main8_k.htm
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) July 10, 2007
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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))
On
July 13, 2007,
FirstEnergy Generation Corp. (FGCO) completed the sale and leaseback of a
93.825% undivided interest in Unit No. 1 of the Bruce Mansfield Generating
Plant
located in Shippingport, Pennsylvania. The undivided interest
represents a net demonstrated capacity of approximately 779 megawatts of the
facility. FGCO and its direct parent, FirstEnergy Solutions Corp.
(FES), are wholly owned subsidiaries of FirstEnergy Corp.
(FirstEnergy).
The
purchasers of
the undivided interest are six Delaware statutory trusts (Lessors), five of
which are held by an owner participant affiliated with AIG Financial Products
Corp. (holding 82% of the undivided interest) and the sixth of which is held
by
an owner participant affiliated with Union Bank of California,
N.A. The purchase price of approximately $1.329 billion for the
undivided interest was funded through a combination of equity investments
by the owner participants in the six Lessors and proceeds from the sale of
$1.135 billion aggregate principal amount of 6.85% pass through certificates
due
2034.
The
Lessors issued
secured notes to the pass through trust that issued and sold the certificates
pursuant to a purchase agreement dated July 10, 2007. Interest on the
notes is 6.85% per annum. The notes mature on June 1,
2034.
FES
has
unconditionally and irrevocably guaranteed all of FGCO’s obligations under each
of the leases and related transaction documents. The notes and
certificates are not guaranteed by FES or FGCO, but the notes are secured by,
among other things, each Lessor’s undivided interest and interests in the
applicable lease and other related transaction documents. FGCO’s
payments of basic rent (approximately $44.4 million for 2007 and $81.4 million
on an average annual basis for subsequent years during the lease term) will
be
sufficient to permit the Lessors to pay principal and interest on the notes
when
due, which amounts will be used in turn to pay scheduled distributions on the
certificates. The payment dates (June 1 and December 1) for basic
rent under the leases, for principal and interest on the notes and for scheduled
distributions on the certificates, are coordinated to facilitate the payment
structure.
The
provisions of
each lease are identical, with each lease having a term of 32 years and 11
months beginning on July 13, 2007, subject to earlier termination upon the
occurrence of certain events of loss and events of default. The lease
term may be extended for one or more renewal terms. In addition to
basic rent, FGCO is required to pay supplemental rent due from time to time
and,
in the event of certain events which cause early termination of the lease,
certain other amounts.
In
addition to the
leases, FGCO has entered into site leases, site subleases, support and other
agreements in connection with the sale and leaseback transaction.
The
certificates
have not been registered under the Securities Act of 1933, as amended, and
may
not be offered or sold in the United States absent registration or any
applicable exemption from registration requirements.
Pursuant
to a
registration rights agreement entered into on the closing date with the initial
purchasers of the certificates, FGCO and FES have agreed to consummate an
exchange offer for certificates pursuant to an effective registration statement
filed with the U. S. Securities and Exchange Commission or, under certain
circumstances, to file a shelf registration statement to cover resales of the
certificates. If the exchange offer is not consummated, or a shelf registration
statement is not declared effective, within 270 calendar days of the closing
date, the interest rate on the Lessor notes will be increased by 0.25% until
the
exchange offer is consummated or the shelf registration statement is declared
effective.
The
transaction will
be classified as a financing under generally accepted accounting principles
(GAAP) until FGCO’s and FES’ registration obligations under the registration
rights agreement referred to above are satisfied, at which time it is expected
to be classified as an operating lease under GAAP.
Net
proceeds to FGCO
from the sale and leaseback transaction will be used to repay short-term
borrowings from, and to invest in, the FirstEnergy non-utility money
pool. The repayments and investments will permit FES to reduce its
investment in that money pool in order to repay approximately $250 million
of
external bank borrowings and fund an equity repurchase from FirstEnergy, of
up
to $700 million. FirstEnergy may use some or all of such funds to
reduce its own external bank borrowings.
On
July 16, 2007,
FirstEnergy issued a press release announcing the completion of the sale and
leaseback transaction. A copy of the release is attached hereto as
Exhibit 99.1.
The
above summary
description of the leases, the notes, the certificates and the other related
sale and leaseback transaction documents does not purport to be complete and
is
qualified in its entirety by reference to the actual documents, forms of
which are expected to be filed as exhibits to FirstEnergy’s next quarterly
report on Form 10-Q.
Item
9.01
Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit
No.
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Description
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99.1
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Press
Release
issued by FirstEnergy, dated July 16,
2007
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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 FirstEnergy’s 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), and the legal and
regulatory changes resulting from the implementation of the Energy Policy Act
of
2005 (including, but not limited to, the repeal of the Public Utility Holding
Company Act of 1935), the uncertainty of the timing and amounts of the capital
expenditures needed to, among other things, implement the Air Quality Compliance
Plan (including that such amounts could be higher than anticipated) or levels
of
emission reductions related to the Consent Decree 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 and oversight) by the NRC (including, but not limited to,
the
Demand For Information issued to FENOC on May 14, 2007) and the various state
public utility commissions as disclosed in the registrant’s SEC filings, the
timing and outcome of various proceedings before the PUCO (including, but not
limited to, the Distribution Rate Cases and the generation supply plan filing
for the Ohio Companies and the successful resolution of the issues remanded
to
the PUCO by the Ohio Supreme Court regarding the Rate Stabilization Plan) and
the PPUC (including the transition rate plan filings for Met-Ed and Penelec
and
the Penn Power Default Service Plan filing), 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
initiatives), 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,
any
final adjustment in the purchase price per share under the accelerated share
repurchase program announced March 2, 2007, the risks and other factors
discussed from time to time in the registrant’s SEC 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.
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.
July
16,
2007
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FIRSTENERGY
CORP.
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Registrant
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By:
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/s/ Harvey
L. Wagner
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Harvey
L.
Wagner
Vice
President, Controller and
Chief
Accounting Officer
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