NEW YORK, May 10, 2016 /PRNewswire/ -- Puget Sound Energy, Inc. ("PSE") announced today that it commenced a tender offer to purchase for cash (the "Tender Offer") any and all of the $250 million aggregate principal amount outstanding of its 6.974% Series A Enhanced Junior Subordinated Notes due June 1, 2067 (the "Notes") and a solicitation of consents (the "Solicitation") for proposed amendments to the related indenture (the "Junior Subordinated Note Indenture"). The Tender Offer and Solicitation are being made pursuant to an Offer to Purchase and Consent Solicitation Statement dated as of May 10, 2016 and related consent and letter of transmittal (collectively, the "Offer to Purchase and Consent Solicitation Statement"). The Tender Offer will expire at 12:00 midnight, New York City time, on June 7, 2016.
In conjunction with the Tender Offer, we are soliciting from Holders consents to amend the Junior Subordinated Indenture (by way of a supplemental indenture), which would eliminate the restrictions pursuant to which the Company may only repurchase, redeem or repay the Notes on or before June 1, 2047 if a specified portion of the funds used in the transaction are obtained by the Issuer through the sale of common stock or certain other equity or equity-like securities (the "Proposed Amendments"). Adoption of the Proposed Amendments requires the consent of the Holders of at least a majority in aggregate principal amount of the outstanding Notes (excluding any Notes owned by the Company or its affiliates) (the "Junior Subordinated Note Consents") as well as satisfaction or waiver of other conditions as described in the Solicitation Documents.
Holders of Notes that are validly tendered prior to the consent payment deadline of 5:00 p.m., New York City time, on May 23, 2016 and accepted for purchase will receive total consideration of $850 per $1,000 principal amount of Notes validly tendered and accepted for purchase, which includes a consent payment of $30 per $1,000 principal amount of Notes, plus any accrued and unpaid interest up to, but not including, the initial settlement date, which is expected to be May 24, 2016. Holders of Notes that are validly tendered after the consent payment deadline, but prior to the expiration of the Tender Offer, and accepted for purchase will receive the tender offer consideration of $820 per $1,000 principal amount of the Notes validly tendered and accepted for purchase, plus any accrued and unpaid interest up to, but not including, the final settlement date, which is expected to be June 8, 2016. Holders of Notes tendered after the consent payment deadline and accepted for purchase will not receive a consent payment.
Concurrently with the Tender Offer and Solicitation, PSE is soliciting consents from the holders of PSE's 6.274% Senior Notes due March 15, 2037 (the "Covered Notes") to terminate the Replacement Capital Covenant dated June 4, 2007 and the Company's obligations thereunder (the "Replacement Capital Covenant") that was granted by PSE in favor of the holders of the Covered Notes. Termination of the Replacement Capital Covenant requires the consent of the holders of a majority in principal amount of the outstanding Covered Notes (the "Covered Note Consents"). The Company is soliciting consents from the holders of the Covered Notes to terminate the Replacement Capital Covenant because it includes restrictions relating to repurchases, redemptions and repayments of the Notes. Obtaining the Covered Note Consents is one of the conditions to the consummation of the Tender Offer and the Consent Solicitation.
Consummation of the Tender Offer and the Consent Solicitation are subject to the satisfaction or waiver of the conditions set forth in the Offer to Purchase and Consent Solicitation Statement, including the Junior Subordinated Notes Consent, the Covered Notes Consent, the financing condition and the supplemental indenture condition described therein. PSE may amend, extend or terminate the Tender Offer and the Consent Solicitation in its sole discretion.
Beginning December 1, 2017, the Junior Subordinated Notes will bear interest at a floating rate of LIBOR plus 253 basis points, reset quarterly, rather than the current fixed rate of 6.974% per annum. In addition, and subject to the Replacement Capital Covenant and the Junior Subordinated Note Indenture, the Junior Subordinated Notes are subject to redemption, in whole or in part, at any time and from time to time on or after June 1, 2017 (the "Initial Par Call Date") at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. PSE currently anticipates that it will not exercise its right to redeem the Junior Subordinated Notes on the Initial Par Call Date.
This news release is neither an offer to purchase nor a solicitation of an offer to sell any Notes. The Tender Offer and the Consent Solicitation are being made only pursuant to the Offer to Purchase and Consent Solicitation Statement, copies of which will be delivered to holders of the Notes. Persons with questions regarding the Tender Offer and the Consent Solicitation should contact Barclays Capital Inc. at (800) 438-3242 (toll free) or (212) 528-7581 (collect), or the Information Agent, D.F. King & Co., Inc., at (877) 732-3614 (toll free).
Certain statements contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, among which include PSE's current anticipation that it will not exercise its right to redeem the Junior Subordinated Notes on the Initial Par Call Date. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. There are several factors that could affect what PSE intends or anticipates happening. More information about these factors is included in Puget Energy's and PSE's most recent annual report on Form 10-K and in their other public filings filed with the Securities and Exchange Commission. Except as required by law, Puget Energy and PSE undertake no obligation to update any forward-looking statements.
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SOURCE Puget Sound Energy, Inc.