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):  May 11, 2015

 

Commission File
Number
Registrant; State of Incorporation;
Address and Telephone Number
IRS Employer
Identification No.
     
1-11459 PPL Corporation
(Exact name of Registrant as specified in its charter)
(Pennsylvania)
Two North Ninth Street
Allentown, PA  18101-1179
(610) 774-5151
23-2758192
     
1-32944 PPL Energy Supply, LLC
(Exact name of Registrant as specified in its charter)
(Delaware)
Two North Ninth Street
Allentown, PA  18101-1179
(610) 774-5151
23-3074920

 

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 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 

 

 

 

 

Section 7 - Regulation FD

 

Item 7.01 Regulation FD Disclosure

 

PPL Energy Supply, LLC (“PPL Energy Supply”) will be making available certain information to potential investors in connection with the proposed financing transaction described below in Item 8.01.

 

The information furnished under this Item 7.01 and in Exhibit 99.1 shall not be considered “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, unless PPL Energy Supply expressly sets forth in such future filings that such information is to be considered “filed” or incorporated by reference therein.

 

Section 8 - Other Events

 

Item 8.01 Other Events

 

On May 11, 2015, PPL Energy Supply announced that it intends to offer, subject to market and other conditions, up to $600 million aggregate principal amount of senior unsecured notes due 2025 (the “Notes”) in a private offering. PPL Energy Supply intends to use the net proceeds from the offering to repay short term borrowings under its revolving credit facilities. A copy of the press release is attached as Exhibit 99.2 hereto and is incorporated herein by reference.

 

The Notes will be offered only to qualified institutional buyers under Rule 144A of the Securities Act, and to non-U.S. persons in transactions outside the United States under Regulation S of the Securities Act. The Notes have not been registered under the Securities Act, and, unless so registered, may not be offered or sold 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. This announcement shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

Section 9 - Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits

 

  (d)   Exhibits  
         
      99.1 - Certain supplemental information.
      99.2 -

Press release, dated May 11, 2015.

 

           

 

 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

 

 

  PPL CORPORATION
       
  By: /s/ Stephen K. Breininger  
   

Stephen K. Breininger

Vice President and Controller

 

 

 

  PPL ENERGY SUPPLY, LLC
       
  By: /s/ Stephen K. Breininger  
   

Stephen K. Breininger

Controller

 

 

 

 

 

Dated:  May 11, 2015



 

Exhibit 99.1

 

SUPPLEMENTAL INFORMATION

 

The following table sets forth summary historical consolidated financial data of PPL Energy Supply, LLC (“Energy Supply”) as of December 31, 2013 and 2014 and for each of the years ended December 31, 2012, 2013 and 2014 and summary historical unaudited consolidated interim financial data of Energy Supply as of March 31, 2015 and for the three months ended March 31, 2014 and 2015. The summary historical consolidated financial data of Energy Supply as of December 31, 2013 and 2014 and for each of the years ended December 31, 2012, 2013 and 2014 have been derived from, and should be read together with, the audited consolidated financial statements of Energy Supply and the accompanying notes contained in Energy Supply’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “Form 10-K”). The summary historical unaudited consolidated interim financial data of Energy Supply as of March 31, 2015 and for the three months ended March 31, 2014 and 2015 have been derived from, and should be read together with, the unaudited condensed consolidated financial statements of Energy Supply and the accompanying notes contained in Energy Supply’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015 (the “Form 10-Q”). The unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual audited consolidated financial statements of Energy Supply. In the opinion of management, these unaudited financial data reflect all adjustments, consisting of only normal and recurring adjustments considered necessary for a fair presentation of the operating results for those interim periods. The summary historical consolidated financial data presented below include certain assets and liabilities of Energy Supply relating to facilities that may be sold as part of Talen Energy’s mitigation plan discussed elsewhere in this offering memorandum. As a result, the summary historical consolidated financial data of Energy Supply set forth below may not necessarily be indicative of the Energy Supply business that will be operated by Talen Energy in future periods. The summary historical consolidated financial data set forth below are not necessarily indicative of the results of future operations. Results for the interim periods are not necessarily indicative of the results that might be expected for any other interim period or for an entire year. The summary historical consolidated financial data should be read in conjunction with the information contained in the Form 10-K and Form 10-Q.

