Exelon 2014 Annual Report Download - page 219

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
On January 9, 2015, Generation amended and extended its $75 million bilateral credit facility for an additional two years. This facility
does not back Generation’s commercial paper program.
Borrowings under Exelon Corporate’s, Generation’s, ComEd’s, PECO’s and BGE’s credit agreements bear interest at a rate based
upon either the prime rate or a LIBOR-based rate, plus an adder based upon the particular registrant’s credit rating. Exelon
Corporate, Generation, ComEd, PECO and BGE have adders of 27.5, 27.5, 7.5, 0.0 and 0.0 basis points for prime based borrowings
and 127.5, 127.5, 107.5, 90.0 and 100.0 basis points for LIBOR-based borrowings. The maximum adders for prime rate borrowings
and LIBOR-based rate borrowings are 65 basis points and 165 basis points, respectively. The credit agreements also require the
borrower to pay a facility fee based upon the aggregate commitments under the agreement. The fee varies depending upon the
respective credit ratings of the borrower.
An event of default under any of the Registrants’ revolving credit facilities would not constitute an event of default under any of the
other Registrants’ revolving credit facilities, except that a bankruptcy or other event of default in the payment of principal, premium or
indebtedness in principal amount in excess of $100 million in the aggregate by Generation under its revolving credit facility would
constitute an event of default under the Exelon Corporation revolving credit facility.
Each credit facility requires the affected borrower to maintain a minimum cash from operations to interest expense ratio for the
twelve-month period ended on the last day of any quarter. The ratios exclude revenues and interest expenses attributable to
securitization debt, certain changes in working capital, distributions on preferred securities of subsidiaries and, in the case of Exelon
and Generation, interest on the debt of its project subsidiaries. The following table summarizes the minimum thresholds reflected in
the credit agreements for the year ended December 31, 2014:
Exelon Generation ComEd PECO BGE
Credit facility threshold ........................................... 2.50 to 1 3.00 to 1 2.00 to 1 2.00 to 1 2.00 to 1
At December 31, 2014, the interest coverage ratios at the Registrants were as follows:
Exelon Generation ComEd PECO BGE
Interest coverage ratio ........................................ 9.19 12.35 7.03 8.72 9.28
Credit Agreements
In May 2014, concurrently and in connection with entering into the agreement to acquire PHI, Exelon entered into a credit facility to
which the lenders committed to provide Exelon a 364-day senior unsecured bridge credit facility of $7.2 billion to support the
contemplated transaction and provide flexibility for timing of permanent financing. The bridge credit facility was subsequently
reduced to $3.2 billion as a result of the June 2014 debt and equity security issuances discussed below, as well as, the net after-tax
proceeds from generating asset divestitures during the second half of 2014. During the year ended December 31, 2014, Exelon
recorded $31 million to interest expense in connection with the bridge facility to temporarily finance the PHI acquisition. It is not
currently expected that Exelon will be required to draw upon this credit facility to finance the proposed PHI acquisition.
Junior Subordinated Notes
In June 2014, Exelon issued $1.15 billion of junior subordinated notes in the form of 23 million equity units at a stated amount of
$50.00 per unit. Net proceeds from the issuance were $1.11 billion, net of a $35 million underwriter fee. The net proceeds are
expected to be used to finance a portion of the acquisition of PHI and for general corporate purposes.
Each equity unit represents an undivided beneficial ownership interest in Exelon’s 2.5% junior subordinated notes due in 2024 and a
forward equity purchase contract which settles in 2017. The junior subordinated notes are expected to be remarketed in 2017. In
connection with the remarketing, Exelon may modify the maturity date of the notes to a date earlier than June 1, 2024 but not earlier
than June 1, 2020, remove redemption provisions of the notes, or change the interest rate on the notes, including changing the
interest rate from fixed to floating. Investors that participate in the remarketing receive the remarketing proceeds and may use those
funds to either settle the equity forward upon settlement date or invest in the remarketed debt and use other funds for the share
purchase. Exelon intends to use the remarketing proceeds to repay debt issued or for other corporate purposes as soon as practical
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