8-K
Public Service Enterprise Group Inc (PEG)
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): November 23, 2020
Public Service Enterprise Group Incorporated
(Exact name of registrant as specified in its charter)
| New Jersey | 001-09120 | 22-2625848 |
|---|---|---|
| (State or other jurisdiction<br> of incorporation) | (Commission<br> File Number) | (I.R.S Employer<br> Identification No.) |
80 Park Plaza
Newark, New Jersey 07102
(Address of principal executive offices) (Zip Code)
973 430-7000
(Registrant’s telephone number, including area code)
PSEG Power LLC
(Exact name of registrant as specified in its charter)
| Delaware | 001-34232 | 22-3663480 |
|---|---|---|
| (State or other jurisdiction<br> of incorporation) | (Commission<br> File Number) | (I.R.S Employer<br> Identification No.) |
80 Park Plaza
Newark, New Jersey 07102
(Address of principal executive offices) (Zip Code)
973 430-7000
(Registrant’s telephone number, including area code)
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.
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule <br>14a-12<br> under the Exchange Act (17 CFR <br>240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule <br>14d-2(b)<br> under the Exchange Act (17 CFR <br>240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule <br>13e-4(c)<br> under the Exchange Act (17 CFR <br>240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading<br> <br>Symbol(s) | Name of Each Exchange<br> <br>On Which Registered |
|---|---|---|
| Public Service Enterprise Group Incorporated<br> <br>Common Stock without par value | PEG | New York Stock Exchange |
| PSEG Power LLC<br> <br>8.625% Senior Notes, due 2031 | PEG31 | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
The information contained in Item 8.01 Other Events in this combined Form 8-K is separately filed, as noted, by Public Service Enterprise Group Incorporated (“PSEG”) and PSEG Power LLC (“PSEG Power”). Information contained herein relating to any individual company is provided by such company on its own behalf and in connection with its respective Form 8-K. PSEG Power makes representations only as to itself and makes no other representations whatsoever as to any other company. The materials filed as Exhibit 99 are available on the corporate.pseg.com website under the investors tab, or at http://investor.pseg.com.
| Item 8.01. | Other Events |
|---|
On November 23, 2020, PSEG announced that it commenced an offer to exchange (the “Exchange Offer”) up to $500 million aggregate principal amount of new 8 5/8% senior notes due 2031 of PSEG (the “PSEG Notes”) for any and all (to the extent held by eligible noteholders, as described below) of the outstanding $500 million aggregate principal amount of 8 5/8% senior notes due 2031 of PSEG Power (the “Power Notes”) pursuant to the terms and conditions set forth in the Offer to Exchange and Consent Solicitation Statement, dated November 23, 2020 (the “Offer to Exchange”). The Exchange Offer will expire as of 11:59 p.m., New York City time, on December 21, 2020. A copy of the Press Release announcing the Exchange Offer is attached as Exhibit 99 to this Current Report on Form 8-K and is incorporated by reference herein. The Offer to Exchange includes the information regarding PSEG’s strategic alternatives set forth in Exhibit 99.1 and is also incorporated by reference herein.
The PSEG Notes are offered for exchange to only qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act and to persons who are qualified investors in Relevant Member States (as defined in the Offer to Exchange) in reliance on the Prospectus Regulation (as defined in the Offer to Exchange). The Exchange Offer is not and the PSEG Notes will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or in a transaction not subject to the registration requirements of the Securities Act or any state securities laws. In connection with the Exchange Offer and as described in the Offer to Exchange, PSEG will enter into a registration rights agreement, pursuant to which PSEG will be obligated to use commercially reasonable efforts to file with the U.S. Securities and Exchange Commission and cause to become effective a registration statement with respect to an offer to exchange the PSEG Notes for new notes and to use commercially reasonable efforts to file a shelf registration statement to cover resales of the PSEG Notes under the Securities Act in the event that PSEG determines that a registered exchange offer is not available or may not be completed.
