Form 8-K PCN Guaranties
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported) April 3, 2006
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Commission
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Registrant;
State of Incorporation;
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I.R.S.
Employer
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File
Number
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Address;
and Telephone Number
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Identification
No.
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333-21011
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FIRSTENERGY
CORP.
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34-1843785
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(An
Ohio Corporation)
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76
South Main Street
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Akron,
OH 44308
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Telephone
(800)736-3402
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2.):
[
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01
Entry Into a Material Definitive Agreement.
See
Item 2.03 below
with respect to certain Guaranties of FirstEnergy referred to
therein.
Item
2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
On
April 3,
2006, FirstEnergy Corp. (FirstEnergy) entered into four separate guaranties
(Guaranties) in connection with the issuance of four new series of pollution
control revenue refunding bonds issued by the Ohio Water Development Authority
(OWDA) and the Beaver County Industrial Development Authority (BCIDA, and
together with the OWDA, the Authorities) on behalf of FirstEnergy’s
subsidiaries, FirstEnergy Generation Corp. (FGCO) and FirstEnergy Nuclear
Generation Corp. (NGC, each a Company and collectively, the Companies), as
follows (collectively, the Bonds):
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Authority
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On
Behalf of
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Series
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Principal
Amount
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Maturity
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Initial
Interest Rate
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OWDA
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FGCO
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Series
2006-A
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$
90,140,000
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May
15,
2019
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Daily
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OWDA
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NGC
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Series
2006-A
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46,500,000
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June
15,
2033
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Weekly
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BCIDA
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FGCO
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Series
2006-A
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56,600,000
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April
1,
2041
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Daily
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BCIDA
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NGC
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Series
2006-A
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60,000,000
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January
1,
2035
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Daily
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Total
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$
253,240,000
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The
OWDA Bonds are
each issued under a separate trust indenture dated as of April 1, 2006
between the OWDA and The Bank of New York Trust Company, N.A., as trustee,
and
the BCIDA Bonds are each issued under a separate trust indenture dated as of
April 1, 2006 between the BCIDA and J.P. Morgan Trust Company, National
Association, as trustee (each an Indenture, and collectively, the Indentures).
Principal
or
redemption price of and interest on, and purchase price of, each series of
the
Bonds is payable from a pledge of revenues derived by the applicable Authority
pursuant to a separate loan agreement dated April 1, 2006 (each a Loan
Agreement), between the applicable Authority and the applicable Company and
a
corresponding related unsecured promissory note between the applicable Company
and the applicable trustee (each a Note).
Payment
of the
principal or redemption price of and interest on, and purchase price of, the
Bonds of each series will be fully secured by a separate irrevocable, direct-pay
letter of credit (each a Letter of Credit) delivered to the applicable trustee
for each series of Bonds by Barclays Bank PLC (Barclays), as Administrative
Agent and Fronting Bank, under each Letter of Credit and Reimbursement
Agreement, dated as of April 3, 2006 (each a Reimbursement Agreement),
among the applicable Company, Barclays, KeyBank National Association, as
syndication agent, and the banks parties thereto.
Each
Letter of
Credit will permit the applicable trustee to draw up to (a) an amount sufficient
to pay the principal of the applicable Bonds or the portion of the purchase
price corresponding to the principal of such Bonds, plus (b) an amount equal
to
36 days’ interest accrued on the applicable Bonds, computed at a maximum rate of
10% per annum, to pay accrued and unpaid interest on such Bonds or the portion
of the purchase price corresponding to accrued and unpaid interest on such
Bonds. Each Letter of Credit will expire April 1, 2011 unless terminated
earlier or extended in accordance with its terms. If a Letter of Credit is
not
extended, is cancelled or is replaced as described herein, the Bonds entitled
to
the benefit of that Letter of Credit will be subject to mandatory purchase
prior
to the cancellation, expiration or replacement of such Letter of
Credit.
FirstEnergy
delivered a separate Guaranty to Barclays pursuant to each Reimbursement
Agreement. Under each Guaranty, FirstEnergy has agreed to guaranty the payment,
performance and other obligations (but not collection) of the applicable Company
under the corresponding credit documents. In certain circumstances relating
to
the attainment of investment grade credit ratings and specified levels of
financial performance by FirstEnergy Solutions Corp. (FES) or the applicable
Company in the future, FirstEnergy may elect to have its obligations under
each
Guaranty reduced to zero.
