ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, IS PRELIMINARY AND WILL BE SUPERSEDED
BY THE INFORMATION CONTAINED IN THE FINAL PROSPECTUS AND RELATED PROSPECTUS
SUPPLEMENT FOR ANY SECURITIES ACTUALLY SOLD TO YOU. THIS TERM SHEET IS FURNISHED
TO PROSPECTIVE INVESTORS ON A CONFIDENTIAL BASIS SOLELY FOR THE PURPOSES OF
EVALUATING THE INVESTMENT OFFERED HEREBY. THE INFORMATION CONTAINED HEREIN MAY
NOT BE REPRODUCED OR USED IN WHOLE OR IN PART FOR ANY OTHER PURPOSES.
PRELIMINARY TERM SHEET May 22, 2002
- ----------------------
JCP&L TRANSITION FUNDING LLC
$320,000,000
TRANSITION BONDS, SERIES 2002-A
Approximate Expected Expected Principal
Principal Ratings Weighted Payment Expected Legal
Offered Amount (Moody's/ Fixed/ Average Window Final Final
Classes ($ Millions) S&P/Fitch) Floating Life (years) (months) Maturity Maturity
- -------------------------------------------------------------------------------------------------------------------
A-1 [$89.5] Aaa/AAA/AAA Fixed [3.0] [9-66] [December 2007] [December 2009]
- -------------------------------------------------------------------------------------------------------------------
A-2 [$52.5] Aaa/AAA/AAA Fixed [7.0] [66-99] [September 2010] [September 2012]
- -------------------------------------------------------------------------------------------------------------------
A-3 [$76.7] Aaa/AAA/AAA Fixed [10.0] [99-138] [December 2013] [December 2015]
- -------------------------------------------------------------------------------------------------------------------
A-4 [$101.3] Aaa/AAA/AAA Fixed [13.4] [138-180] [June 2017] [June 2019]
- -------------------------------------------------------------------------------------------------------------------
KEY FEATURES: TIMELINE:
- ------------- ---------
LEAD MANAGER: CLOSING:
Goldman, Sachs & Co. Expected June 2002
CO-MANAGERS: PAYMENT DATES:
Morgan Stanley, Salomon Smith Barney Each March 5, June 5, September 5 and December 5,
commencing March 5, 2003
ISSUER:
JCP&L Transition Funding LLC INTEREST ACCRUAL:
Interest will accrue on a 30/360 basis
SERVICER:
Jersey Central Power & Light Company ("JCP&L")
CONTACTS:
SELLER: ---------
JCP&L
Syndicate
TYPE OF OFFERING: ---------
SEC-Registered
Dan Sparks
INDENTURE TRUSTEE: (212) 902-2858
The Bank of New York Scott Wisenbaker
Bunty Bohra
ERISA ELIGIBLE: (212) 902-2858
Yes (212) 902-2858
COLLATERAL: Finance
-------
Primarily bondable transition property, which includes
the irrevocable right to charge, collect and receive, Curtis Probst
and be paid from collections of, transition bond (212) 902-6595
charges ("TBCs") payable by essentially all electric
customers, except a single customer with an Linda Kang
experimental tariff. The bondable transition property (212) 902-9636
was established by a financing order issued by the
New Jersey Board of Public Utilities ("BPU") on Darryl Herrick
February 6, 2002 which is final and non-appealable. (212) 902-9305
No securities are being offered by these summary materials. If the securities
described herein or other securities are ultimately offered, they will be
offered only pursuant to a definitive Prospectus and related Prospectus
Supplement, and prospective investors who consider purchasing any such
securities should make their investment decisions based only upon the
information provided therein and consultation with their own advisers. This
material is for your private information and we are not soliciting any action
based upon it. This material is not to be construed as an offer to sell or the
solicitation of any offer to buy any security in any jurisdiction where such an
offer or solicitation would be illegal. This material is based on information
that we consider reliable, but we do not represent that it is accurate or
complete and it should not be relied upon as such. By accepting this material
the recipient agrees that it will not distribute or provide the material to any
other person. The information contained in this material may not pertain to any
securities that will actually be sold. The information contained in this
material may be based on assumptions regarding market conditions and other
matters as reflected herein. We make no representations regarding the
reasonableness of such assumptions or the likelihood that any of such
assumptions will coincide with actual market conditions or events, and this
material should not be relied upon for such purposes. We and our affiliates,
officers, directors, partners and employees, including persons involved in the
preparation or issuance of this material may, from time to time, have long or
short positions in, and buy and sell, the securities mentioned therein or
derivatives thereof (including options). Information contained in this material
is current as of the date appearing on this material only. Information in this
material regarding any assets backing any securities discussed herein supersedes
all prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, is preliminary and will be superseded by the information contained in
any final Prospectus and related Prospectus Supplement for any securities
actually sold to you. Goldman Sachs does not provide accounting, tax or legal
advice. In addition, we mutually agree that, subject to applicable law, you may
disclose any and all aspects of any potential transaction or structure described
herein that are necessary to support any U.S. federal income tax benefits,
without Goldman Sachs imposing limitation of any kind.
- Page 1 -
TAX TREATMENT: Research
--------
U.S. Holders must include all interest payments,
other than payments of OID, in gross income under Kyle Nagel
their normal method of tax accounting. If any series (212) 902-1730
or class of transition bonds is issued with OID,
prospective holders will be so informed in the
related prospectus supplement.
