Tennessee Valley Authority filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
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Electric Utilities: Central
Utilities
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13, 15(d), or 37 of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 2024
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Item 1.01 Entry into a Material Definitive Agreement.
On October 2, 2024 (the “Closing Date”), TVA entered into a lease-purchase transaction involving its Johnsonville Aeroderivative Combustion Turbine Facility (the “Facility”) located in Humphreys County, Tennessee. The Facility consists of ten combustion turbine generators and associated balance-of-plant systems and equipment and will use natural gas as fuel. The Facility is expected to begin commercial operations by April 2025.
In connection with this transaction, TVA entered into three material definitive agreements on the Closing Date with Johnsonville Aeroderivative Combustion Turbine Generation LLC, a single-purpose Delaware limited liability company (“JACTG”): a Head Lease Agreement (the “Head Lease”) (the United States of America is also a party to this agreement), a Facility Lease-Purchase Agreement (the “Facility Lease”), and a Construction Management Agreement (the “CMA”). Each of these agreements is described in more detail below.
•Head Lease. Under the Head Lease, TVA will lease the Facility to JACTG for a term of fifty years. In exchange, JACTG made a one-time rental payment to TVA on the Closing Date. The Head Lease, however, will terminate sooner (upon the expiration of the Facility Lease) so long as (1) all payments under the Facility Lease have been made, and (2) there is no significant lease event of default for which JACTG has exercised remedies to dispossess TVA of the Facility.
•Facility Lease. Under the Facility Lease, TVA will lease the Facility back from JACTG for a term of thirty years. TVA will make rental payments to JACTG on each April 1 and October 1, commencing on April 1, 2025, and ending on October 1, 2054. The amount of rent payable on each rent payment date is listed in a schedule attached to this report as Exhibit 99.1, which schedule is incorporated herein by reference. These rent payments may be accelerated (1) immediately upon (a) the occurrence of a bankruptcy event (to the extent TVA becomes subject to bankruptcy law in the future), insolvency event, or similar event with respect to TVA or (b) repudiation by TVA of the Head Lease, the Facility Lease, or the related Ground Lease Agreement or (2) on a date no earlier than 180 days after the occurrence of certain payment defaults by TVA. Throughout the term of the Facility Lease, TVA will operate and maintain (and improve to the extent required by applicable law) the Facility and take all power from the Facility. At the end of the Facility Lease, TVA will own the Facility as long as TVA is not in default under the Facility Lease.
•CMA. Under the CMA, TVA is obligated to use commercially reasonable efforts to cause the Facility to achieve provisional acceptance by September 25, 2025, or as soon thereafter as commercially practicable. On the Closing Date, JACTG made a one-time payment to TVA in exchange for TVA's agreement to perform its obligations under the CMA.
JACTG is owned by an equity investor that contributed cash equity to JACTG in the amount of $80,000,000 on the Closing Date. In addition, JACTG issued secured notes on the Closing Date in an aggregate principal amount of $720,000,000. Of the $800,000,000 raised by JACTG, JACTG paid $775,087,079 to TVA on the Closing Date under the Head Lease and the CMA, and deposited the remaining $24,912,921 with a lease indenture trustee. The lease indenture trustee will use the $24,912,921 to fund the principal and interest due on the secured notes on the first debt service payment date as well as to fund the return on the equity investment accruing from the Closing Date through the first debt service payment date. TVA plans to use its aggregate proceeds of $775,087,079 for the benefit of its power program and to pay transaction expenses.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
| EXHIBIT NO. | DESCRIPTION OF EXHIBIT | ||||
| 99.1 | Schedule of Amount of Rent Payable on Each Rent Payment Date Under the Facility Lease-Purchase Agreement Dated as of October 2, 2024, Between Johnsonville Aeroderivative Combustion Turbine Generation LLC and TVA | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Tennessee Valley Authority | |||||
| (Registrant) | |||||
| Date: October 4, 2024 | /s/ John M. Thomas, III | ||||
| John M. Thomas, III | |||||
| Executive Vice President and | |||||
| Chief Financial and Strategy Officer | |||||
EXHIBIT INDEX
This exhibit is filed pursuant to Items 1.01 and 2.03 hereof.
| EXHIBIT NO. | DESCRIPTION OF EXHIBIT | ||||