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ATLANTIC CITY ELECTRIC CO FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Financial Statements and Exhibits

August 19, 2014



Item 1.01 Entry into a Material Definitive Agreement.

Atlantic City Electric Company (the Company) has entered into a Purchase Agreement, dated August 18, 2014 (the Purchase Agreement), with Barclays Capital Inc. and KeyBanc Capital Markets Inc., for themselves and as representatives (collectively, the Representatives) of the several underwriters named therein (collectively, the Underwriters), for the offer and sale of $150,000,000 in aggregate principal amount of the Company's First Mortgage Bonds, 3.375% Series due September 1, 2024 (the Bonds), in an underwritten offering registered on a Registration Statement on Form S-3 (Registration No. 333-190917-01), which was filed with the Securities and Exchange Commission on August 30, 2013 (the Offering). The Purchase Agreement is filed herewith as Exhibit 1.1 and the form of Bond is filed herewith as Exhibit 4.1. The Bonds are initially being offered to the public at a price of 99.957% of the principal amount. At the closing of the Offering, which is scheduled to occur on August 25, 2014, the Company will realize, after deduction of the underwriting discount of 0.65% of the principal amount and before deduction of expenses of the Offering, net proceeds of approximately $149.0 million.

The Bonds will be issued under the Mortgage and Deed of Trust, dated January 15, 1937, between the Company and The Bank of New York Mellon (formerly Irving Trust Company) (the Mortgage Trustee), as amended and supplemented from time to time, including pursuant to that certain Indenture Supplemental to Mortgage and Deed of Trust, dated as of August 18, 2014 (the Supplemental Indenture), relating to the issuance of the Bonds (as so amended and supplemented, the Mortgage). Subject to the exceptions and limitations contained in the Mortgage, the Bonds will be secured, together with all bonds now or hereafter issued, under the Mortgage, by a first lien (subject to the conditions and limitations in the instruments through which the Company claims title to its properties, and to excepted encumbrances under the Mortgage) on substantially all of the Company's real and personal properties and franchises. A copy of the Supplemental Indenture is filed herewith as Exhibit 4.2.

The Company may redeem all or any portion of the Bonds, at its option, at any time prior to their maturity, at the redemption price described below. The Company will give notice of its intent to redeem the Bonds at least 30 days, but no more than 60 days, prior to the redemption date. If the Company redeems all or any part of the Bonds as described above prior to June 1, 2024, the Company will pay a redemption price equal to the greater of (i) 100% of the principal amount of the Bonds being redeemed; and (ii) a make-whole amount as set forth in the Supplemental Indenture, plus, in each case, accrued and unpaid interest on such Bonds to, but not including, the redemption date. If the Company redeems all or any part of the Bonds pursuant to the provisions thereof on or after June 1, 2024, the Company will pay a redemption price equal to 100% of the principal amount of the Bonds being redeemed plus accrued and unpaid interest thereon.

The Company intends to use $7.2 million of the net proceeds from the Offering to repay in full at maturity $7.0 million in aggregate principal amount of the Company's 7.63% secured medium term notes, Series C due August 29, 2014, plus accrued and unpaid interest thereon. The medium term notes are secured by a like principal amount of the Company's 7.63% first mortgage bonds due 2014, which under the Mortgage will be deemed to be paid in full when the medium term notes are repaid in full. The Company also intends to use the net proceeds to repay its outstanding commercial paper, including commercial paper that the Company may issue to prepay in full its $100 million term loan (the Term Loan), plus accrued and unpaid interest thereon. The Company intends to use any remaining net proceeds from the Offering for general corporate purposes.

The legality opinion of Kevin C. Fitzgerald, Esq., General Counsel of the Company, relating to the issuance of the Bonds, is filed herewith as Exhibit 5.1.

In the ordinary course of business, the Underwriters and their respective affiliates have from time to time performed and may in the future perform various financial advisory, commercial banking, investment banking, asset leasing, trust or treasury services for the Company and its affiliates, for which they received, or will continue to receive, customary fees or compensation. In addition, affiliates of certain of the several

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Underwriters are lenders under the Company's primary credit facility and the Term Loan, and are dealers under the Company's commercial paper program.

The Underwriters and their respective affiliates may also, in the ordinary course of their various business activities, make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and instruments of the Company or its affiliates. Certain of the Underwriters and their affiliates that have a lending relationship with the Company routinely hedge, and certain other of those Underwriters or their affiliates may hedge, their credit exposure to the Company consistent with their customary risk management policies. The Underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or financial instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits



The following exhibits are filed herewith:

Exhibit No. Description of Exhibit 1.1 Purchase Agreement, dated August 18, 2014, among the Company, and each of Barclays Capital Inc. and KeyBanc Capital Markets Inc., as representatives of the several Underwriters named therein 4.1 Form of First Mortgage Bond, 3.375% Series due September 1, 2024 (included in Exhibit 4.2) 4.2 Indenture Supplemental to Mortgage and Deed of Trust, dated as of August 18, 2014 5.1 Opinion of Kevin C. Fitzgerald, Esq. - 3 -


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Source: Edgar Glimpses


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