This report does not and will not constitute an offer to exchange or sell or a solicitation of an offer to buy or exchange any securities nor will there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of such state. The Exchange Offer will be made only by means of the Offer to Exchange.
| Item 9.01. | Financial Statements and Exhibits |
|---|---|
| Exhibit 99 | Press Release of Public Service Enterprise Group Incorporated, dated as of November 23, 2020. |
| --- | --- |
| Exhibit 99.1 | Certain other information included in the Offer to Exchange. |
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED | |
|---|---|
| (Registrant) | |
| By: | /s/ Rose M. Chernick |
| ROSE M. CHERNICK | |
| Vice President and Controller | |
| (Principal Accounting Officer) |
Date: November 23, 2020
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| PSEG POWER LLC | |
|---|---|
| (Registrant) | |
| By: | /s/ Rose M. Chernick |
| ROSE M. CHERNICK | |
| Vice President and Controller | |
| (Principal Accounting Officer) |
Date: November 23, 2020
EX-99
Exhibit 99
| CONTACTS:<br> <br><br><br><br>Investor Relations<br> <br>Carlotta.Chan@pseg.com<br><br><br>973-430-6565<br><br><br><br> <br>Media Relations<br><br><br>Marijke.Shugrue@pseg.com<br> <br>908-531-4253 |
|---|
PSEG Commences Private Exchange Offer and Consent
Solicitation for 8 5/8% Senior Notes of PSEG Power LLC
(NEWARK, N.J. – Nov. 23, 2020) Public Service Enterprise Group Incorporated (NYSE: PEG) (“PSEG”) announced today that it is commencing a private exchange offer (the “Exchange Offer”) and related consent solicitation (the “Consent Solicitation”) with respect to the 8 5/8% senior notes due 2031 of PSEG Power LLC (PSEG Power LLC, “PSEG Power” and such notes, the “Power Notes”).
Pursuant to the Exchange Offer, PSEG is offering to issue, in a private offering to eligible noteholders, and for the consideration set forth in the table below, new notes (the “PSEG Notes”) in exchange for any and all (to the extent held by eligible noteholders) of the $500 million aggregate principal amount of the outstanding Power Notes. In addition, pursuant to the Consent Solicitation, PSEG is soliciting consents from the eligible noteholders to amend the Power Notes and related indenture under which they were issued as it relates to the Power Notes (the “Subsidiary Indenture”).
| CUSIP | Issuer | Aggregate<br><br><br>Principal AmountOutstanding | Title of Power Notes | Consideration per 1,000 Principal Amount of Power Notes Tendered |
|---|---|---|---|---|
| Tendered After Early Tender Deadline | ||||
| Principal Amount of PSEG NotesIssued | ||||
| 69362BAJ1 | PSEG Power | $500,000,000 | 8^5^/8% Senior Notes due 2031 | 970 |
All values are in US Dollars.
The Exchange Offer and Consent Solicitation are being made upon the terms and subject to the conditions set forth in an Offer to Exchange and Consent Solicitation Statement dated November 23, 2020 (the “Offer to Exchange”), copies of which will be made available to holders of the Power Notes eligible to participate in the Exchange Offer. The Exchange Offer and Consent Solicitation will expire at 11:59 p.m., New York City time, on December 21, 2020, unless such date is extended (such time and date, as they may be extended, the “Expiration Time”) or earlier terminated. Tendered Power Notes may not be withdrawn and consents may not be revoked after 5:00 p.m., New York City time, on December 7, 2020, except as required by applicable law. PSEG reserves the right to terminate, withdraw, amend and/or extend the Exchange Offer and Consent Solicitation in its sole discretion, subject to the terms and conditions set forth in the Offer to Exchange.
