Exelon 2015 Annual Report Download - page 353

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Sheet and $4 million of third-party debt issuance costs, which were charged to earnings within Other, net on Exelon’s Consolidated Statement of
Operations and Comprehensive Income. On December 2, 2015, Exelon also redeemed $0.9 billion of Senior Unsecured Notes not exchanged in
the Exchange Offer resulting in the payment of $9 million of redemption premium and the acceleration of the unamortized original issuance
discount and deferred financing costs associated with the redeemed debt of $9 million, which were charged to earnings within Other, net on
Exelon’s Consolidated Statement of Operations and Comprehensive Income.
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 merger and related costs and expenses for the pending PHI merger and for general corporate purposes. Each equity unit represents
an undivided beneficial ownership interest in Exelon’s 2.50% 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.
At the time of issuance, Exelon determined that the forward equity purchase contract had no value and therefore the entire $1.15 billion of
junior subordinated notes were allocated to debt and recorded within Long-term debt on Exelon’s Consolidated Balance Sheet. Additionally, at the
time of issuance, the present value of the contract payments of $131 million (“Contract Payment Obligation”) were recorded to Long-term debt,
representing the obligation to make contract payments, with an offsetting reduction to Common stock. The obligation for the contract payments is
accreted to interest expense over the 3 year period ending in 2017 in Exelon’s Consolidated Statement of Operations and Comprehensive Income.
During 2015, contract payments of $44 million related to the Contract Payment Obligation were included within Retirements of long-term debt in
Exelon’s Consolidated Statements of Cash Flows. During 2014, the Contract Payment Obligation was considered a non-cash financing transaction
that was excluded from Exelon’s Consolidated Statements of Cash Flows. Until settlement of the equity purchase contract, earnings per share
dilution resulting from the equity unit issuance will be determined under the treasury stock method.
Nonrecourse Debt
Exelon and Generation have issued nonrecourse debt financing, in which approximately $2.4 billion of generating assets and $0.2 billion of
Upstream gas properties have been pledged as collateral at December 31, 2015. Borrowings under these agreements are secured by the assets
and equity of each respective project. The lenders do not have recourse against Exelon or Generation in the event of a default.
Denver Airport. In June 2011, Generation entered into a 20-year, $7 million solar loan agreement to finance a solar construction project in
Denver, Colorado. The agreement is scheduled to mature on June 30, 2031. The agreement bears interest at a fixed rate of 5.50% annually with
interest payable annually. As of December 31, 2015, $7 million was outstanding.
CEU Upstream. In July 2011, Generation entered into a 5-year asset-based lending agreement associated with certain Upstream gas
properties that it owns. The borrowing base committed under the facility is $85 million as of December 31, 2015. The commitment level can be
decreased if the assets no longer support the current borrowing base, which would result in repayment of a portion or all of the outstanding
balance. The commitment can be increased up to $500 million if the assets support a
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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