TRLPC: Exelon to launch $7.2B bridge next week

NEW YORK Fri May 2, 2014 4:10pm EDT

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NEW YORK May 2 (Reuters) - Nuclear power producer Exelon Corp will launch next week a $7.221 billion fully committed bridge loan to back its $6.83 billion purchase of Pepco Holdings Inc, sources told Thomson Reuters LPC. The combination will create the biggest Mid-Atlantic electric and gas utility.

Barclays and Goldman Sachs are leading the one-year deal. Drawn pricing opens at LIB+150 for BBB/Baa2 ratings.

Exelon expects to term out the 364-day bridge with a combination of Exelon equity issuance, long-term debt and cash proceeds from asset sales. The debt portion will be about 50 percent, according to a company presentation.

Pricing includes a margin step up of 25bp every three months after closing. It also includes duration fees on amounts outstanding three, six and nine months after closing.

At current ratings of BBB/Baa2, the loan pays a ticking fee of 22.5bp on undrawn commitments.

On April 30, Exelon and Pepco jointly announced that Exelon will purchase Pepco for $6.83 billion in an all-cash transaction at $27.25 per share, representing a 24.7 percent premium to Pepco's closing price on April 25.

Exelon President and CEO Chris Crane will lead the combined company.

The acquisition is expected to close in the second or third quarter of 2015.

Barclays, Goldman, Sachs & Co. and Loop Capital Markets are serving as financial advisors and Kirkland & Ellis LLP is serving as legal counsel to Exelon.

Lazard served as lead financial advisor to Pepco. Morgan Stanley provided a fairness opinion to the Pepco's board of directors and Sullivan & Cromwell LLP and Covington & Burling LLP served as legal counsel. (Editing By Leela Parker Deo and Jon Methven)

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