If Oncor does not comply with certain of its obligations under the 2025 Notes Registration Rights Agreement, the affected 2025 Notes will bear additional interest on the principal amount of the affected 2025 Notes at a rate of 0.50% per annum over the interest rate otherwise provided for under the 2025 Notes for the period during which the registration default continues, but not later than the second anniversary of the issue date of the 2025 Notes.
Debt Exchange Offer
On September 23, 2020, Oncor, pursuant to the terms of its previously announced exchange offer, issued $300,000,000 aggregate principal amount of 5.35% Senior Secured Notes due 2052 (the “2052 Notes”) in exchange for a like principal amount of all of Oncor’s outstanding 7.25% Senior Notes, Series B, due December 30, 2029, 6.47% Senior Notes, Series A, due September 30, 2030, and certain of Oncor’s outstanding 7.00% Senior Secured Notes due 2032, 7.25% Senior Secured Notes due 2033 and 5.30% Senior Secured Notes due 2042 (the “Existing Notes”). Oncor received no proceeds from the exchange.
The 2052 Notes were issued pursuant to the provisions of the Indenture and an Officer’s Certificate, dated as of September 23, 2020 (the “2052 Notes Officer’s Certificate”), between Oncor and the Trustee. The 2052 Notes Officer’s Certificate establishes the terms of the 2052 Notes. The 2052 Notes constitute a separate series of notes under the Indenture, but will be treated together with Oncor’s other outstanding debt securities issued under the Indenture for amendments and waivers and for taking certain other actions.
Oncor’s obligations under the 2052 Notes are secured by a lien on all property acquired or constructed by Oncor for the transmission and distribution of electric energy, mortgaged as described under the Deed of Trust.
The 2052 Notes bear interest at a rate of 5.35% per annum and mature on October 1, 2052. Interest on the 2052 Notes is payable in cash semiannually in arrears on April 1 and October 1 of each year, and the first interest payment is due on April 1, 2021. Prior to April 1, 2052, Oncor may redeem the 2052 Notes at any time, in whole or in part, at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a “make-whole” premium. On and after April 1, 2052, Oncor may redeem the 2052 Notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of such 2052 Notes, plus accrued and unpaid interest. The 2052 Notes, the Indenture and the Deed of Trust also contain customary events of default, including failure to pay principal or interest on the 2052 Notes when due, among others. If any such event of default occurs and is continuing, the outstanding principal of the 2052 Notes may be declared due and payable, among other remedies as provided in the Indenture.
The offer to exchange the Existing Notes for the 2052 Notes was only made to qualified institutional buyers under Rule 144A under the Securities Act pursuant to an exemption from the registration requirements of the Securities Act, and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. This current report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the 2052 Notes.
In connection with the completion of the exchange offer and issuance of the 2052 Notes, on September 23, 2020, Oncor entered into a Registration Rights Agreement with the dealer-managers of the exchange offer (the “2052 Notes Registration Rights Agreement”). Under the 2052 Notes Registration Rights Agreement, Oncor agreed, subject to certain exceptions, to file a registration statement with the Securities and Exchange Commission with respect to a registered offer to exchange the 2052 Notes for publicly registered notes (the “2052 Notes Registration Statement”), or under certain circumstances, a shelf registration statement to cover resales of the 2052 Notes (the “2052 Notes Shelf Registration Statement”). Oncor agreed to use commercially reasonable efforts to cause the 2052 Notes Registration Statement to be declared effective under the Securities Act no later than 270 days after the issue date of the 2052 Notes and to consummate the exchange offer no later than 315 days after the issue date of the 2052 Notes. Oncor agreed to use commercially reasonable efforts to cause any 2052 Notes Shelf Registration Statement to become or be declared effective within the later of 180 days after such 2052 Notes Shelf Registration Statement filing obligation arises and 270 days after the issue date of the 2052 Notes.
If Oncor does not comply with certain of its obligations under the 2052 Notes Registration Rights Agreement, the affected 2052 Notes will bear additional interest on the principal amount of the affected 2052 Notes at a rate of 0.50% per annum over the interest rate otherwise provided for under the 2052 Notes for the period during which the registration default continues, but not later than the second anniversary of the issue date of the 2052 Notes.