 

    Year Ended December 31,   Three Months Ended March 31,
(dollars in millions)   2012   2013   2014   2014   2015
                     
Statement of Operations Data:                                        
Operating revenues   $ 5,346     $ 4,514     $ 3,736     $ (955 )   $ 946  
Operating income (loss)     804       (293 )     397       (79 )     178  
Income (loss) from continuing operations after income taxes attributable to member     428       (262 )     187       (58 )     96  
Net income (loss) attributable to member     474       (230 )     410       (66 )     96  
                                         
Balance Sheet Data (at period end):                                        
Cash and cash equivalents           $ 239     $ 352             $ 221  
Total assets             11,074       10,760               10,366  
Total liabilities             6,276       6,853               6,550  
Long-term debt, including current portion             2,525       2,218               2,217  
Member’s equity             4,798       3,907               3,816  
                                         
Statement of Cash Flows Data:                                        
Cash provided by (used in):                                        
Operating activities   $ 784     $ 410     $ 462     $ 276     $ 221  
Investing activities     (469 )     (631 )     497       (389 )     (130 )
Financing activities     (281 )     47       (846 )     315       (222 )
                                         
Other Financial Data:                                        
EBITDA   $ 1,122     $ 66     $ 756     $ 10     $ 270  
Adjusted EBITDA(1)     1,048       935       730       223       226  

 

_____________________________________

  (1) Non-GAAP measures, such as EBITDA and Adjusted EBITDA, do not have definitions under GAAP and may be defined differently than, and not be comparable to, similarly titled measures used by other companies. Management cautions investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measure. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP.

The financial information of Energy Supply prepared in accordance with GAAP has been supplemented with EBITDA and Adjusted EBITDA because we believe that EBITDA and Adjusted EBITDA provide useful information to investors, lenders and rating agencies since these groups have historically used EBITDA-related measures in our industry, along with other measures, to estimate the value of companies, to make investment decisions and to evaluate a company’s ability to meet its debt service requirements. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by other companies because not all companies calculate EBITDA and Adjusted EBITDA in the same manner. EBITDA and Adjusted EBITDA are not measurements of financial performance under GAAP. EBITDA is defined as income (loss) from continuing operations after income taxes attributable to member adjusted for depreciation, amortization and accretion, interest expense and income taxes. Adjusted EBITDA is defined as EBITDA as further adjusted for certain items, such as unrealized loss (gain) on derivative contracts, certain financing and transaction costs and other items not indicative of ongoing operating performance.

 

A reconciliation of Energy Supply’s EBITDA and Adjusted EBITDA to income (loss) from continuing operations after income taxes attributable to member determined in accordance with GAAP is provided below:

  

 

  

Year Ended December 31,

 

Three Months Ended March 31,

  

2012

 

2013

 

2014

 

2014

 

2015

                
(dollars in millions)                         
                          
Income (loss) from continuing operations after income taxes attributable to member   $428   $(262)  $187   $(58)  $96 
Interest expense    158    159    124    32    36 
Income taxes    236    (159)   116    (47)   53 
Depreciation and amortization(a)    300    328    329    83    85 
EBITDA   $1,122   $66   $756   $10   $270 
Unrealized loss (gain) on derivative contracts(b)    (91)   131    (17)   219    (46)
Montana lease termination (c)         697                
Separation benefits(d)              33           
Mechanical contracting and engineering subsidiary revenue adjustment(e)              (17)          
SMGT bankruptcy(f)    11    (2)               
Corette asset impairment(g)         65                
Gain from NDT fund    (21)   (22)   (26)   (6)   (6)
Coal contract modification payments(h)    29                     
Corette closure costs(i)                        5 
Other    (2)        1         3 
Adjusted EBITDA   $1,048   $935   $730   $223   $226 

  

______________________________

  (a) Includes, with respect to (i) year ended December 31, 2012, $28 million, (ii) year ended December 31, 2013, $29 million, (iii) year ended December 31, 2014, $32 million, (iv) three months ended March 31, 2014, $8 million and (v) three months ended March 31, 2015, $8 million, of ARO accretion that is recognized in “Other operation and maintenance” on Energy Supply’s Statements of Income for the applicable period.
  (b) Represents non-cash change in the fair value of derivative instruments that have been included in Energy Supply’s earnings.
  (c) In September 2013, PPL Montana executed a definitive agreement to sell to NorthWestern certain hydroelectric generating facilities located in Montana. To facilitate the sale of the hydroelectric facilities, on December 20, 2013, PPL Montana terminated its operating lease arrangement related to partial interests in Units 1, 2 and 3 of the Colstrip coal-fired electric generating facility and acquired those interests, collectively, for $271 million. At lease termination, the existing lease-related assets on the balance sheet were written off and the acquired Colstrip assets were recorded at fair value as of the acquisition date. Energy Supply recorded a charge of $697 million ($413 million after-tax) for the termination of the lease.
  (d) In June 2014, Energy Supply’s largest IBEW local ratified a new three-year labor agreement. In connection with the new agreement, estimated bargaining unit one-time voluntary retirement benefits were recorded. In addition, in 2014, Energy Supply recorded separation benefits related to the anticipated spinoff transaction.
  (e) In 2014, Energy Supply recorded $17 million to “Energy-related businesses” revenues on the Statement of Income to correct an error related to prior periods and the timing of revenue recognition for a mechanical contracting and engineering subsidiary. See Note 1 to the audited consolidated financial statements of Energy Supply included elsewhere in this offering memorandum for additional information.
  (f) In October 2011, a wholesale customer, SMGT, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. In 2012, PPL EnergyPlus recorded an additional allowance for unpaid amounts under the related long-term power contract. In March 2012, the U.S. Bankruptcy Court for the District of Montana approved the request to terminate the contract, effective April 1, 2012. In June 2013, PPL EnergyPlus received an approval for an administrative claim in the amount of $2 million.
  (g) In 2012, Energy Supply announced its intention, beginning in April 2015, to place its Corette plant in long-term reserve status, suspending the plant’s operation due to expected market conditions and the costs to comply with MATS. During the fourth quarter of 2013, Energy Supply determined its Corette plant was impaired and recorded a pre-tax charge of $65 million for the plant and related emission allowances. See (i) below for additional information.
  (h) As a result of lower electricity and natural gas prices, coal-fired generation output decreased during 2012. Contract modification payments were incurred to reduce 2012 and 2013 coal deliveries.
  (i) Operations were suspended and the Corette plant was retired in March 2015.

