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8-K - FORM 8-K - PPL Corp | c13486e8vk.htm |
EX-99.1 - EXHIBIT 99.1 - PPL Corp | c13486exv99w1.htm |
Exhibit 99.2
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANK OF AMERICA, N.A. One Bryant Park New York, New York 10036 |
CREDIT SUISSE SECURITIES (USA) LLC CREDIT SUISSE AG Eleven Madison Avenue New York, New York 10010 |
CONFIDENTIAL
March 1, 2011
PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania 18101
Attention: Paul A. Farr, Executive Vice President and Chief Financial Officer
Two North Ninth Street
Allentown, Pennsylvania 18101
Attention: Paul A. Farr, Executive Vice President and Chief Financial Officer
PROJECT ISLAND
£3.6 Billion Senior Bridge Term Loan Credit Facility
Commitment Letter
£3.6 Billion Senior Bridge Term Loan Credit Facility
Commitment Letter
Ladies and Gentlemen:
PPL Corporation (you or PPL) have advised Credit Suisse AG (acting through such of its
affiliates or branches as it deems appropriate, CS), Credit Suisse Securities (USA) LLC (CS
Securities and, together with CS and their respective affiliates, Credit Suisse), Bank of
America, N.A. (BofA) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S and,
together with BofA and its respective affiliates, Bank of America; Credit Suisse and Bank of
America are collectively herein referred to as we, us, our or the Commitment Parties) that
you, directly or through one of your wholly owned subsidiaries, intend to acquire (the
Acquisition) from E.ON UK plc (the Seller), all of the equity interests of Central Networks
East plc (CN East) and Central Networks Limited (CN Limited), the corporate parent of Central
Networks West plc (CN West and, collectively with CN East, and CN Limited, the Companies), and
to consummate the other Transactions (such term and each other capitalized term used but not
defined herein having the meaning assigned to such term in the Summary of Principal Terms and
Conditions attached hereto as Exhibit A (the Term Sheet)).
You have further advised us that, in connection therewith, you intend that the Borrowers will
obtain the senior bridge term loan credit facility (the Bridge Facility) described in the Term
Sheet, in an aggregate principal amount of up to £3.6 billion.
1. | Commitments. |
In connection with the foregoing, each of CS and BofA (each, in such capacity, an Initial
Lender) is pleased to advise you of its commitment to provide 50% of the entire principal amount
of the Bridge Facility, upon the terms and subject to the conditions set forth or referred to in
this commitment letter (including the Term Sheet and other attachments hereto, this Commitment
Letter). The commitments of the Initial Lenders hereunder are several and not joint.
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2. | Titles and Roles. |
You hereby appoint (a) CS Securities and MLPF&S (each in such capacity, an Arranger) to act,
and the Arrangers hereby agree to act, as joint bookrunners and joint lead arrangers for the Bridge
Facility, and (b) BofA to act, and BofA hereby agrees to act, as sole administrative agent for the
Bridge Facility, in each case upon the terms and subject to the conditions set forth or referred to
in this Commitment Letter. Each of the Arrangers and the Initial Lenders, in such capacities, will
perform the duties and exercise the authority customarily performed and exercised by it in such
roles. You agree that Bank of America will have left placement in any and all marketing
materials or other documentation used in connection with the Bridge Facility. You further agree
that no other titles will be awarded and no compensation (other than that expressly contemplated by
this Commitment Letter and the Fee Letter referred to below) will be paid in connection with the
Bridge Facility unless you and we shall so agree; provided that you may appoint one or more
additional arrangers or agents that are reasonably satisfactory to us so long as (i) we shall be
entitled to not less than 50% of the commitments and related economics in respect of the Bridge
Facility and (ii) such additional arrangers or agents shall not be awarded the title of joint
bookrunner or joint lead arranger.
3. | Syndication. |
We reserve the right, prior to and/or after the execution of the Bridge Facility Documentation
(as defined below), to syndicate all or a portion of the Initial Lenders commitments with respect
to the Bridge Facility to Permitted Assignees (as defined below) and other banks, financial
institutions and other institutional lenders reasonably acceptable to you (together with the
Initial Lenders, the Lenders) (which syndication shall not reduce the commitments of the Initial
Lenders hereunder, except as provided for in Section 9), and you agree to provide us with a period
of at least 15 consecutive business days following the date hereof. We intend to commence
syndication efforts promptly upon the execution of this Commitment Letter and public announcement
of the Transactions, and you agree to actively assist us in completing a Successful Syndication (as
defined in the Fee Letter). Such assistance shall include (a) your using commercially reasonable
efforts to ensure that any syndication efforts benefit materially from your existing lending and
investment banking relationships and the existing lending and investment banking relationships of
the Companies, (b) direct contact between senior management, representatives and advisors of you
and the Borrowers (and your using commercially reasonable efforts to cause direct contact between
senior management, representatives and advisors of the Companies) and the proposed Lenders, (c)
assistance by you and the Borrowers (and your using commercially reasonable efforts to cause the
assistance by the Companies) in the preparation of a customary confidential information memorandum
for the Bridge Facility and other marketing materials and presentations to be used in connection
with the syndication (the Information Materials), (d) your providing or causing to be provided
customary projections of PPL and its subsidiaries, (e) prior to the launch of the syndication,
having a Public Debt Rating from each of Standard & Poors Ratings Service (S&P) and Moodys
Investors Service, Inc. (Moodys), (f) the hosting, with the Arrangers, of one or more meetings
of prospective Lenders, and (g) your using commercially reasonable efforts to execute and deliver
definitive documentation with respect to the Bridge Facility (including, without limitation, the
execution and delivery by PPL of the Guarantee), consistent with the terms set forth herein and in
the Term Sheet and otherwise reasonably satisfactory to you and the Arrangers (the Bridge Facility
Documentation) or, if applicable, one or more Joinder Agreements (as defined below), in each case
as soon as reasonably practicable following commencement of syndication of the Bridge Facility.
Without limiting your obligations to assist with syndication efforts as set forth above, each
Initial Lender agrees that none of the commencement of the
syndication by the Arrangers, the expiration of the syndication period described in the first
sentence of this paragraph, the completion of a Successful Syndication (as defined in the Fee
Letter) or the delivery of the information and documents referred to in the last paragraph of this
Section 3 is a condition to the initial funding under the Bridge Facility.
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You agree, at the request of the Arrangers, to assist in the preparation of a version of the
Information Materials to be used in connection with the syndication of the Bridge Facility,
consisting exclusively of information and documentation that is either (i) publicly available or
(ii) not material with respect to PPL, the Companies, the Seller or their respective subsidiaries
or any of their respective securities for purposes of United States Federal and state securities
laws (all such Information Materials being Public Lender Information). Any information and
documentation that is not Public Lender Information is referred to herein as Private Lender
Information. Before distribution of any Information Materials, you agree to execute and deliver
to the Arrangers, either (i) a letter in which you authorize distribution of the Information
Materials to Lenders employees willing to receive Private Lender Information or (ii) a separate
letter in which you authorize distribution of Information Materials containing solely Public Lender
Information and represent that such Information Materials do not contain any Private Lender
Information. You further agree that each document to be disseminated by the Arrangers to any
Lender in connection with the Bridge Facility will, at the request of the Arrangers, be identified
by you as either (i) containing Private Lender Information or (ii) containing solely Public Lender
Information. You acknowledge that the following documents contain solely Public Lender Information
(unless you notify us promptly prior to their intended distribution that any such document contains
Private Lender Information): (a) drafts and final Bridge Facility Documentation, including term
sheets; (b) administrative materials prepared by the Commitment Parties for prospective Lenders
(such as a lender meeting invitation, bank allocation, if any, and funding and closing memoranda);
and (c) notification of changes in the terms of the Bridge Facility.
The Arrangers will manage all aspects of any syndication in consultation with you, including
decisions as to the selection of institutions to be approached and when they will be approached,
when their commitments will be accepted, which institutions will participate (provided that any
such institution must be reasonably acceptable to you or be a Permitted Assignee), the allocation
of the commitments among the Lenders, any naming rights (subject to your naming rights in
accordance with Section 2 above) and the amount and distribution of fees among the Lenders. To
assist the Arrangers in their syndication efforts, you agree promptly to prepare and provide (and
to use commercially reasonable efforts to cause the Companies promptly to provide) to the Arrangers
all customary information with respect to PPL, the Companies and their respective subsidiaries, the
Transactions and the other transactions contemplated hereby, including all financial information
and projections (the Projections), as the Arrangers may reasonably request.
