered $167,281,121 principal amount, or about 76.39%, of PPL Ironwood, LLC's 8.857% senior secured bonds due 2025 by the end of the exchange offer at 11:59 p.m. ET on Feb. 8.

The company plans to settle the tendered notes on Feb. 12 and, in exchange, issue $212,415,000 of new notes, according to a company press release.

As noted before, the exchange payment is $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 would not have accepted any tender that would have resulted in the issuance of less than $1,000 principal amount of new notes. Any bonds that were not tendered or accepted for exchange needed to 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.

Holders also will receive a cash payment of about $8.46 per $1,000 principal amount, which is accrued interest from Nov. 30, the last interest payment date for the Ironwood bonds, to but excluding the settlement date, less an amount equal to the accrued interest on the new notes at issuance. In order for the new notes issued in the exchange offer to be fungible with the existing 2021 notes, the new notes will be issued with accrued interest from Dec. 15, the date of the most recent interest payment on the 2021 notes.

The exchange offer began on Jan. 11 and was conditioned on the receipt of tenders for at least a majority of the bonds.

Consent solicitation

PPL Energy Supply also received the needed consents in the solicitation to amend the notes. As previously noted, the company sought to 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 were needed from the holders of at least a majority of the outstanding PPL Ironwood bonds. In order to amend the collateral agency agreement, consents were needed from the holders of at least a majority of the outstanding debt of PPL Ironwood.

The company previously said that it received the needed consents, any outstanding debt of PPL Ironwood (other than the 8.857% bonds) would be repaid prior to the exchange offer's settlement date.

Tenders were deemed to include consents to the proposed amendments, and holders could 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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