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Exelon seeking at least $2.75 billion in stock, equity unit offerings

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The parent company of an electric and gas utility that does business in the midstate hopes to raise at least $2.75 billion from its offering of common stock and equity units.

Exelon Corp., owner of PECO, which serves a portion of York County, and of Three Mile Island in Middletown, set a price of $35 per share, as well as $50 per equity unit, according to a news release. Exelon announced Wednesday it was offering 50 million shares and 20 million equity units to raise money, in part, to finance its merger with Pepco Holdings Inc.

The company has granted the underwriters a 30-day option to purchase an additional 7.5 million shares of Exelon common stock upon the same terms. The offering of common stock is expected to close Tuesday, subject to customary closing conditions.

In connection with the common stock offering, Exelon entered into forward sale agreements with an affiliate of Barclays Capital Inc. and Goldman, Sachs & Co. Under those agreements, Exelon agreed to issue and sell to those firms, subject to Exelon’s right to cash or net share settle the forward sale agreements, the same number of shares of Exelon’s common stock sold by the firms or their affiliates in the underwritten public offering, according to the news release.

Settlement of the forward sale agreements will occur no later than Oct. 29, 2015, Exelon said. Upon settlement, Exelon will issue and deliver to the firms shares of its common stock in exchange for cash proceeds per share equal to the forward sale price, which will initially be $33.95 -- the public offering price, less underwriting discounts and commissions, the company stated. Exelon said it may, subject to certain conditions, elect cash or net share settlement for all or a portion of its rights or obligations under the forward sale agreements.

The equity units carry a total annual distribution rate of 6.5 percent, according to the release. The reference price for the equity units is $35 per unit, the public offering price in the concurrent common stock offering. The threshold appreciation price for the equity units is approximately $43.75, which represents a premium of approximately 25 percent over the reference price.

The closing of the offering of common stock and the offering of equity units are not contingent on each other, Exelon stated.

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.

Joseph Deinlein

Joseph Deinlein

Joseph Deinlein covers York County, energy and environment, agribusiness and workforce issues. Have a tip or question for him? Email him at joed@cpbj.com. Follow him on Twitter, @JDeinleinCPBJ. Circle Joseph Deinlein on .

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