4. | Information. |
You hereby represent and covenant that (with respect to Information (as defined below) and
Projections relating to the Companies and their affiliates, to the best of your knowledge) (a) all
written information and all oral communications made in Lender meetings and due diligence sessions
held in connection with the syndication of the Bridge Facility, taken as a whole, other than the
Projections and information of a general economic or industry nature (the Information) that has
been or will be made available to us by or on behalf of you or any of your representatives is or
will be, when furnished, complete and correct in all material respects and does not or will not,
when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements are made and (b)
the Projections that have been or will be made available to us by or on behalf of you or any of
your representatives have been or will be prepared in good faith based upon accounting principles
consistent in all material respects with the historical audited financial statements of PPL (except
as otherwise expressly disclosed in such Projections) and upon assumptions that are reasonable at
the time made and at the time the related Projections are made available to us (it being understood
that projections are subject to significant uncertainties and that no assurances can be given that
any projections will be realized, and the variances between actual results and projected results
may be material). You agree that if at any time prior to the later of (i) the closing of the
Bridge Facility and (ii) completion of a Successful Syndication (as defined in the Fee Letter), any
of the representations in the preceding sentence would be incorrect if the Information and
Projections were being furnished, and such representations were being made, at such time, then you
will promptly supplement the Information and the Projections so that such representations will be
correct under those circumstances. In arranging and syndicating the Bridge Facility, we will be
entitled to use and rely primarily on the Information and the Projections without responsibility
for independent verification thereof.
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5. | Fees. |
As consideration for the Initial Lenders commitments hereunder, and the Arrangers agreements
to perform the services described herein, you agree to pay (or to cause PPL Capital to pay) to us
the fees set forth in this Commitment Letter and in the fee letter dated the date hereof and
delivered herewith with respect to the Bridge Facility (the Fee Letter).
6. | Conditions Precedent. |
Each Initial Lenders commitment hereunder, and each of our agreements to perform the services
described herein, are subject to the following conditions precedent: (a) our satisfaction that,
prior to Successful Syndication (as defined in the Fee Letter), there shall be no other issues of
debt securities or commercial bank or other credit facilities of PPL, the Companies or their
respective subsidiaries (other than the Excluded Subsidiaries) announced, offered, placed or
arranged (other than (i) the Permanent Debt Financing, (ii) indebtedness of the Companies and their
subsidiaries permitted to be incurred pursuant to the terms of the Purchase Agreement (as in effect
on the date hereof and without giving effect to any consents granted thereunder) and (iii) any
other financing reasonably agreed by the Arrangers, (b) the negotiation, execution and delivery of
the Bridge Facility Documentation, (c) one or more investment banks reasonably satisfactory to the
Arrangers (collectively, the Investment Bank) shall have been engaged to publicly sell or
privately place the Permanent Financing and other debt and equity securities for the purpose of
replacing or refinancing the Bridge Facility and (d) the other conditions set forth on Exhibit B.
Notwithstanding anything in this Commitment Letter, the Fee Letter or the Bridge Facility
Documentation to the contrary, (a) the only representations relating to PPL, the Companies and
their respective subsidiaries and their respective businesses the making of which shall be a
condition to availability of the Bridge Facility on the Closing Date shall be (i) such of the
representations made by or on behalf of the Seller, the Companies and their subsidiaries in the
Purchase Agreement as are material to the interests of the Lenders, but only to the extent that you
have (or a subsidiary has) the right to terminate or not complete your (or its) obligations under
the Purchase Agreement as a result of a breach of such representations in the Purchase Agreement,
(the Purchase Agreement Representations) and (ii) the Specified
Representations (as defined below) and (b) the terms of the Bridge Facility Documentation shall be in a form such that
they do not impair availability of the Bridge Facility on the Closing Date if the conditions set
forth in this Section 6 and Exhibit B are satisfied. For purposes hereof, Specified
Representations means the representations and warranties set forth in the Term Sheet relating to
corporate power and authority, due authorization, execution and delivery, in each case as they
relate to the entering into and performance of the Bridge Facility Documentation, the
enforceability of such documentation, Federal Reserve margin regulations, the Investment Company
Act, no conflicts of the Bridge Facility Documentation, status of the Bridge Facility as senior
debt, solvency (assuming no default under the Bridge Facility Documentation) and financial
statements fairly present, in all material respects in conformity with GAAP (to the extent material
to the Lenders or the Arrangers), the financial position, results of operation and cash flow of PPL
and its subsidiaries for the applicable period.
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7. | Indemnification; Expenses. |
You agree (a) to indemnify and hold harmless each of us and our respective officers,
directors, employees, agents, advisors, controlling persons, members and successors and assigns
(each, an Indemnified Person) from and against any and all losses, claims, damages, liabilities
and expenses, joint or several, to which any such Indemnified Person may become subject arising out
of or in connection with this Commitment Letter, the Fee Letter, the Transactions, the Bridge
Facility or any related transaction or any claim, litigation, investigation or proceeding relating
to any of the foregoing, regardless of whether any such Indemnified Person is a party thereto (and
regardless of whether such matter is initiated by a third party or by the Companies, the Seller or
any of their respective affiliates or equity holders), and to reimburse each such Indemnified
Person upon demand for any reasonable legal or other expenses incurred in connection with
investigating or defending any of the foregoing; provided that the foregoing indemnity will not, as
to any Indemnified Person, apply to losses, claims, damages, liabilities or related expenses to the
extent they are found in a final, non-appealable judgment of a court of competent jurisdiction to
have arisen from the bad faith, willful misconduct or gross negligence of such Indemnified Person,
and (b) to reimburse each of us from time to time, upon presentation of a summary statement, for
all reasonable out-of-pocket expenses (including, but not limited to, expenses of our due diligence
investigation, consultants fees, syndication expenses, travel expenses and fees, disbursements and
other charges of counsel identified in the Term Sheet (and, if reasonably necessary, of one
regulatory counsel and one local counsel in any relevant jurisdiction for all Indemnified Persons
unless, in the reasonable opinion of an Indemnified Person, representation of all Indemnified
Persons by such counsel would be inappropriate due to the existence of an actual or potential
conflict of interest)), in each case, incurred in connection with the Bridge Facility and the
preparation, negotiation and enforcement of this Commitment Letter, the Fee Letter, the Bridge
Facility Documentation and any ancillary documents in connection therewith. Notwithstanding any
other provision of this Commitment Letter, no Indemnified Person shall be liable for any indirect,
special, punitive or consequential damages in connection with its activities related to the Bridge
Facility.
8. | Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities. |
You acknowledge that each Commitment Party may be providing debt financing, equity capital or
other services (including financial advisory services) to other companies in respect of which you
may have conflicting interests regarding the transactions described herein or otherwise. We will
not furnish confidential information obtained from you by virtue of the transactions contemplated
by this Commitment Letter or our other relationships with you to other companies. You also
acknowledge that we do not have any obligation to use in connection with
the transactions contemplated by this Commitment Letter, or to furnish to you, confidential
information obtained by us from other companies.
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You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship
between you and any of us is intended to be or has been created in respect of any of the
transactions contemplated by this Commitment Letter, irrespective of whether any of us have advised
or is advising you on other matters, (b) each of us, on the one hand, and you, on the other hand,
have an arms-length business relationship that does not directly or indirectly give rise to, nor
do you rely on, any fiduciary duty on the part of any of us, (c) you are capable of evaluating and
understanding, and you understand and accept, the terms, risks and conditions of the transactions
contemplated by this Commitment Letter, (d) you have been advised that each of us is engaged in a
broad range of transactions that may involve interests that differ from your interests and that
none of us has any obligation to disclose such interests and transactions to you by virtue of any
fiduciary, advisory or agency relationship and (e) you waive, to the fullest extent permitted by
law, any claims you may have against any of us for breach of fiduciary duty or alleged breach of
fiduciary duty and agree that none of us shall have any liability (whether direct or indirect) to
you in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on
behalf of or in right of you, including your stockholders, employees or creditors. Additionally,
you acknowledge and agree that each of us is not advising you as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction (including, without limitation, with respect
to any consents needed in connection with the transactions contemplated hereby). You shall consult
with your own advisors concerning such matters and shall be responsible for making your own
independent investigation and appraisal of the transactions contemplated hereby (including, without
limitation, with respect to any consents needed in connection therewith), and we shall have no
responsibility or liability to you with respect thereto. Any review by us of PPL, the Borrowers,
the Companies, the Transactions, the other transactions contemplated hereby or other matters
relating to such transactions will be performed solely for our benefit and shall not be on behalf
of you or any of your affiliates.