STRUCTURE:
Sequential Pay
MINIMUM DENOMINATION:
$1,000, except for one transition bond of each class
which may be of a smaller denomination.
DELIVERY:
DTC
CLEAN-UP CALL:
5% clean-up call
- Page 2 -
DESCRIPTION OF THE BONDS
- ------------------------
OFFERED BONDS: | | $320,000,000 of bonds, consisting of 4 classes,
issued by JCP&L Transition Funding LLC, a
Delaware limited liability company
TRANSACTION PARTIES: | | For a summary of the Transaction Parties and
their relationships, see Exhibit A hereto
COLLATERAL: | | Primarily bondable transition property, which
includes the irrevocable right to charge, collect
and receive, and be paid from the collections of,
the TBC payable by essentially all electric
customers, except a single customer with an
experimental tariff
CREDIT ENHANCEMENT: | | True-ups effected through filings made with the
BPU provide adjustments to the TBCs
-- At least annually; but
-- Not more frequently than quarterly, except
that monthly filings are permitted in the last
year before expected maturity of the
transition bonds and continuing until their
legal final maturity
| | Capital subaccount (0.50% of initial principal
balance funded on the issuance date)
| | Overcollateralization subaccount (0.50% of
initial principal balance funded ratably over
time)
| | Reserve subaccount, which will hold any excess
TBC collections
STATE PLEDGE: The State of New Jersey has pledged, among other
things, that it will not take or permit any action
that would impair the value of bondable transition
property, except as contemplated by the periodic
adjustments to the TBC discussed above. No voter
initiative or referendum process currently exists in
New Jersey
PRINCIPAL PAYMENTS: Principal will be paid sequentially. No class will
receive principal payments until all classes of a
higher payment priority have been paid in full unless
there is an acceleration of the series 2002-A
transition bonds following an event of default in
which case principal will be paid to all classes on a
pro rata basis
PAYMENT PRIORITY: The indenture trustee will pay all amounts on deposit
in the collection account and all investment earnings
thereon, other than investment earnings on amounts
held in the capital subaccount, generally in the
order of priority set forth in Exhibit B hereto
AVERAGE LIFE PROFILE: Principal cannot be repaid earlier than expected
(except for 5% clean-up call applicable to Class A-4)
unless the bonds are accelerated; any excess
collections will be held in the reserve subaccount.
The true-up mechanism is intended to provide, among
other things, for the recovery of amounts sufficient
to repay principal according to expected amortization
schedule
TRANSITION BOND CHARGES: Calculated to (a) generate TBC collections sufficient
to pay expenses, interest and principal according to
expected amortization schedule and fund or replenish
the capital and overcollateralization subaccounts to
required levels and (b) reflect revised assumptions
of electricity usage, write-offs and delinquencies
For summary historical information regarding JCP&L's
electric sales and revenues and customers, see Table
1 attached hereto
- Page 3 -
- --------------------------------------------------------------------------------
Parties to Transaction Exhibit A
- --------------------------------------------------------------------------------
The following diagram represents a general summary of the parties to the
transactions underlying the offering of the transition bonds, their roles and
their various relationships to the other parties:
[GRAPHIC OMITTED]
- Page 4 -
- --------------------------------------------------------------------------------
Allocations and Distributions Exhibit B
- --------------------------------------------------------------------------------
A general summary of the flow of collected transition bond charges appears in
the diagram below:
[GRAPHIC OMITTED]
- Page 5 -
TABLE 1
HISTORICAL JCP&L ELECTRIC SALES, RETAIL ELECTRIC REVENUES
AND RETAIL CUSTOMER STATISTICS/1/
Retail Electric Sales (GWh): 1997 1998 1999 2000 2001 2002 Q1
- ---------------------------- ---- ---- ---- ---- ---- -------
Residential 7,256 7,552 7,978 8,087 8,403 2,079
Commercial 6,975 7,259 7,625 7,706 8,183 1,970
Industrial 3,536 3,474 3,289 3,307 3,165 712
Other 79 81 81 82 82 21
--------- --------- --------- --------- --------- -------
Total 17,845 18,366 18,972 19,182 19,833 4,781
Billed Retail Electric Revenues
($000): 1997 1998 1999 2000 2001 2002 Q1
- ------------------------------- ---- ---- ---- ---- ---- -------
Residential $905,063 $892,922 $924,519 $886,602 $919,206 $210,758
Commercial 796,755 779,878 797,922 712,415 779,025 189,898
Industrial 313,000 288,241 272,055 232,933 242,894 56,742
Other 21,544 20,671 20,331 19,367 18,900 4,677
--------- --------- --------- --------- --------- -------
Total 2,036,362 1,981,712 2,014,827 1,851,317 1,960,025 462,075
Average Retail Electric
Customers: 1997 1998 1999 2000 2001 2002 Q1
- ----------------------- ---- ---- ---- ---- ---- -------
Residential 854,243 866,787 879,060 891,173 904,390 913,070
Commercial 103,074 105,158 106,482 106,474 109,001 110,899
Industrial 3,083 3,036 3,001 2,879 2,811 2,799
Other 1,605 1,623 1,643 1,594 1,510 1,465
--------- --------- --------- --------- --------- -------
Total 962,005 976,604 990,186 1,002,120 1,017,712 1,028,213
- ----------
/1/ Numbers may not total due to rounding
- Page 6 -