Item 1.01. Entry into a Material Definitive Agreement.
On May 20, 2014, Pepco Holdings, Inc. (Pepco Holdings), Potomac Electric Power
Company (Pepco), Delmarva Power & Light Company (DPL), and Atlantic City
Electric Company (ACE, and together with Pepco Holdings, Pepco and DPL, each a
Borrower and collectively the Borrowers), entered into an Amendment and Consent
to Second Amended and Restated Credit Agreement (the Consent) among certain
Lenders (as defined below), Bank of America, N.A., as syndication agent and as
an issuer of letters of credit, and Wells Fargo Bank, National Association, as
agent on behalf of the various financial institutions (the Lenders) from time to
time party to that certain Second Amended and Restated Credit Agreement dated as
of August 1, 2011, and as amended on August 2, 2012 and extended on June 6, 2013
(the Credit Agreement), as the swingline lender and as an issuer of letters of
On April 29, 2014, Pepco Holdings entered into an Agreement and Plan of Merger
with Exelon Corporation (Exelon) and Purple Acquisition Corp., an indirect,
wholly-owned subsidiary of Exelon (Merger Sub) whereby Merger Sub will merge
with and into Pepco Holdings, with Pepco Holdings surviving the Merger as an
indirect, wholly-owned subsidiary of Exelon (the Merger). As the consummation of
the Merger would constitute a breach of certain non-financial covenants of the
Credit Agreement, Pepco Holdings was required to obtain the consent of certain
of the Lenders under the Credit Agreement in order to consummate the
Merger. Pursuant to the Consent, certain of the Lenders consented to the
consummation of the Merger and the subsequent conversion of Pepco Holdings from
a Delaware corporation to a Delaware limited liability company, provided that
the Merger and subsequent conversion are consummated on or before October 29,
2015. In addition, the Consent amends the definition of "Change in Control" in
the Credit Agreement to mean, following consummation of the Merger, an event or
series of events by which Exelon no longer owns, directly or indirectly, 100% of
the outstanding shares of voting stock of Pepco Holdings.
In the ordinary course of business, the Lenders and their respective affiliates
have from time to time performed and may in the future perform various financial
advisory, commercial banking, investment banking and treasury services for the
Borrowers, for which they received, or will continue to receive, customary fees
or compensation. In addition, affiliates of certain of the Lenders are paying
agents under the Borrowers' respective commercial paper programs.
The foregoing summary of the Consent does not purport to be complete and is
subject to, and qualified in its entirety by, the full text of the Consent
attached as Exhibit 10.1 and incorporated herein by reference.
Cautionary Statements Regarding Forward-Looking Information
Except for the historical information contained herein, certain of the matters
discussed in this communication constitute "forward-looking statements" within
the meaning of the Securities Act of 1933 and the Securities Exchange Act of
1934, both as amended by the Private Securities Litigation Reform Act of 1995.
Words such as "may," "might," "will," "should," "could," "anticipate,"
"estimate," "expect," "predict," "project," "future", "potential," "intend,"
"seek to," "plan," "assume," "believe," "target," "forecast," "goal,"
"objective," "continue" or the negative of such terms or other variations
thereof and words and terms of similar substance used in connection with any
discussion of future plans, actions, or events identify forward-looking
statements. These forward-looking statements include, but are not limited to,
statements regarding benefits of the proposed Merger, integration plans and
expected synergies, the expected timing of completion of the transaction,
anticipated future financial and operating performance and results, including
estimates for growth. These statements are based on the current expectations of
management of Pepco Holdings
and its utility subsidiaries. There are a number of
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements included in this communication. For example,
(1) Pepco Holdings
may be unable to obtain shareholder approval required for the
Merger; (2) Pepco Holdings
or Exelon may be unable to obtain regulatory
approvals required for the Merger, or required regulatory approvals may delay
the Merger or cause the companies to abandon the Merger; (3) conditions to the
closing of the Merger may not be satisfied; (4) an unsolicited offer of another
company to acquire assets or capital stock of Pepco Holdings
with the Merger; (5) problems may arise in successfully integrating the
businesses of the companies, which may result in the combined company not
operating as effectively and efficiently as expected; (6) the combined company
may be unable to achieve cost-cutting synergies or it may take longer than
expected to achieve those synergies; (7) the Merger may involve unexpected
costs, unexpected liabilities or unexpected delays, or the effects of purchase
accounting may be different from the companies' expectations; (8) the credit
ratings of the combined company or its subsidiaries may be different from what
the companies expect; (9) the businesses of Pepco Holdings
and its utility
subsidiaries may suffer as a result of uncertainty surrounding the Merger; (10)
and its utility subsidiaries may not realize the values expected
to be obtained for properties expected or required to be sold; (11) the industry
may be subject to future regulatory or legislative actions that could adversely
affect Pepco Holdings
and its utility subsidiaries; and (12) Pepco Holdings
its utility subsidiaries may be adversely affected by other economic, business,
and/or competitive factors. Other unknown or unpredictable factors could also
have material adverse effects on future results, performance or achievements of
the combined company. Therefore, forward-looking statements are not guarantees
or assurances of future performance, and actual results could differ materially
from those indicated by the forward-looking statements. Discussions of some of
these other important factors and assumptions are contained in Pepco Holdings'
filings with the Securities and Exchange Commission
(SEC), and available at the
website at www.sec.gov
, including Pepco Holdings'
2013 Annual Report on
Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations and (c) ITEM 8.