You further acknowledge that each of us is a full service securities firm engaged in
securities trading and brokerage activities as well as providing investment banking and other
financial services. In the ordinary course of business, each of us may provide investment banking
and other financial services to, and/or acquire, hold or sell, for its own accounts and the
accounts of customers, equity, debt and other securities and financial instruments (including bank
loans and other obligations) of, you, the Borrowers, the Companies and other companies with which
you, the Borrowers or the Companies may have commercial or other relationships. With respect to
any securities and/or financial instruments so held by any of us or any of our customers, all
rights in respect of such securities and financial instruments, including any voting rights, will
be exercised by the holder of the rights, in its sole discretion.
9. | Assignments; Amendments; Governing Law, Etc. |
This Commitment Letter shall not be assignable by you without the prior written consent of
each Initial Lender and each Arranger (and any attempted assignment without such consent shall be
null and void), is intended to be solely for the benefit of the parties hereto (and Indemnified
Persons), and is not intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto (and Indemnified Persons).
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Each Commitment Party may assign all or a portion of its commitment hereunder to one or more
prospective Lenders (i) that are acceptable to you, or (ii) that you have identified to us in
writing on or prior to the date hereof (each, a Permitted Assignee), whereupon such
Commitment Party shall be released from all or the portion of its commitment hereunder so assigned;
provided that no such assignment shall relieve the Commitment Parties of their obligations
hereunder, except to the extent such assignment is evidenced by, at our election, (i) a customary
joinder agreement (a Joinder Agreement) pursuant to which such lender agrees to become party to
this agreement and extend commitments directly to you on the terms set forth herein, and which
shall not add any conditions to the availability of the Bridge Facility or change the terms of the
Bridge Facility or increase compensation payable by you in connection therewith except as set forth
in the Commitment Letter and the Fee Letter and which shall otherwise be reasonably satisfactory to
you and us, or (ii) the Bridge Facility Documentation. The Joinder Agreements will include a
provision allowing PPL, at PPLs expense, to replace any such additional Lender party thereto that
has (or is controlled by or under common control with any person or entity that has) been deemed
insolvent or become subject to a bankruptcy, insolvency, receivership, conservatorship or other
similar proceeding, or that refuses to execute, or materially delays in executing, the Bridge
Facility Documentation agreed with the Arrangers with respect to the Bridge Facility, with another
financial institution selected by PPL in consultation with the Arrangers. Any and all obligations
of, and services to be provided by, a Commitment Party hereunder (including, without limitation,
each Initial Lenders commitment) may be performed and any and all rights of such Commitment Party
hereunder may be exercised by or through any of their respective affiliates or branches and, in
connection with such performance or exercise, such Commitment Party may exchange with such
affiliates or branches information concerning you and your affiliates that may be the subject of
the transactions contemplated hereby and, to the extent so employed, such affiliates and branches
shall be entitled to the benefits afforded to such Commitment Party hereunder. This Commitment
Letter may not be amended or any provision hereof waived or modified except by an instrument in
writing signed by each of us and you. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken together, shall
constitute one agreement. Delivery of an executed counterpart of a signature page of this
Commitment Letter by facsimile or other electronic transmission shall be effective as delivery of a
manually executed counterpart hereof. Section headings used herein are for convenience of
reference only, are not part of this Commitment Letter and are not to affect the construction of,
or to be taken into consideration in interpreting, this Commitment Letter. You acknowledge that
information and documents relating to the Bridge Facility may be transmitted through SyndTrak,
Intralinks, the internet, e-mail or similar electronic transmission systems, and that none of us
shall be liable for any damages arising from the unauthorized use by others of information or
documents transmitted in such manner. The Arrangers may place advertisements in financial and
other newspapers and periodicals or on a home page or similar place for dissemination of
information on the Internet or worldwide web as it may choose, and circulate similar promotional
materials, after the closing of the Transactions in the form of a tombstone or otherwise
describing the names of you, the Borrowers and your and their affiliates (or any of them), and the
amount, type and closing date of such Transactions, all at the expense of the Arrangers; provided
that you shall have been given a reasonable opportunity to review such tombstone prior to its
initial publication. This Commitment Letter and the Fee Letter supersede all prior understandings,
whether written or oral, between us with respect to the Bridge Facility. THIS COMMITMENT LETTER
AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS COMMITMENT LETTER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT THE DETERMINATION OF ANY PURCHASE AGREEMENT REPRESENTATION SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH ENGLISH LAW.
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10. | Jurisdiction. |
Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and
its property, to the exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in the Borough of Manhattan in New York City, and any appellate
court from any thereof, in any action or proceeding arising out of or relating to this Commitment
Letter, the Fee Letter or the transactions contemplated hereby or thereby, and agrees that all
claims in respect of any such action or proceeding may be heard and determined only in such New
York State court or, to the extent permitted by law, in such Federal court, (b) waives, to the
fullest extent it may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or relating to this
Commitment Letter, the Fee Letter or the transactions contemplated hereby or thereby in any New
York State court or in any such Federal court, (c) waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or proceeding in any such
court and (d) agrees that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
law. Service of any process, summons, notice or document by registered mail addressed to you at
the address above shall be effective service of process against you for any suit, action or
proceeding brought in any such court.
11. | Waiver of Jury Trial. |
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF
THIS COMMITMENT LETTER, THE FEE LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER.
12. | Confidentiality. |
This Commitment Letter is delivered to you on the understanding that neither this Commitment
Letter nor the Fee Letter nor any of their terms or substance, nor the activities of any of us
pursuant hereto, shall be disclosed, directly or indirectly, to any other person except (a) to your
officers, directors, employees, attorneys, agents, accountants and advisors on a confidential and
need-to-know basis, (b) (i) in any legal, judicial or administrative proceeding, (ii) as otherwise
required by applicable law, regulation or compulsory legal process or as requested by a
governmental authority, or (iii) in the case of the Commitment Letter and the contents hereof (but
not the Fee Letter and the contents thereof) as you may determine is reasonably advisable to comply
with your obligations under securities and other applicable laws and regulations (in each case
pursuant to this clause (b), you agree, to the extent permitted by law, to inform us promptly
thereof prior to such disclosure), and (c) to the Companies and the Seller and their officers,
directors, employees, attorneys, accountants and advisors on a confidential and need-to-know basis
(but not the Fee Letter and the contents thereof unless redacted in a form acceptable to the
Commitment Parties in their absolute discretion); provided that you may disclose this Commitment
Letter and the contents hereof (but not the Fee Letter or the contents thereof) in any prospectus
or other offering memorandum relating to any offering of the Permanent Financing; provided,
further, that the foregoing restrictions shall cease to apply (except in respect of the Fee Letter
and the contents thereof) after this Commitment Letter has been accepted by you and this Commitment
Letter has become publicly available as a result of its disclosure in accordance with the terms of
this paragraph.
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Notwithstanding anything herein to the contrary, any party to this Commitment Letter (and any
employee, representative or other agent of such party) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions contemplated by
this Commitment Letter and the Fee Letter and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and tax structure,
except that (i) tax treatment and tax structure shall not include the identity of any existing or
future party (or any affiliate of such party) to this Commitment Letter or the Fee Letter and (ii)
no party shall disclose any information relating to such tax treatment and tax structure to the
extent nondisclosure is reasonably necessary in order to comply with applicable securities laws.
For this purpose, the tax treatment of the transactions contemplated by this Commitment Letter and
the Fee Letter is the purported or claimed U.S. Federal income tax treatment of such transactions
and the tax structure of such transactions is any fact that may be relevant to understanding the
purported or claimed U.S. Federal income tax treatment of such transactions.
