On September 30, 2009, Pennsylvania Electric Company (Penelec) issued and sold $250,000,000 aggregate principal amount of its 5.20% Senior Notes due 2020 (2020 Notes) and $250,000,000 aggregate principal amount of its 6.15% Senior Notes due 2038 (2038 Notes) pursuant to the terms of an Underwriting Agreement, dated September 28, 2009, among Penelec and Banc of America Securities LLC, Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Wells Fargo Securities, LLC, as representatives of the underwriters listed on Schedule I thereto. The Senior Notes are registered under Penelec’s automatic shelf registration statement on Form S-3 (SEC File No. 333-153608-01), which was filed and became effective on September 22, 2008.
The 2020 Notes will mature on April 1, 2020, and bear interest at the rate of 5.20% per annum payable on April 1 and October 1 in each year beginning on April 1, 2010, until maturity. The 2038 Notes will mature on October 1, 2038, and bear interest at the rate of 6.15% per annum payable on April 1 and October 1 in each year beginning on April 1, 2010, until maturity.
The Senior Notes of each series will be redeemable as a whole or in part, at Penelec’s option, at any time, at a redemption price equal to the greater of: (i) 100% of the principal amount of such Senior Notes being redeemed or (ii) a make-whole price calculated by reference to the present value of the then-remaining scheduled principal and interest payments discounted at a rate derived from the then current yield on U.S. Treasury securities of comparable maturity plus the applicable make-whole redemption spread specified in the applicable form of the Senior Notes, plus, in each case, accrued and unpaid interest to the redemption date.
Penelec intends to use the net proceeds to repay short-term debt.
The terms of the Senior Notes of each series were established in a Company Order, dated as of September 30, 2009, supplementing the Indenture, dated April 1, 1999, as amended, between Penelec and The Bank of New York Mellon, as Successor Trustee (Indenture), a copy of which is filed as Exhibit 4.1 under Item 9.01 hereof.
On October 1, 2009, Penelec and The Bank of New York Mellon entered into a Supplemental Indenture No. 2 to remove a provision requiring the Trustee’s principal place of business to be in New York, New York. Furthermore, pursuant to a written agreement among Penelec, The Bank of New York Mellon and The Bank of New York Mellon Trust Company, N.A., The Bank of New York Mellon Trust Company, N.A. will succeed The Bank of New York Mellon as successor trustee for all of Penelec’s currently outstanding series of senior notes issued under the Indenture.
