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Exelon offers stock, equities to finance Pepco deal

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The parent company of an electric and gas utility that does business in the midstate plans to offer common stock and equity units to raise money, in part, to finance its merger with Pepco Holdings Inc.

Exelon Corp., owner of PECO, which serves a portion of York County, and Three Mile Island in Middletown, will start concurrent registered offerings of 50 million shares of its common stock and 20 million equity units worth $1 billion, according to a company news release.

In connection with the offerings, Exelon expects to grant the underwriters of the offerings a 30-day option to purchase up to an additional 7.5 million shares of Exelon common stock and a 13-day option to purchase up to an additional 3 million equity units upon the same terms, according to the release.

In connection with the common stock offering, Exelon expects to enter into forward sale agreements with an affiliate of Barclays Capital Inc. and Goldman, Sachs & Co., according to the release. Under those agreements, Exelon will agree to issue and sell to those firms the same number of shares of Exelon common stock sold by those firms, or their affiliates, in the underwritten public offering, according to the release. Settlement of the forward sales agreements will be done some time before Oct. 29, 2015.

Each equity unit will be issued in a stated amount of $50 and will consist of a contract to purchase Exelon common stock on or before June 1, 2017, and a one-20th undivided beneficial ownership interest in $1,000 principal amount of Exelon’s junior subordinated notes due 2024, according to the company.

Exelon warned that the public offerings are subject to market and other conditions.

“There can be no assurance as to whether or when the offerings may be completed, or as to the actual size or terms of the offerings,” the company said in the release. “In addition, the offering of common stock and the offering of equity units are not contingent on each other.”

Exelon signed an all-cash agreement with Pepco in late April worth $27.25 per share. The companies last month filed an application with the Federal Energy Regulatory Commission seeking approval of the deal. Because of a lack of competition areas between the two, they asked FERC for a 90-day review of the merger request. The companies anticipate closing in the second or third quarter of 2015.

The combination would bring together Exelon’s three electric and gas utilities — BGE in Baltimore, ComEd in Chicago and PECO in Philadelphia — and Pepco Holding’s electric and gas utilities Atlantic City Electric in Atlantic City, N.J.; Delmarva Power in Newark, Del.; and Pepco in Washington, D.C.

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