Financial Statements and Supplementary Data, and Pepco Holdings'
Report on Form 10-Q for the quarter ended March 31, 2014
in (x) PART I, ITEM 1.
Financial Statements, (y) PART I, ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations and (z) PART II, ITEM 1A. Risk
Factors. These risks as well as other risks associated with the proposed Merger
will be more fully discussed in the proxy statement that Pepco Holdings
to file with the SEC
and mail to its stockholders in connection with the
proposed Merger. In light of these risks, uncertainties, assumptions and
factors, the forward-looking events discussed in this communication may not
occur. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
communication. Pepco Holdings
does not undertake any obligation to publicly
release any revision to its forward-looking statements to reflect events or
circumstances after the date of this communication. New factors emerge from time
to time, and it is not possible for Pepco Holdings
to predict all such factors.
Furthermore, it may not be possible to assess the impact of any such factor on
or its utility subsidiaries' businesses (either individually or
collectively) or the extent to which any factor, or combination of factors, may
cause results to differ materially from those contained in any forward-looking
statement. Any specific factors that may be provided should not be construed as
Additional Information and Where to Find It
This communication does not constitute a solicitation of any vote or approval.
intends to file with the SEC
and mail to its stockholders a proxy
statement in connection with the proposed Merger. PEPCO HOLDINGS URGES INVESTORS
AND SECURITY HOLDERS TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION about Exelon, Pepco Holdings
and the proposed Merger. Investors and
security holders will be able to obtain these materials (when they are
available) and other documents filed with the SEC
free of charge at the SEC's
. In addition, a copy of Pepco Holdings'
(when it becomes available) may be obtained free of charge from Pepco Holdings,
, Corporate Secretary, 701 Ninth Street, N.W.
, Room 1300
, Washington, D.C.
20068. Investors and security holders may also read and copy any reports,
statements and other information filed by Pepco Holdings
with the SEC
, at the
public reference room at 100 F Street, N.E.
, Washington, D.C.
call the SEC
-0330 or visit the SEC's
website for further
information on its public reference room.
Participants in the Merger Solicitation
Exelon, Pepco Holdings
, and their respective directors, executive officers and
certain other members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the Merger.
Information regarding Exelon's directors and executive officers is available in
its proxy statement filed with the SEC
on April 2, 2014
in connection with its
2014 annual meeting of stockholders, and information regarding Pepco Holdings'
directors and executive officers is available in its proxy statement filed with
on March 25, 2014
in connection with its 2014 annual meeting of
stockholders. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy statement and
other relevant materials to be filed with the SEC
when they become available.
Item 9.01. Financial Statements and Exhibits.
No. Description of Exhibit
10.1 Amendment and Consent to Second Amended and Restated
Credit Agreement, dated as of May 20, 2014, by and among
Pepco Holdings, Inc., Potomac Electric Power Company,
Delmarva Power & Light Company, Atlantic City Electric
Company, the various financial institutions from time to
time party thereto, Bank of America, N.A. and Wells
Fargo Bank, National Association.