13. | Surviving Provisions. |
The compensation, reimbursement, indemnification, confidentiality, syndication, jurisdiction,
governing law and waiver of jury trial provisions contained herein and in the Fee Letter and the
provisions of Section 8 of this Commitment Letter shall remain in full force and effect regardless
of whether definitive financing documentation shall be executed and delivered and (other than in
the case of the syndication provisions) notwithstanding the termination of this Commitment Letter
or the Initial Lenders commitments hereunder and our agreements to perform the services described
herein; provided that your obligations under this Commitment Letter, other than those relating to
confidentiality, compensation and to the syndication of the Bridge Facility (which shall remain in
full force and effect), shall, to the extent covered by the Bridge Facility Documentation,
automatically terminate and be superseded by the applicable provisions contained in such Bridge
Facility Documentation upon the occurrence of the Closing Date. The commitments under the Bridge
Facility may be terminated in whole or in part by you at any time subject to the provisions of the
preceding sentence.
14. | PATRIOT Act Notification. |
We hereby notify you that, pursuant to the requirements of the USA PATRIOT Act, Title III of
Pub. L. 107-56 (signed into law October 26, 2001) (the PATRIOT Act), each of us and each Lender
is required to obtain, verify and record information that identifies the Borrowers, which
information includes the name, address, tax identification number and other information regarding
the Borrowers that will allow each of us or such Lender to identify the Borrowers in accordance
with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act
and is effective as to each of us and each Lender. You hereby acknowledge and agree that we shall
be permitted to share any or all such information with each other Lender.
15. | Acceptance and Termination. |
If the foregoing correctly sets forth our agreement with you, please indicate your acceptance
of the terms of this Commitment Letter and of the Fee Letter by returning to us executed
counterparts hereof and of the Fee Letter not later than 5:00 p.m., New York City time, on March 7,
2011. Each Initial Lenders offer hereunder, and our agreements to perform the services described
herein, will expire automatically and without further action or notice and without further
obligation to you at such time in the event that we have not received such executed counterparts in
accordance with the immediately preceding sentence. This Commitment Letter will become a binding
commitment of the Initial Lenders only after it has been duly executed and delivered by you in accordance with the first sentence of this Section 15.
Thereafter, all commitments and undertakings of each Commitment Party hereunder will expire (and
the commitments if any under the Bridge Facility Documentation shall terminate) on the earliest of
(hereinafter, the Outside Date) (a) the Long Stop Date (as defined in the Purchase Agreement as
in effect on the date hereof), (b) the closing of the Acquisition, (c) the date that the Purchase
Agreement is terminated or expires or pursuit of the Acquisition is abandoned, and (d) receipt by
the Commitment Parties of written notice from PPL of its election to terminate all commitments
under the Bridge Facility in full.
9
We are pleased to have been given the opportunity to assist you in connection with the
financing for the Acquisition.
Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED |
||||
By | /s/ Jeff Kulik | |||
Name: | Jeff Kulik | |||
Title: | Managing Director | |||
BANK OF AMERICA, N.A. |
||||
By | /s/ Kevin Bertelsen | |||
Name: | Kevin Bertelsen | |||
Title: | Managing Director |
CREDIT SUISSE SECURITIES (USA) LLC |
||||
By | /s/ SoVonna Day-Goins | |||
Name: | SoVonna Day-Goins | |||
Title: | Managing Director | |||
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH |
||||
By | /s/ Mikhail Faybusovich | |||
Name: | Mikhail Faybusovich | |||
Title: | Director | |||
By | /s/ Vipul Dhadda | |||
Name: | Vipul Dhadda | |||
Title: | Associate |
Accepted and agreed to as of
the date first above written:
the date first above written:
PPL CORPORATION |
||||
By | /s/ James E. Abel | |||
Name: | James E. Abel | |||
Title: | Treasurer and SVP - Finance | |||
CONFIDENTIAL
EXHIBIT A
PROJECT ISLAND
£3.6 Billion Senior Bridge Term Loan Credit Facility
Summary of Principal Terms and Conditions1
£3.6 Billion Senior Bridge Term Loan Credit Facility
Summary of Principal Terms and Conditions1
Borrowers:
|
PPL Capital Funding, Inc., a wholly
owned subsidiary of PPL incorporated
in Delaware (PPL Capital), WPD
Investment Holdings, Ltd, a wholly
owned subsidiary of PPL incorporated
in England and Wales (WPD
Investment) and Central Networks
East plc (CN East), Central
Networks West plc (CN West and,
together with CN East, the
Regulated Borrowers) and Central
Networks Limited (CN Limited and,
together with the Regulated
Borrowers, the Companies), which,
after giving effect to the
Acquisition, will be wholly-owned
subsidiaries of PPL incorporated in
England and Wales, shall each be a
borrower under the Bridge Facility
(collectively, the Borrowers).
The Borrowers shall be several, but
not joint, obligors and each shall
not be liable for any obligations of
the others. |
|
Transactions:
|
PPL Corporation, a Pennsylvania
corporation (PPL), intends to
acquire (the Acquisition) through
WPD Investment from E.ON UK plc (the
Seller), all of the equity
interests of the Companies, pursuant
to a share purchase agreement (the
Purchase Agreement) dated as of
March 1, 2011 among WPD Investment,
PPL, Avon Energy Partners Holdings,
East Midlands Electricity
Distribution Holdings, E.ON AG and
the Seller for an aggregate cash
consideration set forth in the
Purchase Agreement (Acquisition
Consideration). In connection with
the Acquisition, the Borrowers and
PPL intend to (a) obtain a senior
bridge term loan credit facility
described below under the caption
Bridge Facility, (b) repay certain
outstanding indebtedness of the
Companies and their subsidiaries and
(c) pay the fees and expenses
incurred in connection with the
foregoing (the Transaction Costs).
It is anticipated that some or all
of the Bridge Facility will be
replaced or refinanced by (i) the
issuance of senior notes by the
Companies (the Target Debt
Financing), (ii) the issuance of
senior notes by WPD Investment or
one of its subsidiaries that is a
parent company of the Companies (the
WPD Debt Financing and, together
with the Target Debt Financing, the
Permanent Debt Financing) and (iii) the issuance of equity or
equity-linked securities in a public
offering or private placement by PPL
Capital or PPL (other than any
equity issued pursuant to PPLs
Dividend Reinvestment Plan, any
director or employee stock ownership
plan or any other employee
compensation plan, in each case, in
effect as of the date hereof) (the
Equity Offering and, together with
the Permanent Debt Financing, the
Permanent Financing). The
transactions described in this
paragraph are collectively referred
to herein as the Transactions. |
1 | All capitalized terms used but not defined herein
have the meanings given to them in the Commitment Letter to which this Exhibit
A is attached. |
Agent:
|
Bank of America, N.A., acting
through one or more of its branches
or affiliates (BofA), will act as
sole administrative agent
(collectively, in such capacities,
the Agent) for a syndicate of
banks, financial institutions and
other institutional lenders selected
in accordance with the Commitment
Letter (together with BofA, the
Lenders), and will perform the
duties customarily associated with
such roles. |
|
Joint Bookrunners and Joint Lead
Arrangers:
|
Credit Suisse Securities (USA) LLC
and Merrill Lynch, Pierce, Fenner &
Smith Incorporated will act as joint
bookrunners and joint lead arrangers
for the Bridge Facility described
below (collectively, in such
capacities, the Arrangers), and
will perform the duties customarily
associated with such roles. |
|
Syndication Agent:
|
At the option of the Arrangers, one
or more financial institutions
identified by the Arrangers and
acceptable to PPL (in such capacity,
the Syndication Agent). |
|
Documentation Agent:
|
At the option of the Arrangers, one
or more financial institutions
identified by the Arrangers and
acceptable to PPL (in such capacity,
the Documentation Agent). |
|
Bridge Facility:
|
A senior bridge term loan credit
facility in an aggregate principal
amount of up to £3.6 billion (the
Bridge Facility) consisting of (i)
a £1.6 billion tranche A bridge
facility (the Tranche A Facility
and loans made thereunder, the
Tranche A Loans) to PPL Capital
and (ii) a £2.0 billion tranche B
facility (the Tranche B Facility
and the loans made thereunder, the
Tranche B Loans) to CN East, CN
West, WPD Investments and CN
Limited, in each case in amounts to
be agreed. |
|
Purpose:
|
The proceeds of the Bridge Facility
will be used by the Borrowers on the
date of the initial borrowing under
the Bridge Facility (the Closing
Date), solely (a) to pay the
Acquisition Consideration, and (b)
to pay the Transaction Costs. |
Availability:
|
The Bridge Facility must be drawn in
a single drawing by one or more
Borrowers on the Closing Date which
shall occur on or prior to the
Outside Date. Amounts borrowed
under the Bridge Facility that are
repaid or prepaid may not be
reborrowed. |
|
Interest Rates and Fees:
|
As set forth on Annex I hereto. |
|
Default Rate:
|
At any time when a Borrower is in
default in the payment of any amount
of principal due under the Bridge
Facility, the overdue amount shall
bear interest at 2% above the rate
otherwise applicable thereto.
