Form 8-K - PCRB Issuance
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported) December 5, 2006
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Commission
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Registrant;
State of Incorporation;
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I.R.S.
Employer
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File
Number
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Address;
and Telephone Number
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Identification
No.
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333-21011
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FirstEnergy
Corp.
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34-1843785
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(An
Ohio Corporation)
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76
South Main Street
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Akron,
OH 44308
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Telephone
(800)736-3402
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2.):
[
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01
Entry into a Material Definitive Agreement.
See
Item 2.03 below
with respect to certain letter of credit and guaranty obligations of FirstEnergy
Corp.
referred to therein.
Item
2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
On
December 5,
2006,
FirstEnergy entered into arrangements for the delivery of eight separate
letters
of credit in connection with the issuance of eight new series of pollution
control revenue refunding bonds issued by the Ohio Air Quality Development
Authority (OAQDA), the Ohio Water Development Authority (OWDA) and the Beaver
County Industrial Development Authority (BCIDA, and together with the OAQDA
and
OWDA, the Authorities) on behalf of FirstEnergy’s subsidiaries, FirstEnergy
Nuclear Generation Corp. (NGC) and FirstEnergy Generation Corp. (FGCO, each
a
Company and collectively, the Companies), as follows (collectively, the
Bonds):
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Authority
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Company
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Series
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Principal
Amount
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Maturity
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Initial
Interest Rate
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OAQDA
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NGC
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2006-A
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$62,500,000
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June
1,
2033
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Weekly
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OAQDA
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NGC
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2006-B
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15,500,000
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December
1,
2033
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Weekly
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OWDA
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NGC
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2006-B
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135,550,000
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December
1,
2033
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Weekly
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OWDA
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NGC
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2006-C
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107,500,000
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June
1,
2033
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Weekly
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BCIDA
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NGC
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2006-B
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163,965,000
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December
1,
2035
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Weekly
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OAQDA
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FGCO
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2006-A
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234,520,000
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December
1,
2023
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Weekly
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BCIDA
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FGCO
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2006-B
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129,610,000
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December
1,
2041
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Weekly
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BCIDA
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FGCO
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2006-C
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28,525,000
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March
1,
2017
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Daily
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Total
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$877,670,000
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Proceeds
from
the issuance and sale of the Bonds were or will be used to refund an equal
aggregate amount of pollution control bonds previously issued in various
series
by the Authorities and the Lawrence County Industrial Development Authority
for
which FirstEnergy’s utility operating subsidiaries, Ohio Edison Company,
Pennsylvania Power Company, The Cleveland Electric Illuminating Company and
The
Toledo Edison Company, were obligors under corresponding pollution control
notes. These refundings have resulted or will result in a corresponding
reduction in each of the utility operating subsidiaries’ affiliate notes
payables from NGC and FGCO relating to the generation asset transfers completed
in 2005.
Each
of the eight
new series of Bonds is
issued under a
separate trust indenture dated as of December 1, 2006 between the
applicable Authority and The Bank of New York Trust Company, N.A., as trustee
(each an Indenture, and collectively, the Indentures).
Principal
or
redemption price of and interest on, and purchase price of, each series of
the
Bonds is payable from a pledge of revenues derived by the applicable Authority
pursuant to a separate loan agreement dated as of December 1, 2006 (each a
Loan Agreement), between the applicable Authority and the applicable Company
and
a corresponding related unsecured promissory note between the applicable Company
and the applicable trustee (each a Note). Payment of the principal or redemption
price of and interest on, and purchase price of, each series of Bonds will
be
fully secured by a separate irrevocable, direct-pay letter of credit (each
a
Letter of Credit) delivered to the applicable trustee.
Each
Letter of
Credit for Bonds corresponding to NGC (each an NGC Letter of Credit) will be
issued by Wachovia Bank, National Association (Wachovia), as Fronting Bank
and
Administrative Agent, under a Letter of Credit and Term Loan Agreement, dated
as
of December 5, 2006 (the NGC Reimbursement Agreement), between NGC
and Wachovia.
In
connection with
the NGC Reimbursement Agreement, FirstEnergy delivered its guaranty (the NGC
Guaranty) to Wachovia under which FirstEnergy has agreed to guaranty the
payment, performance and other obligations (but not collection) of NGC under
the
NGC Reimbursement Agreement. Prior to January 31, 2007, the NGC Guaranty
may be exchanged for a letter of credit to be issued by Wachovia on behalf
of
FirstEnergy under a master letter of credit facility to be entered into between
FirstEnergy and an affiliate of Wachovia, which letter of credit would allow
Wachovia to draw to cover reimbursement obligations of NGC with respect to
draws
under the NGC Letter of Credit.
Each
Letter of
Credit for the Bonds corresponding to FGCO (each an FGCO Letter of Credit)
will
be issued by Barclays Bank PLC (Barclays), as Fronting Bank, under the
$2.75 billion credit agreement, dated as of August 24, 2006 (the
Credit Agreement), among FirstEnergy and certain other borrowers, the financial
institutions from time to time party thereto, Citibank, N.A., as administrative
agent, Barclays, as a Fronting Bank and certain other Fronting Banks and the
Swing Line Lenders named therein, and a separate Supplemental Letter of Credit
Agreement, dated as of December 5, 2006 (each an FGCO Supplemental LOC
Agreement), among FirstEnergy, FGCO and Barclays. Under each FGCO Supplemental
LOC Agreement, FGCO has agreed to guaranty the payment, performance and other
obligations (but not collection) of FirstEnergy under the Credit Agreement
with
respect to the applicable FGCO Letter of Credit.