Upon the terms and subject to the conditions set forth in the Offer to Exchange, each eligible noteholder exchanging Power Notes in the Exchange Offer will receive, in exchange for the Power Notes validly tendered and not validly withdrawn, newly issued PSEG Notes having the same interest payment and maturity dates and interest rate as the Power Notes exchanged. Eligible noteholders who validly tender and do not validly withdraw their tendered Power Notes by 5:00 p.m., New York City time, on December 7, 2020 (such time and date, as they may be extended, the “Early Tender Deadline”) will receive, upon the terms and subject to the conditions set forth in the Offer to Exchange, PSEG Notes in the same principal amount as the Power Notes tendered therefor. Eligible noteholders who validly tender their Power Notes after the Early Tender Deadline, but on or prior to the Expiration Time, will receive $970 principal amount of the PSEG Notes per $1,000 principal amount of Power Notes validly tendered (the “Exchange Consideration”). Settlement of the Exchange Offer is expected to occur on or about December 23, 2020, unless PSEG extends the Expiration Time or terminates the Exchange Offer. Interest on each PSEG Note will accrue from (and including) October 15, 2020, the last interest payment date on which interest was paid on the Power Note tendered in exchange for such PSEG Note, and, accordingly, no accrued interest will be paid on the settlement date in respect of Power Notes accepted for exchange, except as set forth in the Offer to Exchange with respect to cash paid in lieu of PSEG Notes not delivered.
The PSEG Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. If the principal amount of PSEG Notes validly tendered that would otherwise be required to be delivered in exchange for a tender of Power Notes would not equal $2,000 or an integral multiple of $1,000 in excess thereof, it will be rounded down to $2,000 or the nearest integral multiple of $1,000 in excess thereof, and PSEG will pay cash equal to the remaining portion of the Exchange Consideration for such Power Notes plus accrued and unpaid interest with respect to that portion. No tender of Power Notes will be accepted, however, if it would result in the issuance of less than $2,000 principal amount of PSEG Notes.
PSEG’s obligation to accept and exchange the Power Notes validly tendered pursuant to the Exchange Offer is subject to customary conditions, as set forth in the Offer to Exchange. The Exchange Offer and Consent Solicitation are not conditioned upon the tender of any minimum aggregate principal amount of the Power Notes being validly tendered for exchange or the receipt of the requisite consents in the Consent Solicitation to adopt the proposed amendments.
In the Consent Solicitation, PSEG is soliciting the consents of the eligible noteholders to amend the Power Notes and the Subsidiary Indenture with respect to the Power Notes to eliminate substantially all of the restrictive covenants and certain of the other covenants and events of default. Consents of the holders of not less than a majority in aggregate principal amount of all outstanding Power Notes must be obtained for the amendments to the Power Notes and the Subsidiary Indenture with respect to the Power Notes to be effective. Eligible noteholders validly tendering their Power Notes will be deemed to have validly delivered consents to the proposed amendments with respect to such tendered Power Notes. Eligible noteholders will not be
permitted to tender their Power Notes without delivering consents or to deliver consents without tendering their Power Notes.
This press release is issued pursuant to Rule 135c under the Securities Act of 1933, as amended (the “Securities Act”). This press release is neither an offer to sell nor the solicitation of an offer to buy the PSEG Notes or any other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which, or to any person to whom, such an offer, solicitation or sale is unlawful. The Exchange Offer has not been and will not initially be registered under the Securities Act, or the securities laws of any other jurisdiction. The PSEG Notes will be issued in reliance upon exemptions from, or in transactions not subject to, registration under the Securities Act. The PSEG Notes will be offered for exchange only (1) to qualified institutional buyers as defined in Rule 144A under the Securities Act in reliance on the exemption provided by Section 4(a)(2) of the Securities Act and (2) outside the United States to persons other than U.S. persons (each as defined in Rule 902 under the Securities Act) in reliance upon Regulation S under the Securities Act and (3) in any Relevant Member State (any member state of the European Economic Area) or in the United Kingdom, to persons who are qualified investors (as defined in Regulation (EU) 2017/1129). The PSEG Notes may not be offered, sold, pledged or otherwise transferred in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.
The Exchange Offer and Consent Solicitation are being made only pursuant to the Offer to Exchange. The Offer to Exchange and other documents relating to the Exchange Offer and Consent Solicitation will be distributed only to holders who confirm that they are within the categories of eligible participants in the Exchange Offer. None of PSEG, PSEG Power, PSEG’s other subsidiaries, any of their respective directors or officers, the dealer managers and solicitation agents, the exchange agent, the information agent, any trustee for the PSEG Notes or the Power Notes, their respective affiliates, or any other person is making any recommendation as to whether holders should tender their Power Notes in the Exchange Offer.