From
the date of
issuance of the Bonds, each series will accrue interest at the Daily or Weekly
Rate, as indicated above, determined by the applicable remarketing agent as
set
forth in the related Indenture. The method of determining the interest rate
on
the Bonds may be converted from time to time in accordance with the Indenture
to
a Daily Rate, a Weekly Rate, a Commercial Paper Rate, a Semi-Annual Rate, an
Annual Rate, a Two-Year Rate, a Three-Year Rate, a Five-Year Rate, a Long Term
Rate or a Dutch Auction Rate. The Bonds of each series will be subject to
optional, extraordinary optional and special mandatory redemption prior to
maturity, and to optional and mandatory tender for purchase and remarketing
in
certain circumstances described in the Indentures.
All
of the proceeds
of the Bonds were or will be used to refinance bonds previously issued by the
Authorities on behalf of affiliates of the Companies to refinance the costs
of
construction and installation of certain air and water pollution control
facilities, and sewage and solid waste disposal facilities at plants now owned
by the Companies.
The
foregoing
summary does not purport to be complete and is qualified in its entirety by
reference to the complete text of each Note, Guaranty, Reimbursement Agreement,
Indenture and Loan Agreement.
Forward-Looking
Statements: This
Form 8-K
includes forward-looking statements based on information currently available
to
management. Such statements are subject to certain risks and uncertainties.
These statements typically contain, but are not limited to, the terms
"anticipate," "potential," "expect," "believe," "estimate" and similar words.
Actual results may differ materially due to the speed and nature of increased
competition and deregulation in the electric utility industry, economic or
weather conditions affecting future sales and margins, changes in markets for
energy services, changing energy and commodity market prices, replacement power
costs being higher than anticipated or inadequately hedged, the continued
ability of our regulated utilities to collect transition and other charges
or to
recover increased transmission costs, maintenance costs being higher than
anticipated, legislative and regulatory changes (including revised environmental
requirements), the repeal of the Public Utility Holding Company Act of 1935
and
the legal and regulatory changes resulting from the implementation of the Energy
Policy Act of 2005, the uncertainty of the timing and amounts of the capital
expenditures (including that such amounts could be higher than anticipated)
or
levels of emission reductions related to the settlement agreement resolving
the
New Source Review litigation, adverse regulatory or legal decisions and outcomes
(including, but not limited to, the revocation of necessary licenses or
operating permits, fines or other enforcement actions and remedies) of
governmental investigations and oversight, including by the Securities and
Exchange Commission, the United States Attorney’s Office, the Nuclear Regulatory
Commission and the various state public utility commissions as disclosed in
the
registrant's Securities and Exchange Commission filings, generally, and with
respect to the Davis-Besse Nuclear Power Station outage and heightened scrutiny
at the Perry Nuclear Power Plant in particular, the timing and outcome of future
rate proceedings in Pennsylvania, the continuing availability and operation
of
generating units, the ability of generating units to continue to operate at,
or
near full capacity, the inability to accomplish or realize anticipated benefits
from strategic goals (including employee workforce factors), the anticipated
benefits from voluntary pension plan contributions, the ability to improve
electric commodity margins and to experience growth in the distribution
business, the ability to access the public securities and other capital markets
and the cost of such capital, the outcome, cost and other effects of present
and
potential legal and administrative proceedings and claims related to the
August 14, 2003 regional power outage, circumstances which may lead
management to seek, or the Board of Directors to grant, in each case in its
sole
discretion, authority for the implementation of a share repurchase program
in
the future, the risks and other factors discussed from time to time in the
registrant's Securities and Exchange Commission filings, and other similar
factors. The registrant expressly disclaims any current intention to update
any
forward-looking statements contained herein as a result of new information,
future events, or otherwise.
SIGNATURE
Pursuant
to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto
duly
authorized.
April
3,
2006
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FIRSTENERGY
CORP.
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/s/ Harvey
L. Wagner
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Harvey
L. Wagner
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Vice
President, Controller and
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