ITC Itc Holdings Corp.

Indenture

On May 14, 2020, ITC Holdings Corp. (the “Company”) entered into a Fifth Supplemental Indenture (the “Fifth Supplemental Indenture”), between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”), to the Indenture, dated as of April 18, 2013 (the “Base Indenture” and, as amended and supplemented by the Fifth Supplemental Indenture, the “Indenture”), between the Company and the Trustee, under which the Company issued $700.0 million aggregate principal amount of its 2.95% senior notes due 2030 (the “notes”).

The notes are the Company’s direct, senior unsecured obligations and will rank equally in right of payment with all of the Company’s other existing and future senior unsecured indebtedness and senior in right of payment to all of the Company’s future subordinated debt.  The notes will be effectively subordinated to any of the Company’s future secured debt to the extent of the value of the assets securing such debt.  In addition, the notes will be structurally subordinated to all existing and future indebtedness and other obligations of the Company’s subsidiaries. There is no sinking fund for the notes.

The notes are redeemable, at the Company’s option, in whole at any time or in part from time to time at any time prior to February 14, 2030 (such date being referred to herein as the “par call date”), by paying the Make-Whole Price.  The “Make-Whole Price” is an amount equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) as determined by an independent investment banker, the sum of the present values of the remaining scheduled payments of principal and interest thereon assuming the notes matured on the par call date (not including any portion of such payments of interest accrued as of the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the sum of (x) 35 basis points plus (y) the adjusted treasury rate on the third business day prior to the redemption date, plus accrued and unpaid interest thereon to, but excluding, the redemption date.  Commencing on the par call date, the notes may be redeemed, at the Company’s option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the redemption date. Any redemption of the notes may, at the Company’s discretion, be subject to one or more conditions precedent.

The notes were offered in the United States only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.  The notes bear interest at 2.95% per annum and mature on May 14, 2030. Interest on the notes is payable semi-annually in arrears on May 14 and November 14 of each year, beginning on November 14, 2020, to the persons in whose names the notes are registered at the close of business on the preceding May 1 and November 1, as the case may be, immediately preceding each such interest payment date.

The Indenture contains restrictive covenants that limit, among other things, the ability of the Company and its subsidiaries to create liens on certain assets to secure debt, enter into sale and lease-back transactions and consolidate, merge, sell or lease their properties and assets substantially as an entirety.  The Indenture also contains customary events of default, including upon the failure to make timely payments on the notes, the failure to satisfy certain covenants and specified events of bankruptcy, insolvency and reorganization.

The Company intends to use a portion of the net proceeds from the notes offering to repay indebtedness outstanding under the term loan credit agreement, its revolving credit facility and its commercial paper program. The Company will use the remaining net proceeds for general corporate purposes.

The foregoing summary is qualified in its entirety by reference to the Base Indenture, the Fifth Supplemental Indenture and the form of the notes, a copy of each of which is filed or incorporated by reference hereto as Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3 respectively, and is incorporated herein by reference.