Holders who desire a copy of the eligibility letter should contact Global Bondholder Services Corporation, the information agent for the Exchange Offer and Consent Solicitation, at (866) 470-3800 (U.S. Toll-free). Banks and brokers should call (212) 430-3774. The eligibility letter may also be found here: https://gbsc-usa.com/eligibility/pseg. Global Bondholder Services Corporation will also provide copies of the Offer to Exchange to eligible noteholders.
In connection with the Exchange Offer and as described in greater detail in the Offer to Exchange, PSEG will enter into a registration rights agreement, pursuant to which PSEG will be obligated to use commercially reasonable efforts to file with the U.S. Securities and Exchange Commission (the “SEC”) and cause to become effective a registration statement with respect to an offer to exchange the PSEG Notes for new notes and to use commercially reasonable efforts to file a shelf registration statement to cover resales of the PSEG Notes under the Securities Act in the event that PSEG determines that a registered exchange offer is not available or may not be completed.
This press release, the Offer to Exchange and any other documents or materials relating to the Exchange Offer and Consent Solicitation may only be communicated to persons in the United Kingdom in circumstances where Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”) does not apply. Accordingly, this press release and the Offer to Exchange are only for circulation to (i) persons who are outside the United Kingdom, (ii) investment professionals falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005, as amended (the “Financial Promotion Order”), (iii) high net worth entities, and other persons to whom the communication may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Financial Promotion Order, (iv) persons falling within Article 43(2) of the Financial Promotion Order, or (v) other persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the communication may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to for purposes of this paragraph as “relevant persons”). The PSEG Notes will only be available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such PSEG Notes will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on the Offer to Exchange or any of its contents and may not participate in the Exchange Offer.
The complete terms and conditions of the Exchange Offer and Consent Solicitation are set forth in the Offer to Exchange. The Exchange Offer is only being made pursuant to the Offer to Exchange. The Exchange Offer is not being made to holders of Power Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. The Exchange Offer has not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the Offer to Exchange.
About PSEG
Public Service Enterprise Group Inc. (PSEG) (NYSE: PEG) is a publicly traded diversified energy company with approximately 13,000 employees. Headquartered in Newark, N.J., PSEG’s principal operating subsidiaries are: Public Service Electric and Gas Co. (PSE&G), PSEG Power and PSEG Long Island. PSEG is a Fortune 500 company included in the S&P 500 Index and has been named to the Dow Jones Sustainability Index for North America for 13 consecutive years.
Forward-Looking Statement
This press release may contain statements about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such forward-looking statements are based on management’s beliefs as well as assumptions made by and information currently available to management.
When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,” “hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ materially are often presented by the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in filings we make with the SEC, including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K.
EX-99.1
Exhibit 99.1
Recent Developments at PSEG Power—Exploration of Strategic Alternatives
for Non-Nuclear Generation Assets—Potential Effect on Power Notes
In July 2020, Public Service Enterprise Group Incorporated (“PSEG”) announced that it was exploring strategic alternatives for PSEG Power LLC’s (“PSEG Power”) non-nuclear generating fleet with the intention of accelerating the transformation of PSEG into a primarily regulated electric and gas utility, with a contracted generation business. PSEG further announced that it was then in the preliminary stages of this process and it anticipated beginning the marketing process in the fourth quarter of 2020, with the expectation that the process would be completed sometime in 2021.