Each
Letter of
Credit will permit the trustee to draw up to (a) an amount sufficient to pay
the
principal of the applicable Bonds or the portion of the purchase price
corresponding to the principal of such Bonds, plus (b) an amount equal to 36
days’ interest accrued on the applicable Bonds, computed at a maximum rate of
10% per annum, to pay accrued and unpaid interest on such Bonds or the portion
of the purchase price corresponding to accrued and unpaid interest on such
Bonds. Each NGC Letter of Credit and FGCO Letter of Credit will expire
March 18, 2009 and December 3, 2007, respectively, unless terminated
earlier or extended in accordance with its terms. If a Letter of Credit is
not
extended, is cancelled or is replaced as described herein, the applicable Bonds
entitled to the benefit of that Letter of Credit will be subject to mandatory
purchase prior to the cancellation, expiration or replacement of such Letter
of
Credit.
From
the date of
issuance of the Bonds, each series will accrue interest at the Daily or Weekly
Rate, as indicated above, determined by the applicable remarketing agent as
set
forth in the related Indenture. The method of determining the interest rate
on
the Bonds may be converted from time to time in accordance with the Indenture
to
a Daily Rate, a Weekly Rate, a Commercial Paper Rate, a Semi-Annual Rate, an
Annual Rate, a Two-Year Rate, a Three-Year Rate, a Five-Year Rate, a Long Term
Rate or a Dutch Auction Rate. The Bonds of each series will be subject to
optional, extraordinary optional and special mandatory redemption prior to
maturity, and to optional and mandatory tender for purchase and remarketing
in
certain circumstances described in the Indentures.
The
foregoing
summary does not purport to be complete and is qualified in its entirety by
reference to the complete text of each applicable Note, Guaranty, Reimbursement
Agreement, Indenture, Letter of Credit, Supplemental LOC Agreement and Loan
Agreement.
Forward-Looking
Statements:
This Form 8-K
includes forward-looking statements based on information currently available
to
management. Such statements are subject to certain risks and uncertainties.
These statements typically contain, but are not limited to, the terms
“anticipate,” “potential,” “expect,” “believe,” “estimate” and similar words.
Actual results may differ materially due to the speed and nature of increased
competition and deregulation in the electric utility industry, economic or
weather conditions affecting future sales and margins, changes in markets for
energy services, changing energy and commodity market prices, replacement power
costs being higher than anticipated or inadequately hedged, the continued
ability of FirstEnergy’s regulated utilities to collect transition and other
charges or to recover increased transmission costs, maintenance costs being
higher than anticipated, legislative and regulatory changes (including revised
environmental requirements), and the legal and regulatory changes resulting
from
the implementation of the Energy Policy Act of 2005 (including, but not limited
to, the repeal of the Public Utility Holding Company Act of 1935), the
uncertainty of the timing and amounts of the capital expenditures needed to,
among other things, implement the Air Quality Compliance Plan (including that
such amounts could be higher than anticipated) or levels of emission reductions
related to the Consent Decree resolving the New Source Review litigation,
adverse regulatory or legal decisions and outcomes (including, but not limited
to, the revocation of necessary licenses or operating permits, fines or other
enforcement actions and remedies) of governmental investigations and oversight,
including by the Securities and Exchange Commission, the United States
Attorney’s Office, the Nuclear Regulatory Commission and the various state
public utility commissions as disclosed in the registrant’s Securities and
Exchange Commission filings, generally, and with respect to the Davis-Besse
Nuclear Power Station outage and heightened scrutiny at the Perry Nuclear Power
Plant in particular, the timing and outcome of various proceedings before the
Public Utilities Commission of Ohio (including, but not limited to, the
successful resolution of the issues remanded to the Public Utilities Commission
of Ohio by the Ohio Supreme Court regarding the Rate Stabilization Plan) and
the
Pennsylvania Public Utility Commission, including the transition rate plan
filings for Met-Ed and Penelec, the continuing availability and operation of
generating units, the ability of generating units to continue to operate at,
or
near full capacity, the inability to accomplish or realize anticipated benefits
from strategic goals (including employee workforce initiatives), the anticipated
benefits from voluntary pension plan contributions, the ability to improve
electric commodity margins and to experience growth in the distribution
business, the ability to access the public securities and other capital markets
and the cost of such capital, the outcome, cost and other effects of present
and
potential legal and administrative proceedings and claims related to the
August 14, 2003 regional power outage, the successful completion of the
share repurchase program announced August 10, 2006, the risks and other
factors discussed from time to time in the registrant’s Securities and Exchange
Commission filings, including its annual report on Form 10-K for the year ended
December 31, 2005, and other similar factors. The registrant expressly
disclaims any current intention to update any forward-looking statements
contained herein as a result of new information, future events, or otherwise.
SIGNATURE
Pursuant
to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto
duly
authorized.
December
6,
2006
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FIRSTENERGY
CORP.
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Registrant
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By:
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/s/
Harvey L.
Wagner
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Harvey
L.
Wagner
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Vice
President, Controller
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and
Chief
Accounting Officer
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