PPL Corporation (PPL) announced the completion of the final leg of financing for the recently acquired LG&E and KU Energy LLC, formerly E.ON U.S., the parent company of Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU).

The three Kentucky companies agreed to sell $2.9 billion worth of debt, proceeds of which will be used to repay interim financing made by PPL to the Kentucky companies in connection with PPL’s acquisition of them.

Of the planned $2.9 billion debt sale, Kentucky Utilities would sell $1.5 billion of first mortgage bonds consisting of $750 million of 30-year debt with a coupon of 5 1/8%, priced to yield 5.2% to investors; $500 million of 10-year debt with a coupon of 3 1/4%, priced to yield 3.3% to investors; and $250 million of 5-year debt with a coupon of 1 5/8%, priced to yield 1.7% to investors.  

Louisville Gas and Electric’s debt sale portion includes $535 million of first mortgage bonds consisting of $285 million of 30-year debt with a coupon of 5 1/8%, priced to yield 5.2% to investors; and $250 million of 5-year debt with a coupon of 1 5/8%, priced to yield 1.7% to investors.  

LG&E and KU Energy LLC has agreed to sell $875 million of senior unsecured debt consisting of $475 million of 10-year senior unsecured debt with a coupon of 3 3/4%, priced to yield 3.8% to investors; and $400 million of 5-year debt with a coupon of 2 1/8%, priced to yield 2.2% to investors.

The LG&E and KU Energy LLC expects to close the sale on or about November 12, 2010, while the LG&E and KU sales are expected to close on or around November 16, 2010.

PPL Corp. acquired E.ON U.S. on November 1, 2010, for $7.6 billion, financed through a combination of cash, credit facility drawings and using the proceeds from PPL’s June issuances of approximately $3.5 billion of common stock and equity units.

The acquisition has resulted in the creation of a larger and more diverse energy company that is well-positioned to continue delivering excellent services to its customers, attractive returns to shareowners and solid benefits for the communities it serves.

PPL Corp. believes that the acquired assets along with upside opportunities at the generation and marketing businesses, as energy market fundamentals improve, would increase shareholder value in the long term. We maintain our long term Neutral recommendation on PPL shares.

 
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