Since the announcement, PSEG has continued preparatory activities relating to the potential divestiture of these assets. PSEG recently began the marketing process for PSEG Power’s solar generating assets and continues to anticipate beginning the marketing process relating to the remainder of the non-nuclear generating fleet later in the fourth quarter of 2020, likely during the pendency of the offer to exchange 8 5/8% Senior Notes due 2031 (the “Power notes”) issued by PSEG Power, to the extent held by eligible noteholders, for newly-issued 8 5/8% Senior Notes due 2031 of PSEG (the “PSEG notes”) having the same interest payment and maturity dates and interest rate as the Power notes (the “Exchange Offer”). While PSEG has received preliminary unsolicited inbound inquiries expressing an interest in various types of transactions involving PSEG Power, PSEG currently expects to receive bids for the non-nuclear generating assets in the winter or early spring of 2021, with the further expectation that any transaction or transactions, if entered into, would be completed sometime in 2021, subject to the satisfaction of all conditions to closing included in the applicable transaction agreements, including, among other things, the receipt of all required regulatory approvals. Because PSEG currently believes that the universe of potential transaction parties interested in PSEG Power’s fossil and solar assets likely will be different, if successful, the divestiture of the fossil and solar assets likely will take the form of at least two separate transactions which may be completed, if at all, on different timetables.
As PSEG continues its pursuit of strategic alternatives for PSEG Power’s fossil and solar generating assets, the timeline, value and ultimate outcome of the process are uncertain. The process may result in numerous potential outcomes including, without limitation, the ultimate divestiture of all, a portion or none of the applicable assets or another transaction not presently being pursued by PSEG, may take more or less time than currently anticipated to complete and the terms, including value to be realized by PSEG, of any applicable transaction is presently unknown.
If PSEG ultimately disposes of PSEG Power’s non-nuclear generating fleet, it is possible that the resulting transaction could cause PSEG Power to redeem the Power notes at a price equal to the principal amount thereof plus a make-whole premium. Holders of Power notes who participate in the Exchange Offer will not receive any further payment in respect of their Power notes exchanged in the Exchange Offer, including any payment upon a redemption of the Power notes. Alternatively, if PSEG were to enter into a transaction involving all of PSEG Power or less than all or substantially all of PSEG Power’s assets, such transaction may not lead PSEG Power to redeem the Power notes, and such Power notes would continue to be the obligations of PSEG Power.
In addition, if the amendments to the Power notes and the Subsidiary Indenture (as defined below) to eliminate substantially all of the restrictive covenants and certain of the other covenants and events of default with respect to the Power notes (the “Proposed Amendments”) are adopted, holders of Power notes who do not participate in the Exchange Offer will no longer be entitled to many of the current provisions and protections of (a) the Indenture, dated as of April 16, 2001, by and among PSEG Power, the Subsidiary Guarantors (as defined below) and The Bank of New York Mellon, as trustee, filed
with the U.S. Securities and Exchange Commission as Exhibit 4.1 to Registration Statement on Form S-4, File No. 033-69228, on September 10, 2001, as supplemented by the First Supplemental Indenture, dated as of March 13, 2002, filed as Exhibit 4.7 with Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, File No. 000-49614, on May 15, 2002 and the Second Supplemental Indenture, dated as of March 10, 2006, in each case, as such Indenture and such supplements relate to the Power notes (the “Subsidiary Indenture”) and (b) the Power notes.
RisksRelated to our Exploration of Strategic Alternatives
The timeline and ultimate outcome of PSEG’s exploration of strategic alternativesrelating to PSEG Power’s non-nuclear generating fleet is uncertain.
In July 2020, PSEG announced that it was exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet with the intention of accelerating the transformation of PSEG into a primarily regulated electric and gas utility, with a contracted generation business. PSEG further announced that it was then in the preliminary stages of this process and it anticipated beginning the marketing process in the fourth quarter of 2020, with the expectation that the process would be completed sometime in 2021.
Since the announcement, PSEG has continued preparatory activities relating to the potential divestiture of these assets. PSEG recently began the marketing process for PSEG Power’s solar generating assets and continues to anticipate beginning the marketing process relating to the remainder of the non-nuclear generating fleet later in the fourth quarter of 2020, likely during the pendency of the Exchange Offer. While PSEG has received preliminary unsolicited inbound inquiries expressing an interest in various types of transactions involving PSEG Power, the timeline and ultimate outcome of this process are uncertain. The ability of PSEG to divest all or a portion of these assets, and the applicable terms, conditions and timeline, will depend in large part on the participation of potentially interested parties and the value such parties place on the applicable assets. It is possible that third parties may wish to acquire all, a portion or none of the applicable assets (or engage in another transaction not presently being pursued by PSEG), and the value that such third parties may place on such assets is uncertain. The process may further be impacted by, among other things, global and domestic market and economics conditions, conditions generally impacting the fossil and solar generating industries and changes in the regulatory environment. Any transaction agreement that PSEG may enter into will contain various terms and conditions, and it is possible that even if entered into, such transaction may fail to be completed. It is also possible that such a transaction could be completed on a shorter timeline than currently anticipated.