Overdue interest, fees and other
amounts shall bear interest at 2%
above the rate applicable to loans. |
|
Final Maturity
and Amortization:
|
The Bridge Facility will mature on
the date that is 364 days after the
Closing Date (the Maturity Date).
Subject to conditions to be agreed,
including prior payment of the
Extension Fee (as defined in Annex
I) and the absence of any default or
event of default under the Bridge
Facility, the Borrowers may elect to
extend the Maturity Date of up to
£1.3 billion Tranche B Loans
(allocated pro rata among the
Lenders holding such Tranche B Loans
on the Maturity Date) to the date
that is 6 months after the Maturity
Date (such date, the Extended
Maturity Date). There will be no
scheduled amortization. |
|
Guarantee:
|
All obligations of the Borrowers
under the Bridge Facility will be
unconditionally guaranteed (the
Guarantee) by PPL. |
|
Mandatory Prepayments and Commitment
Reductions:
|
On or prior to the Closing Date, the
aggregate commitments in respect of
the Bridge Facility under the
Commitment Letters or under the
Credit Agreement (as applicable)
shall be permanently reduced, and
after the Closing Date, the
aggregate loans under the Bridge
Facility shall be prepaid, in each
case, dollar-for-dollar, by the
following amounts (in each case,
other than any amounts issued,
incurred or received by Western
Power Distribution Holdings Limited
and its subsidiaries (collectively,
WPD), PPL Electric Utilities
Corporation (PPL Electric),
Kentucky Utilities Company (KU),
Louisville Gas and Electric Company
(LG&E) and LG&E and KU Energy LLC
(KU Energy, and together with WPD,
KU, LG&E and PPL Electric, the
Excluded Subsidiaries), except to
the extent such proceeds (i) are
distributed to PPL or other
intermediate entity that is not
ring-fenced (other than proceeds
which are distributed to PPL or
other intermediate entity which are
designated by the Borrowers for
contribution or advance to an
Excluded Subsidiary for its use) or
(ii) represent issuances of equity
to persons other than PPL or a
subsidiary of PPL, which shall be
treated as an asset sale by the
parent of such Excluded Subsidiary): |
(a) 100% of the net cash proceeds of
all asset sales or other
dispositions of property by PPL and
its subsidiaries (including proceeds
from the sale of stock of any
subsidiary of PPL Capital and
insurance and condemnation proceeds)
(an Asset Sale) in excess (when
taken together with all net cash
proceeds in respect of all Asset
Sales) of $50,000,000 in the
aggregate, subject to exceptions for
Safe Harbor Water Power Company, PPL
Wallingford Energy LLC and PPL
University Park LLC and other
exceptions and reinvestment
provisions to be agreed upon. Any
prepayment or commitment reduction
pursuant to this clause (a) shall be
made pro rata to the Tranche A
Facility and the Tranche B Facility; |
||
(b) 100% of the net cash proceeds
received from any incurrence of debt
for borrowed money (including,
without limitation, any Permanent
Debt Financing) other than (i) any
intercompany debt of PPL or any of
its subsidiaries, (ii) any debt of
PPL or any of its subsidiaries
incurred in the ordinary course
under the Revolving Credit
Facilities (as defined in Exhibit
C), (iii) any debt incurred up to
$500,000,000 in the aggregate (other
than any Permanent Debt Financing),
(iv) any debt incurred by either
Regulated Borrower in the ordinary
course under its £300,000,000
revolving credit facility to be
entered with BofA, as administrative
agent, and the other agent and
lenders party thereto and (v) other
debt for borrowed money to be agreed
upon (the debt referred to in
clauses (i) through (v), the
Excluded Debt). Any prepayment or
commitment reduction required
pursuant to this clause (b) shall be
made first to the Tranche B Facility
or the Tranche B Loans, as
applicable, and second to the
Tranche A Facility or the Tranche A
Loans, as applicable; and |
||
(c) 100% of the net cash proceeds
received from any issuance of equity
or equity-linked securities (in a
public offering or private
placement) by PPL or any of its
subsidiaries, other than (i) any
equity issued pursuant to PPLs
Dividend Reinvestment Plan, any
director or employee stock ownership
plan or any other employee
compensation plan, in each case, in
effect as of the date hereof, and
(ii) other exceptions to be agreed
upon. Any prepayment or commitment
reduction required pursuant to this
clause (c) shall be applied first to
the Tranche A Facility or the
Tranche A Loans, as applicable, and
second to the Tranche B Facility or
the Tranche B Loans, as applicable. |
Notwithstanding the foregoing, (i)
net cash proceeds received by any
Regulated Borrower or its
subsidiaries from any Asset Sale,
incurrence of debt or issuance of
equity or equity-linked securities
consummated by such Regulated
Borrower or its subsidiaries shall
be applied, subject to the
exceptions set forth in the
foregoing paragraphs, to reduce the
commitments of such Regulated
Borrower or prepay the loans of such
Regulated Borrower (as applicable)
and (ii) following such application,
any remaining net cash proceeds
shall only be required to reduce
commitments or prepay loans to the
extent that such proceeds may be
distributed to any parent entity of
such Regulated Borrower in
compliance with applicable laws,
rules, regulations and orders of any
governmental authority, domestic or
foreign; provided that each
Regulated Borrower shall be required
to request or apply for, and to use
commercially reasonable efforts to
obtain, any consent or approval
necessary to permit such
distribution. |
||
Voluntary Prepayments and
Reductions in Commitments:
|
Voluntary reductions of the
unutilized portion of the
commitments under the Bridge
Facility and prepayments of
borrowings thereunder will be
permitted at any time, in minimum
principal amounts to be agreed upon,
without premium or penalty, subject
to reimbursement of the Lenders
redeployment costs in the case of a
prepayment of Adjusted LIBOR
borrowings other than on the last
day of the relevant interest period.
