| Item 1.01. |
Entry into a Material Definitive Agreement. |
As previously announced by Vistra Corp. (the “Company”) in its Current Report on Form 8-K filed on December 15, 2023 with the U.S. Securities and Exchange Commission, Vistra Operations Company LLC (“Vistra Operations” or the “Issuer”), an indirect, wholly owned subsidiary of the Company, entered into purchase agreements, dated December 11, 2023, by and among Vistra Operations, Citigroup Global Markets Inc. as representative of the several initial purchasers named in Schedule I thereto (the “Initial Purchasers”) and certain subsidiaries of the Issuer that are guarantors under that certain credit agreement, dated as of October 3, 2016, by and among the Issuer, Vistra Intermediate Company LLC, the guarantors party thereto, Credit Suisse AG, Cayman Islands Branch (as successor to Deutsche Bank AG New York Branch), as administrative and collateral agent, various lenders and letter of credit issuers party thereto, and the other parties named therein (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Credit Agreement”) (together with such other subsidiaries that become guarantors from time to time, the “Subsidiary Guarantors”), in connection with the offer and sale by the Issuer, and the purchase by the Initial Purchasers, of $400 million aggregate principal amount of the Issuer’s 6.950% senior secured notes due 2033 (the “Secured Notes”), which form a part of the same series as the Issuer’s outstanding 6.950% Senior Secured Notes due 2033 issued on September 26, 2023, in a private offering (the “Secured Offering”) and $350 million aggregate principal amount of the Issuer’s 7.750% senior unsecured notes due 2031 (the “Unsecured Notes” and, together with the Secured Notes, the “Notes”), which form a part of the same series as the Issuer’s outstanding 7.750% Senior Notes due 2031 issued on September 26, 2023, in a concurrent private offering (the “Unsecured Offering” and, together with the Secured Offering, the “Offerings”).
The Offerings closed on December 22, 2023, following the satisfaction of customary closing conditions. The sale of the Notes was not registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Notes were sold on a private placement basis to persons reasonably believed to be qualified institutional buyers under Rule 144A under the Securities Act and outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act.
The Issuer received approximately $759 million of net proceeds from the sale of the Notes after deducting fees and expenses, including the Initial Purchasers’ commissions, and adding the Initial Purchasers’ premiums paid (but excluding accrued interest on the Notes). The Company will use the net proceeds of the Offerings, together with cash on hand, to (i) pay the purchase price of $750 million (excluding accrued interest on the Tender Offer Notes (as defined below)) pursuant to the Issuer’s acceptance for purchase and cancellation of $345,308,000 aggregate principal amount of its 3.550% Senior Secured Notes due 2024 (“3.550% 2024 Notes”), $58,201,000 aggregate principal amount of its 4.875% Senior Secured Notes due 2024 (“4.875% 2024 Notes”), and $355,693,000 aggregate principal amount of its 5.125% Senior Secured Notes due 2025 (“5.125% 2025 Notes”, and together with 3.55% 2024 Notes and 4.875% 2024 Notes, the “Tender Offer Notes”) as announced on December 26, 2023, subject to the terms and conditions set forth in the Offer to Purchase dated December 11, 2023 (“Offer to Purchase”), (ii) pay any fees and expenses related to the Offerings and the Tender Offers, and (iii) the remainder, if any, for general corporate purposes.
The Secured Notes were issued under an indenture (the “Base Indenture”), dated as of June 11, 2019, by and between the Issuer and Wilmington Trust, National Association, as trustee (the “Trustee”), as supplemented by that certain Fourteenth Supplemental Indenture, dated as of September 26, 2023, by and among the Issuer, the Subsidiary Guarantors and the Trustee (the “Fourteenth Supplemental Indenture” and, together with the Base Indenture and such other supplemental indentures entered into from time to time, the “Secured Notes Indenture”). The Unsecured Notes were issued under an indenture, dated as of September 26, 2023, by and among the Issuer, the Subsidiary Guarantors and the Trustee (the “Unsecured Notes Indenture” and, together with the Secured Notes Indenture, the “Indentures”).The Indentures provide for the full and unconditional guarantee by the Subsidiary Guarantors of the punctual payment of the principal of, premium, if any, interest on and all other amounts due under the Notes and the Indentures. The Secured Notes Indenture further provides that the Secured Notes will be secured by a first-priority security interest in the same collateral that is pledged for the benefit of the lenders under the Credit Agreement, which consists of a substantial portion of the property, assets and rights owned by the Issuer and the Subsidiary Guarantors, as well as the stock of the Issuer. The collateral securing the Secured Notes will be released if the Issuer’s senior, unsecured long-term debt securities obtain an investment grade rating from two out of the three rating agencies, subject to reversion if such rating agencies withdraw the investment grade rating of the Issuer’s senior, unsecured long-term debt securities or downgrade such rating below investment grade.
Interest on the Secured Notes and the Unsecured Notes will accrue from September 26, 2023, at a rate of 6.950% per annum and 7.750% per annum, respectively. Interest on the Notes will be payable by the Issuer on April 15 and October 15 of each year, beginning on April 15, 2024. At closing, the Initial Purchasers paid to the Company accrued interest from September 26, 2023 to, but excluding, the issue date of December 22, 2023. The Secured Notes and the Unsecured Notes will mature on October 15, 2033 and October 15, 2031, respectively.
At any time prior to July 15, 2033, the Issuer will have the option to redeem all or any portion of the Secured Notes at a redemption price equal to 100% of the aggregate principal amount of the applicable Secured Notes being redeemed, plus a make-whole premium and accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time on or after July 15, 2033, the Issuer will have the option to redeem all or any portion of the Secured