PPL extends exchange for 7¾% PEPS

New York, Dec. 19 - PPL Corp. said it extended its exchange offer for its 7¾% Premium Equity Participating Security units to 5 p.m. ET Jan. 15 from Dec. 18.

As of 5 p.m. ET Dec. 18, holders had tendered 4.025 million of the units, or 17.5% of the 23 million or $575 million outstanding.

Holders may withdraw PEPS tendered up until the expiration date.

PPL announced on Nov. 18 that it is offering to exchange its 7¾% PEPS for new 7¾% PEPS with different remarketing provisions.

The Allentown, Pa., electricity generator is offering the new PEPS on a one-for-one basis for the existing PEPS plus $0.375 in cash per PEPS.

PPL said it is carrying out the exchange to reduce its future interest expense.

The new PEPS will consist of a fixed-income security plus a forward sales contract to buy PPL's common stock in May 2004. On remarketing, the fixed-income security will become a senior unsecured debt obligation of PPL Capital Funding Inc., guaranteed on a senior basis by PPL.

The existing PEPS consist of an identical forward sales contract but combined with a five-year trust preferred security.

Based on PPL's current ratings, the new fixed-income security in the new PEPS would have an investment-grade rating while the trust preferreds in the old PEPS would be junk rated.

PPL said it expects the interest rate on the new fixed-income securities at remarketing to be lower than that on the trust preferreds.

The new fixed-income securities will be remarketed in an attempt to generate proceeds of 100.50% of the $25 par at a floating rate based on three-month Libor plus a spread. The rate may be lower than, the same as or higher than the current 7.29% on the fixed-income portion of the PEPS. If the remarketing succeeds, holders will receive $0.0625 per $25 PEPS.

The trust preferreds in the existing PEPS pay a minimum of 7.29% after remarketing. Holders will receive any proceeds above 100.25% of the $25 par.

PPL said it will reduce the number of PEPS accepted in the exchange if it believes the level of response is likely to result in the existing PEPS being delisted by the New York Stock Exchange.

PPL said it will apply to list the new PEPS on the New York Stock Exchange. It said it has asked the Securities and Exchange Commission to waive the listing requirement that securities have a minimum life of one year but added that it does not expect to receive the waiver before the expiration of the exchange.

The tender is also subject to at least 35% of the existing PEPS being tendered.

Morgan Stanley is dealer manager for the offer, and JPMorgan Chase Bank is the exchange agent. The information agent is Innisfree M&A Inc. (877 825-8777, banks and brokers call collect at 212 750-5833).

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.