Voluntary prepayments shall be
allocated to the Tranche A Loans and
the Tranche B Loans as the Borrowers
may direct. |
|
Representations and Warranties:
|
Substantially the same as those
contained in the Senior Bridge Term
Loan Credit Agreement dated as of
June 9, 2010 among PPL Capital, PPL,
the lenders party thereto from time
to time and Bank of America, N.A.,
as Administrative Agent (the Prior
Bridge Credit Agreement) except as
set forth below, limited to the
following: corporate status;
authority; no conflict; legality;
financial condition (including
audited financial statements,
interim financial statements and no
material adverse change); rights to
properties; litigation; no
violation; ERISA; governmental
approvals; Investment Company Act;
tax returns and payments; compliance
with laws (including PATRIOT Act,
OFAC, FCPA and margin regulations);
no default; environmental matters;
guarantees; solvency; and treatment
as senior debt under all
subordinated debt and as sole
designated senior debt thereunder. |
Conditions Precedent to Initial
Borrowing:
|
The initial borrowing under the
Bridge Facility will be subject
solely to the conditions precedent
set forth in Section 6 of the
Commitment Letter and Exhibit B to
the Commitment Letter. |
|
Covenants and Events of Default:
|
The Bridge Facility Documentation
will contain only the following
affirmative, negative and financial
covenants and Events of Default
which shall be applicable to PPL and
its subsidiaries; provided that (i)
a breach of such affirmative,
negative or financial covenant or
the occurrence of any event
otherwise listed as a default
shall not constitute an Event of
Default until the later of the
Closing Date (after giving effect to
the funding under the Bridge
Facility on such date) and the end
of any applicable grace period (if
such breach or default is then
continuing); (ii) only the financial
covenants and the cross-event of
default, cross-acceleration and
bankruptcy defaults shall apply to
the Excluded Subsidiaries and (iii)
no default or event of default shall
apply to either Regulated Borrower
and its obligations to the extent
arising from a default or event of
default by the Guarantor, any
Borrower or any of their
subsidiaries unless such default or
event of default has occurred and is
continuing with respect to such
Regulated Borrower and/or any
subsidiary of it. For the avoidance
of doubt, compliance with such
affirmative, negative and financial
covenants and the absence of any
Event of Default, in each case set
forth in the Bridge Facility
Documentation shall not be a
condition precedent to funding the
loans under the Bridge Facility. |
|
Affirmative Covenants:
|
Substantially the same as those
contained in the Prior Bridge Credit
Agreement (provided that to the
extent any affirmative covenant
identified below does not appear in
the Prior Bridge Credit Agreement,
such affirmative covenant shall be
on terms customary for transactions
of this type), limited to the
following: information (including,
annual financial statements,
quarterly financial statements,
officers certificates, default,
change in PPL Capitals ratings,
securities laws filings, ERISA
matters, PATRIOT Act and other
information); maintenance of
property; maintenance of insurance;
conduct of business and maintenance
of existence; compliance with laws
(including PATRIOT Act, OFAC, FCPA
and margin regulations); books and
records; use of proceeds; use of
commercially reasonable efforts to
maintain a Public Debt Rating from
S&P and Moodys; delivery of pro
forma financial statements within 90
days of the Closing Date; and
securities demand. |
Negative Covenants:
|
Substantially the same as those
contained in the Prior Bridge Credit
Agreement (provided that to the
extent any negative covenant
identified below does not appear in
the Prior Bridge Credit Agreement,
such negative covenant shall be on
terms customary for transactions of
this type), limited to the
following: limitations on liens;
limitations on merger or
consolidation; limitations on asset
sales (subject to Mandatory
Prepayments and Commitment
Reductions above); restrictive
agreements; limitations on debt of
subsidiaries; limitations on
dividends on, and redemptions and
repurchases of, equity interests
(other than (i) ordinary cash
dividends economically equivalent
(on a per share basis after giving
effect to the Acquisition) to the
ordinary cash dividends historically
paid by PPL plus any increase to
such dividends that is consistent
with historical practice, (ii) any
payments made on any equity-linked
securities, the issuance of which
shall constitute an Equity Offering
and shall have reduced the
commitments or loans under the
Bridge Facility in accordance with
the caption Mandatory Prepayments
and Commitment Reductions above,
and (iii) any repurchase of PPL
Electric preferred or preference
stock in an aggregate principal
amount of up to $250,000,000 (from
the proceeds of a new issuance of
indebtedness by PPL Electric);
limitations on investments in
non-wholly owned entities and
acquisitions of entities or business
units (other than investments and
acquisitions in an aggregate
principal amount not to exceed
$300,000,000), in each case subject
to additional exceptions to be
agreed upon. |
|
Financial Covenant:
|
(i) PPL shall maintain a ratio of
Consolidated Debt (as defined in the
Prior Bridge Credit Agreement) of
PPL (excluding WPD) to Consolidated
Capitalization (as defined in the
Prior Bridge Credit Agreement) of
PPL (excluding WPD) not to exceed
70% at any time; and (ii) in the
case of a Regulated Borrower, such
Regulated Borrowers Total Net Debt
to Regulatory Asset Base shall not
exceed 85%. |
|
Events of Default:
|
Substantially the same as those
contained in the Prior Bridge Credit
Agreement except as otherwise set
forth below, limited to the
following (subject, where
appropriate, to thresholds and grace
periods substantially the same as
those contained in the Prior Bridge
Credit Agreement): nonpayment of
principal, interest or other
amounts; violation of covenants;
incorrectness of representations and
warranties in any material respect;
cross event of default and cross
acceleration; bankruptcy; material
judgments; ERISA events; change of
control; actual or asserted
invalidity of the Guarantee. |
Voting:
|
Amendments and waivers of the
definitive credit documentation will
require the approval of Lenders
holding more than 50% of the
aggregate amount of the loans and
commitments under the Bridge
Facility, except that the consent of
each Lender shall be required with
respect to, among other things, (a)
increases in the commitment of such
Lender, (b) reductions of principal,
interest or fees payable to such
Lender, (c) extensions of final
maturity of the loans or commitments
of such Lender, and (d) releases of
all or substantially all of the
value of the Guarantee. |
|
Cost and Yield Protection:
|
Usual for facilities and
transactions of this type, including
customary tax gross-up provisions. |
|
Assignments and Participations:
|
Prior to the Closing Date, the
Lenders will be permitted to assign
commitments under the Bridge
Facility with the consent of PPL
Capital; provided that such consent
of PPL Capital shall not be required
(i) if such assignment is made to
another Lender under the Bridge
Facility or an affiliate or approved
fund of any such Lender or (ii) if
such assignment is made to a
Permitted Assignee. From the
Closing Date, the Lenders will be
permitted to assign loans under the
Bridge Facility without the consent
of PPL Capital. Each assignment
will be in an amount of an integral
multiple of £1,000,000. Assignments
will be by novation. |
|
The Lenders will be permitted to
sell participations in loans and
commitments without restriction.
Voting rights of participants shall
be limited to matters in respect of
(a) increases in commitments of such
participant, (b) reductions of
principal, interest or fees payable
to such participant, (c) extensions
of final maturity of the loans or
commitments in which such
participant participates, and (d)
releases of all or substantially all
of the value of the Guarantee. |
||
Defaulting Lenders:
|
Usual for facilities and
transactions of this type, including
the suspension of voting rights and
rights to receive certain fees, and
the termination or assignment of
commitments or loans of defaulting
Lenders. |
Expenses and Indemnification:
|
The Borrowers will indemnify the
Arrangers, the Agent, the
Syndication Agent, the Documentation
Agent, the Lenders, their respective
affiliates, successors and assigns
and the officers, directors,
employees, agents, advisors,
controlling persons and members of
each of the foregoing (each, an
Indemnified Person) and hold them
harmless from and against all costs,
expenses (including reasonable fees,
disbursements and other charges of
counsel) and liabilities of such
Indemnified Person arising out of or
relating to any claim or any
litigation or other proceeding
(regardless of whether such
Indemnified Person is a party
thereto and regardless of whether
such matter is initiated by a third
party or by PPL, the Companies, the
Seller or any of their respective
affiliates or equity holders) that
relates to the Transactions,
including the financing contemplated
hereby, the Acquisition or any
transactions in connection
therewith; provided that no
Indemnified Person will be
indemnified for any cost, expense or
liability to the extent determined
in the final, non-appealable
judgment of a court of competent
jurisdiction to have resulted
primarily from its bad faith, gross
negligence or willful misconduct.
