AEP Texas Transition Funding II LLC Series A Transition Bonds
Issuing Entity and Capital Structure
AEP Texas Central Transition Funding II LLC is a special purpose bankruptcy-remote Delaware limited liability company. AEP Texas Central Company is our sole member and owns all of our equity interests. We have no commercial operations. We were formed solely to purchase and own transition property, to issue transition bonds and to perform activities incidental thereto. Please read "AEP Texas Central Transition Funding II LLC, the Issuing Entity" in the accompanying prospectus.
In addition to the transition property, we will be capitalized with an upfront deposit of 0.5% of the Bonds' principal amount issued (to be held in the capital subaccount) and will have an excess funds subaccount to retain, until the next payment date, any amounts collected and remaining after all payments on the Bonds have been made.
We are responsible to the State of Texas and the Texas commission. Specifically, pursuant to the financing order of the Texas commission relating to the Bonds:
- Our organizational documents and transaction documents prohibit us from engaging in any activities other than acquiring transition property, issuing transition bonds and performing other activities as specifically authorized by the financing order.
- We must respond to representatives of the Texas commission throughout the process of offering the Bonds, with the financing order directing the Texas commission's financial advisor to advise the Texas commission of any proposal that does not comply in any material respect with the criteria established in the financing order.
- All required true-up adjustments must be filed by the servicer on our behalf.
We have also agreed that certain reports will be submitted to the Texas commission by us or on our behalf.
1539 N. Carancahua Street
Corpus Christi, Texas 78401
View SEC filings for AEP Texas Transition Funding II LLC.
Senior Secured Series A Transition Bonds
AEP Texas Central Transition Funding II LLC
Senior Secured Transition Bonds, Series A
|Tranche||Expected Average Life (Years)||Principal Amount Issued||Scheduled Final Payment Date||Final Maturity Date||Interest Rate||Price to Public||Underwriting Discounts and Commissions||Proceeds to the Issuing Entity|
The total price to the public is $1,739,151,598. The total amount of the underwriting discounts and commissions is $6,391,458. The total amount of proceeds to the Issuing Entity before deduction of expenses (estimated to be $5,178,138) is $1,732,760,141.
Investing in the Senior Secured Transition Bonds, Series A involves risks. Please read "Risk Factors" on page 13 of the accompanying prospectus(PDF).
AEP Texas Central Transition Funding II LLC is issuing $1,739,700,000 of Senior Secured Transition Bonds, Series A, referred to herein as the Bonds, in five tranches. AEP Texas Central Company is the seller, initial servicer and sponsor with regard to the Bonds. The Bonds are senior secured obligations of the Issuing Entity supported by transition property which includes the right to a special, irrevocable non-bypassable charge, known as a transition charge, paid by all retail electric customers in the service territory of the sponsor based on their consumption of electricity as discussed herein. The Public Utility Commission of Texas requires and guarantees that transition charges be adjusted annually, and semi-annually as necessary, to ensure the expected recovery of amounts sufficient to timely provide all scheduled payments of principal and interest on the Bonds, as described further in this prospectus supplement and the accompanying prospectus. Through this adjustment mechanism, all retail customers cross share in the liabilities of all other retail electric customers for the payment of transition charges.
A special statute, the Texas Electric Utility Restructuring Act, enacted in June 1999 authorizes the Public Utility Commission of Texas to issue irrevocable financing orders supporting the issuance of transition bonds. One of the purposes of this act was to lower the cost to consumers of the transition to a competitive retail electricity market in Texas. The Public Utility Commission of Texas issued an irrevocable financing order to the sponsor on June 21, 2006. Pursuant to the financing order, the sponsor established the Issuing Entity as a bankruptcy remote special purpose subsidiary company to issue the Bonds. In the financing order, the Public Utility Commission of Texas authorized a transition charge to be imposed on all retail customers, which includes all individuals, corporations, other business entities, the State of Texas and other federal, state and local governmental entities who purchase electricity in the sponsor's service territory to pay principal and interest on the Bonds and other administrative expenses of the offering. AEP Texas Central Company, as servicer, will collect transition charges on behalf of the Issuing Entity and remit the transition charges daily to a trustee. Please read "The Bonds—The Transition Property" in this prospectus supplement.
The Public Utility Commission of Texas guarantees that it will take specific actions pursuant to its irrevocable financing order as expressly authorized by the Texas Electric Utility Restructuring Act to ensure that transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the Bonds. The Public Utility Commission of Texas' obligations relating to the Bonds, including the specific actions that it has guaranteed to take, are direct, explicit, irrevocable and unconditional upon issuance of the Bonds, and are legally enforceable against the Public Utility Commission of Texas, which is a United States public sector entity.
The Bonds represent obligations only of the Issuing Entity and do not represent obligations of the sponsor or any of its affiliates other than the Issuing Entity. Please read "The Bonds—The Transition Property", "—The Collateral" and "Credit Enhancement" in this prospectus supplement. The Bonds are not a debt or general obligation of the State of Texas, the Public Utility Commission of Texas or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of Texas or any governmental agency or instrumentality. However, the State of Texas and other federal, state and local governmental entities, as retail electric customers, will be obligated to pay transition charges securing the Bonds. Only in their capacity as retail electric customers will the State of Texas or any political subdivision, agency, authority or instrumentality of the State of Texas, or any other entity, be obligated to provide funds for the payment of the Bonds.
All matters relating to the structuring and pricing of the Bonds have been considered jointly by AEP Texas Central Company and the Public Utility Commission of Texas, acting through its financial advisor. The financial advisor to the Public Utility Commission of Texas is Saber Partners, LLC.
Additional information is contained in the accompanying prospectus. You should read this prospectus supplement and the accompanying prospectus carefully before you decide to invest in the Bonds. This prospectus supplement may not be used to offer or sell the Bonds unless accompanied by the prospectus. Please review the prospectus and prospectus supplement (PDF)
Ratings assigned to the AEP Texas Transition Funding II LLC Series A Transition Bonds and to the debt issued by the Servicer
Issuer:AEP Texas Central Transition Funding II LLC
Instrument: Transition Bonds
Moody’s Rating: Aaa
S&P Rating: AAA
Fitch Rating: AAA
Servicer:AEP Texas Central Company
Instrument: Senior Unsecured Debt
Moody’s Rating: Baa2
Moody’s Outlook: Stable
S&P Rating: BBB
S&P Outlook: Stable
Fitch Rating: A-
Fitch Outlook: Stable