PSEG Power performed a recoverability test for impairment of certain of its generating assets using a weighted probability cash flow analysis that considers the likelihood of a potential sale or disposition or continuing to operate the assets through their remaining estimated useful lives. As of September 30, 2020, the estimated undiscounted future cash flows of each of the asset groups exceeded the carrying amount and no impairment was identified. However, certain assumptions are subject to change as the potential sales and marketing process progresses. A change in the held-for-sale classification of PSEG Power’s non-nuclear generating assets may have a material adverse impact on PSEG’s and PSEG Power’s future financial results.
If PSEG ultimately disposes of PSEG Power’s non-nuclear generating fleet, PSEG Power may redeemthe Power notes at a price equal to the principal amount thereof plus a make-whole premium. Holders that elect to participate in the Exchange Offer will not receive any further payment in respect of their Power notes exchanged in the Exchange Offer,including any payment upon a redemption of the Power notes.
As described in the offer to exchange and consent solicitation statement (the “Offer to Exchange”), the Subsidiary Indenture includes covenants that limit, among other matters, certain asset sales exceeding 15% of PSEG Power’s consolidated net tangible assets or, subject to certain exceptions, sales by PSEG Power of more than 25% of the assets or capital stock in Fossil (as defined below), one of the Subsidiary Guarantors of the Power notes. The Subsidiary Indenture also includes restrictions on the ability of PSEG Power to merge, consolidate or sell all or substantially all of its assets. The consent solicitation included in the Offer to Exchange proposes the removal of these provisions of the Subsidiary Indenture upon receipt of the consents required for the Proposed Amendments to become effective. In the event that the Proposed Amendments do not become effective, however, the disposal of PSEG Power’s non-nuclear generating fleet could, depending on the structure of such transaction, among other factors, trigger a default under one or more of these provisions.
In addition, the Power notes, after giving effect to the Proposed Amendments pursuant to the Exchange Offer, will continue to be guaranteed by PSEG Power’s subsidiaries, PSEG Fossil LLC (“Fossil”), PSEG Nuclear LLC (“Nuclear”) and PSE&G Energy Resources & Trade LLC (“ER&T,” and together with Fossil and Nuclear, the “Subsidiary Guarantors”), which may be transferred in connection with the disposition of all or part of PSEG Power’s non-nuclear generating fleet. The purchaser in any such transaction could be unwilling to acquire any such Subsidiary Guarantors with such guarantee in effect.
For these reasons, or for other reasons, PSEG Power may decide, or be required, to redeem the Power notes at a price equal to the principal amount thereof plus a make-whole premium, as described in the Offer to Exchange. Whether the Power notes are subject to redemption will depend on a number of factors, including the structure of any transaction resulting from the strategic review, and any actual redemption price would depend on the applicable treasury rate in effect at such time. It is likewise possible that the ultimate outcome of the process may result in a transaction, or may result in no transaction at all, where the Power notes are not redeemed.
Any holder that elects to participate in the Exchange Offer will receive PSEG notes in exchange for its Power notes in accordance with the terms of the Exchange Offer described in the Offer to Exchange. Accordingly, if, following completion of the Exchange Offer, PSEG Power redeems the Power notes, any holder that exchanged Power notes for PSEG notes will not receive any further payment in respect of their Power notes exchanged in the Exchange Offer, including any payment upon a redemption of the Power notes. Holders must make their own determination regarding whether to participate in the Exchange Offer and thereby forego any such further payments in respect of their Power notes.