 

 

 

 



Exhibit 99.2

Contacts:  For news media: George C. Lewis, 610-774-4687

  For financial analysts: Joseph P. Bergstein, 610-774-5609

  PPL Corporation

PPL Energy Supply, LLC Announces Offering of Senior Notes

ALLENTOWN, Pa. (May 11, 2015) – PPL Energy Supply, LLC (“PPL Energy Supply”) announced Monday (5/11) that it intends to offer, subject to market and other conditions, up to $600 million aggregate principal amount of its senior unsecured notes due 2025 (the “Notes”) in a private offering. PPL Energy Supply intends to use the net proceeds from the offering to repay short term borrowings under its revolving credit facilities.

The Notes will be offered only to qualified institutional buyers as defined under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in transactions outside the United States under Regulation S of the Securities Act. The Notes have not been registered under the Securities Act, and, unless so registered, may not be offered or sold 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.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About PPL Energy Supply, LLC

PPL Energy Supply is primarily engaged in the competitive power generation and marketing of electricity, generating capacity, ancillary services and related commodities primarily on a wholesale basis from its fleet of power plants located in Pennsylvania and Montana. PPL Energy Supply’s principal subsidiaries are PPL EnergyPlus, LLC and PPL Generation, LLC. PPL Energy Supply is an indirect wholly owned subsidiary of PPL Corporation (NYSE: PPL), a Pennsylvania corporation.

#     #     #

 Statements contained in this news release, including statements with respect to future earnings, cash flows, financing, regulation, operating performance and corporate strategy, are “forward-looking statements” within the meaning of the federal securities laws. Although PPL Energy Supply believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements are subject to a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: failure to obtain necessary regulatory approvals or to satisfy any of the other conditions to the previously announced transaction to spin off PPL Energy Supply, LLC and combine it with the power generation businesses of affiliates of Riverstone Holdings LLC to form Talen Energy Corporation ; actions, including divestitures, that may be required to obtain necessary regulatory approvals for the spinoff transaction; adverse effects on the market price of PPL Energy Supply's securities and its operating results because of any failure to complete, or a delay in the completion of, the spinoff and/or financing transaction; failure to realize the expected benefits of the proposed spinoff and/or financing transaction; negative effects of the announcement or consummation of the spinoff and/or financing transaction; market demand and prices for energy, capacity and fuel; weather conditions affecting customer energy usage and operating costs; competition in power markets; the effect of any business or industry restructuring; the profitability and liquidity of PPL Energy Supply and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of generating plants and other facilities; the length of scheduled and unscheduled outages at our generating plants; environmental conditions and requirements and the related costs of compliance, including environmental capital expenditures and emission allowance and other expenses; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; asset or business acquisitions and dispositions; any impact of hurricanes or other severe weather on our business, including any impact on fuel prices; receipt of necessary government or other regulatory permits, approvals; capital market conditions and decisions regarding capital structure; the impact of state, federal or foreign investigations applicable to PPL Energy Supply and its subsidiaries; the outcome of litigation against PPL Energy Supply and its subsidiaries; the market prices of equity securities and the impact on pension income and resultant cash funding requirements for defined benefit pension plans; the securities and credit ratings of PPL Energy Supply and its subsidiaries; political, regulatory or economic conditions in states, regions or countries where PPL Energy Supply or its subsidiaries conduct business, including any potential effects of threatened or actual terrorism or war or other hostilities; new state, federal or foreign legislation, including new tax legislation; and the commitments and liabilities of PPL Energy Supply and its subsidiaries. Any such forward-looking statements should be considered in light of such important factors and in conjunction with PPL Energy Supply’s Form 10-K and other reports on file with the Securities and Exchange Commission.

 

Note to Editors: Visit our media website at www.pplnewsroom.com for additional news and background about PPL Corporation.

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