In addition, the Borrowers shall pay
all reasonable out-of-pocket
expenses (including, without
limitation, reasonable fees,
disbursements and other charges of
counsel identified in the Term Sheet
(and, if reasonably necessary, of
one regulatory counsel and one local
counsel in any relevant jurisdiction
for all Indemnified Persons unless,
in the reasonable opinion of an
Indemnified Person, representation
of all Indemnified Persons by such
counsel would be inappropriate due
to the existence of an actual or
potential conflict of interest)) of
(a) the Arrangers, the Agent, the
Syndication Agent and the
Documentation Agent in connection
with the syndication of the Bridge
Facility, the preparation and
administration of the definitive
documentation, and amendments,
modifications and waivers thereto,
and (b) the Arrangers, the Agent,
the Syndication Agent, the
Documentation Agent and the Lenders
for enforcement costs associated
with the Bridge Facility. |
|
Governing Law and Forum:
|
New York. |
|
Counsel to Agent and
Arrangers:
|
Davis Polk & Wardwell LLP. |
ANNEX I
Interest Rates:
|
The interest rates under the Bridge Facility will
be Adjusted LIBOR plus the Applicable Adjusted
LIBOR Margin (as defined below). |
|
The Borrowers may elect interest periods of 1, 2, 3
or 6 months for Adjusted LIBOR borrowings. |
||
Calculation of interest shall be on the basis of
the actual days elapsed in a year of 365 days and
interest shall be payable at the end of each
interest period and, in any event, at least every
three months. |
||
Adjusted LIBOR will at all times include mandatory
costs. |
||
Pricing Definitions:
|
For the purposes hereof, the term Applicable
Adjusted LIBOR Margin means, with respect to loans
under the Bridge Facility, a percentage per annum
on any date of determination during any period set
forth in the table below. |
Level I | Level II | Level III | Level IV | Level V | ||||||||||||||||
Applicable Adjusted | Applicable Adjusted | Applicable Adjusted | Applicable Adjusted | Applicable Adjusted | ||||||||||||||||
LIBOR Margin | LIBOR Margin | LIBOR Margin | LIBOR Margin | LIBOR Margin | ||||||||||||||||
Closing Date until
3-month anniversary
thereof |
1.25% | 1.50% | 1.75% | 2.00% | 2.25% | |||||||||||||||
3-month anniversary
of Closing Date
until 6-month
anniversary thereof |
1.50% | 1.75% | 2.00% | 2.25% | 2.50% | |||||||||||||||
6-month anniversary
of Closing Date
until 9-month
anniversary thereof |
1.75% | 2.00% | 2.25% | 2.50% | 3.00% | |||||||||||||||
9-month anniversary
of Closing Date and
thereafter |
2.25% | 2.50% | 2.75% | 3.00% | 3.25% |
Level I Status pricing shall apply if, on any date
of determination, the Public Debt Rating is A- or higher
by S&P and is A3 or higher by Moodys. |
||
Level II Status pricing shall apply if, on any date of
determination, Level I Status does not exist and the
Public Debt Rating is BBB+ or higher by S&P and is Baa1
or higher by Moodys. |
||
Level III Status pricing shall apply if, on any date of
determination, Level I Status and Level II Status does
not exist and the Public Debt Rating is BBB or higher by
S&P and is Baa2 or higher by Moodys. |
Level IV Status pricing shall apply if, on any date of
determination, Level I Status, Level II Status and Level
III Status does not exist and the Public Debt Rating is
BBB- or higher by S&P and Baa3 or higher by Moodys.
Level V Status pricing shall apply if, on any date of determination, Level I Status, Level II Status, Level III Status and Level IV Status does not exist. For the purposes hereof, the term Public Debt Rating means, as of any date of determination, the rating of S&P or Moodys for any class of non-credit enhanced (other than by PPL) long-term senior unsecured debt issued by PPL Capital. In the event of a split Public Debt Rating with respect to any Level Status, the higher of the S&P and Moodys Public Debt Rating will determine the applicable Level Status, unless one of the S&P or Moodys Public Debt Ratings is two or more levels lower than the other, in which case the applicable Level Status shall be determined by reference to the Public Debt Rating level one rating lower than the higher of the S&P or Moodys Public Debt Ratings. |
||
Duration Fees:
|
PPL Capital will pay a fee (the Duration Fee) for the
ratable benefit of the Lenders in an amount equal to the
percentage set forth below of the aggregate principal
amount of the loans under the Bridge Facility outstanding
on each date set forth below, due and payable in cash on
such date (or if such day is not a business day, the next
business day): |
Paydown Condition Satisfied | Paydown Condition not Satisfied. | |||||||
90th day following the Closing Date
|
0.25 | % | 0.50 | % | ||||
180th day following the Closing Date
|
0.50 | % | 1.00 | % | ||||
270th day following the Closing Date
|
0.75 | % | 1.50 | % |
The Paydown Condition shall be satisfied on any
date if (i) all Tranche A Loans shall have been prepaid
with the proceeds of an equity offering on or prior to
such date and (ii) at least £625,000,000 aggregate
principal amount of Tranche B Loans shall have been
prepaid on or prior to such date. |
Commitment Fees:
|
0.25% per annum on the undrawn portion of the commitments
in respect of the Bridge Facility, payable upon the
earlier of termination of the commitments under the
Bridge Facility and the Closing Date, calculated based on
the number of days elapsed in a 360-day year. For the
avoidance of doubt, it is understood and agreed that the
Commitment Fee shall replace the Ticking Fee (as defined
in the Fee Letter) following the execution and delivery
of the Bridge Facility Documentation. |
|
Extension Fees:
|
PPL Capital will pay an extension fee (the Extension
Fee) to the Lenders on a pro rata basis upon the
election by the Borrowers to extend the Maturity Date to
the Extended Maturity Date, in an amount equal to 0.75%
of the amount of the loans extended on the Maturity Date. |
EXHIBIT B
PROJECT ISLAND
£3.6 Billion Senior Bridge Term Loan Credit Facility
Summary of Additional Conditions Precedent1
£3.6 Billion Senior Bridge Term Loan Credit Facility
Summary of Additional Conditions Precedent1
The initial borrowing under the Bridge Facility shall be subject to the following additional
conditions precedent:
1. | The Acquisition and the other Transactions shall be
consummated substantially concurrently with the closing under the Bridge
Facility in accordance with the Purchase Agreement and the Purchase Agreement
shall not have been amended or modified, and no condition shall have been
waived or consent granted, in any respect that is materially adverse to the
Lenders without the Arrangers prior written consent (such consent not to be
unreasonably withheld or delayed), it being understood and agreed that any
material change to the transaction structure, and any increase or decrease in
the Acquisition Consideration (other than as a result of any adjustment to the
Acquisition Consideration as provided in the Purchase Agreement as in effect
on the date hereof), shall in each case be deemed to be materially adverse to
the Lenders. |
||
2. | After giving effect to the Transactions and the other
transactions contemplated hereby, PPL and its subsidiaries (other than the
Excluded Subsidiaries) shall have outstanding no indebtedness, credit
facilities or preferred stock other than (a) the loans and other extensions of
credit under the Bridge Facility, (b) the Permanent Debt Financing, (c) the
indebtedness incurred or outstanding under the agreements and instruments set
forth on Exhibit C attached hereto (the Existing Debt Instruments),
including the Revolving Credit Facilities (as defined in Exhibit C), (d)
indebtedness of the Companies and their subsidiaries permitted to be
outstanding on the Closing Date under the Purchase Agreement (as in effect on
the date hereof and without giving effect to any consents granted thereunder),
(e) preferred stock issued as of the date hereof, (f) any Excluded Debt and
(g) other limited indebtedness to be agreed upon. |
||
3. | The Agent shall have received legal opinions, corporate
organizational documents, good standing certificates, resolutions and other
customary closing certificates as are customary for transactions of this type
and reasonably satisfactory to the Agent. |
||
4. | The Agent shall have received a certificate from the chief
financial officer of PPL in form satisfactory to the Agent certifying that PPL
and its subsidiaries, on a consolidated basis after giving effect to the
Transactions and the other transactions contemplated hereby, are solvent. It
is understood and agreed that the solvency certificate in the form
attached hereto on Exhibit D shall be deemed to be in form satisfactory to
the Agent. |
1 | All capitalized terms used but not defined
herein have the meanings given to them in the Commitment Letter to which this
Exhibit B is attached, including Exhibit A thereto. |
5. | PPL Capital shall have a Public Debt Rating from each of S&P
and Moodys. |
||
6. | The Arrangers, the Agent, the Syndication Agent, the
Documentation Agent and the Lenders shall have received all fees and invoiced
expenses required to be paid on or prior to the Closing Date pursuant to the
Fee Letter or otherwise. |
||
7. | The Arrangers shall have received, at least five business
days prior to the Closing Date, all documentation and other information
required by regulatory authorities under applicable know your customer and
