PSEG Power launches exchange offer for up to $250 million 7¾% notes

By Jennifer Chiou

New York, March 29 - PSEG Power LLC announced the start of an offer to pay cash and issue new 5 1/8% senior notes due April 15, 2020 in exchange for up to $250 million of its $800 million of 7¾% senior notes due 2011.

The new notes are fully and unconditionally guaranteed by PSEG Power's three principal operating subsidiaries.

The offer will end at midnight ET on April 26.

Those who tender their notes for exchange prior to 5 p.m. ET on April 12, the early participation date, will receive the total exchange price. For each $1,000 principal amount of old notes, the total exchange price of new notes will be determined using the bid-side yield on the 0.875% Treasury due March 31, 2011 plus a fixed spread of 35 basis points, including a $30.00 early participation payment.

The exchange price will be payable 25% in cash and 75% in new notes.

PSEG Power said that the exchange ratio will be the ratio determined by dividing the total exchange price by the new notes value, which will be based on a pricing formula using the bid-side yield on the 3.625% Treasury due Feb. 15, 2020 plus a fixed spread of 130 bps.

Separately, the company also plans to issue $250 million of the new notes on April 5. Interest will be payable semiannually.

PSEG Power added that it will not receive any cash proceeds from the exchange offer.

The company is a wholly owned subsidiary of Public Service Enterprise Group Inc., a Newark-based diversified energy company.

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