anti-money laundering rules and regulations, including, without limitation,
the PATRIOT Act. |
EXHIBIT C
Existing Indebtedness of PPL and its Subsidiaries
Existing Debt Instruments as of February 15, 2011
Exempt Facilities Notes:
| Series 2009C Exempt Facilities Loan Agreement between Pennsylvania Economic Development
Financing Authority (PEDFA) and PPL Energy Supply, LLC dated April 1, 2009, in connection
with the PEDFA Exempt Facilities Revenue Refunding Bonds, Series 2009C (PPL Energy Supply,
LLC Project) due 2037, in an aggregate principal amount of $80,570,000. |
||
| Series 2009A Exempt Facilities Loan Agreement between PEDFA and PPL Energy Supply, LLC
dated April 1, 2009, in connection with the PEDFA Exempt Facilities Revenue Refunding
Bonds, Series 2009A (PPL Energy Supply, LLC Project) due 2038, in an aggregate principal
amount of $100,000,000. |
||
| Series 2009B Exempt Facilities Loan Agreement between PEDFA and PPL Energy Supply, LLC
dated April 1, 2009, in connection with the PEDFA Exempt Facilities Revenue Refunding
Bonds, Series 2009B (PPL Energy Supply, LLC Project) due 2038, in an aggregate principal
amount of $50,000,000. |
Senior Notes:
| PPL Energy Supply, LLCs Senior Notes, 6.40% Exchange Series A due 2011, in an
aggregate principal amount of $500,000,000. |
||
| PPL Energy Supply, LLCs Senior Notes, 6.30% Series due 2013, in an aggregate principal
amount of $300,000,000. |
||
| PPL Energy Supply, LLCs Senior Notes, 5.40% Series due 2014, in an aggregate principal
amount of $300,000,000. |
||
| PPL Energy Supply, LLCs Senior Notes, 6.20% Series due 2016, in an aggregate principal
amount of $349,674,000. |
||
| PPL Energy Supply, LLCs Senior Notes, 6.50% Series due 2018, in an aggregate principal
amount of $400,000,000. |
||
| PPL Energy Supply, LLCs 5.70% Reset Put Securities due 2035, in an aggregate principal
amount of $300,000,000. |
||
| PPL Energy Supply, LLCs Senior Notes, 6.00% Series due 2036, in an aggregate principal
amount of $200,418,000. |
||
| PPL Energy Supply, LLCs Senior Notes, 7.00% Series due 2046 in an aggregate principal
amount of $250,000,000. |
| PPL Capital Funding, Inc.s 4.625% Junior Subordinated Notes due 2018, in an aggregate
principal amount of $1,150,000,000. |
||
| PPL Capital Funding, Inc.s 6.85% Senior Notes due 2047, in an aggregate principal
amount of $99,000,000. |
||
| PPL Capital Funding, Inc.s 6.70% 2007 Series A Junior Subordinated Notes due 2067, in
an aggregate principal amount of $480,000,000. |
||
| PPL Montana, LLCs 8.903% Pass Through Certificates (off balance sheet) amortizing
through 2020, in an aggregate principal amount of $175,940,000. |
||
| LMB Funding, Limited Partnerships 8.05% Senior Secured Notes, Series A due 2013, in an
aggregate principal amount of $283,996,700. |
||
| LMB Funding, Limited Partnerships 8.30% Senior Secured Notes, Series B due 2013, in an
aggregate principal amount of $152,921,300. |
||
| PPL Renewable Energy, LLCs 6% Promissory Note due 2020, in an aggregate principal
amount of $4,650,000. |
Revolving Credit Facilities:
| Revolving Credit Agreement, dated as of October 19, 2010 among PPL Energy Supply, Wells
Fargo Bank, National Association, as Administrative Agent, Issuing Lender and Swingline
Lender, and the other Lenders party thereto in an aggregate amount of $3 billion.
(Expiration Date: December 31, 2014) |
||
| Revolving Credit Agreement, dated December 31, 2010 among PPL Electric Utilities
Corporation, Wells Fargo Bank, National Association, as Administrative Agent, Issuing
Lender and Swingline Lender, and the other Lenders party thereto in an aggregate amount of
$200 million. (Expiration Date: December 31, 2014) |
||
| Revolving Credit Agreement, dated November 1, 2010 among Kentucky Utilities Company,
Wells Fargo Bank, National Association, as Administrative Agent, Issuing Lender and
Swingline Lender, and the other Lenders party thereto in an aggregate amount of $400
million. (Expiration Date: December 31, 2014) |
||
| Revolving Credit Agreement, dated November 1, 2010 among Louisville Gas and Electric
Company, Wells Fargo Bank, National Association, as Administrative Agent, Issuing Lender
and Swingline Lender, and the other Lenders party thereto in an aggregate amount of $400
million. (Expiration Date: December 31, 2014) |
||
(the Existing Revolving Facilities) |
|||
| Any renewal, replacement, extension, refinancing, amendment or amendment and
restatement (a Refinancing) of any Existing Revolving Facility with a new or amended
revolving credit facility (including any refinancing that increases the committed amount
of such Existing
Revolving Facility) (together with the Existing Revolving Facilities, the Revolving Credit
Facilities). |
Other Facilities:
| PPL Energy Supply, LLCs Reimbursement Agreement dated as of March 31, 2005 (as amended
on March 31, 2010), in an aggregate committed amount of $200,000,000.
(Expiration date: March 2013). |
||
| PPL Receivables Corporations (with PPL Electric Utilities Corporation, as Servicer)
Revolving Credit and Security Agreement dated as of August 5, 2008 (as amended on July 28,
2009 and July 27, 2010) in an aggregate committed amount of $150,000,000.
(Expiration date: July 2011). |
EXHIBIT D
Form of Solvency Certificate
SOLVENCY CERTIFICATE
OF
PPL CORPORATION AND ITS SUBSIDIARIES
OF
PPL CORPORATION AND ITS SUBSIDIARIES
[_____], 2010
This Solvency Certificate (the Certificate) of PPL Corporation, a Pennsylvania corporation
(Holdings), and its Subsidiaries is delivered pursuant to Section [_____] of the Bridge Term Loan
Credit Agreement dated as of [_____] (the Credit Agreement) by and among PPL Capital Funding, Inc.,
WPD Investment Holdings, Ltd, Central Networks Limited, Central Networks East plc and Central
Networks West plc (the Borrowers), Holdings, as Guarantor, the Lenders from time to time party
thereto, Bank of America, N.A., as Administrative Agent, [_____], as Documentation Agent, [_____], as
Syndication Agent, and Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Joint Lead Arrangers. Unless otherwise defined herein, capitalized terms used in
this Certificate shall have the meanings set forth in the Credit
Agreement.1
I, [Paul A. Farr], the duly elected, qualified and acting [EVP and Chief Financial Officer] of
Holdings and its Subsidiaries, DO HEREBY CERTIFY, as follows:
1. I have carefully reviewed the Credit Agreement and the other [Loan Documents] referred to
therein (collectively, the Transaction Documents) and such other documents as I have deemed
relevant and the contents of this Certificate and, in connection herewith, have made such
investigation as I have deemed necessary therefor. I further certify that the financial
information and assumptions which underlie and form the basis for the representations made in this
Certificate were fair and reasonable when made and were made in good faith and continue to be fair
and reasonable as of the date hereof. Furthermore, I confirm and acknowledge that the Joint Lead
Arrangers, the Administrative Agent and the Lenders are relying on the truth and accuracy of this
Certificate in connection with the Commitments and Loans under the Credit Agreement. I am
providing this certificate solely in my capacity as an officer of Holdings.
2. As of the date hereof, after giving effect to the Transactions, the fair value and the
present fair saleable value of any and all property of Holdings and its Subsidiaries, on a
consolidated basis, is greater than the probable liability on existing debts of Holdings and its
Subsidiaries, on a consolidated basis, as they become absolute and matured (it being understood
that the amount of contingent liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability).
3. As of the date hereof, after giving effect to the Transactions, Holdings and its
Subsidiaries, on a consolidated basis are able to pay their debts (including, without limitation,
contingent and subordinated liabilities) as they become absolute and mature and are otherwise
solvent and not unable, or deemed to be unable, to meet their debts within the meaning given that
term and similar terms under applicable laws relating to fraudulent transfers and conveyances.
4. Holdings and its Subsidiaries, on a consolidated basis, do not intend to, nor do they
believe that they will, incur debts that would be beyond their ability to pay as such debts mature.
1 | Note: Description to be modified to reflect
the description of the final Credit Agreement. Defined terms used herein shall
also be modified to reflect the defined terms used in the Bridge Facility
Documentation. |
5. As of the date hereof, before and after giving effect to the Transactions, Holdings and its
Subsidiaries are not engaged in businesses or transactions, nor about to engage in businesses or
transactions, for which any property remaining would, on a consolidated basis, constitute
unreasonably small capital after giving due consideration to the prevailing practice in the
industry in which they are engaged.
6. For the purpose of the foregoing, I have assumed there is no default under the Credit
Facility on the date hereof and will be no default under the Credit Facility after giving effect to
the funding under the Credit Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, I have executed this Certificate as of the date first written above.
By: | ||||
Name: | [Paul A. Farr] | |||
Title: | [EVP and Chief Financial Officer] | |||