Free Writing Prospectus, dated January
11, 2024
Filed pursuant to Rule 433 under the Securities Act of 1933
Supplementing the Preliminary Prospectus, dated January 5, 2024
Registration Statement Nos. 333-274815 and 333-274815-01
This Preliminary Term Sheet has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any securitized utility tariff bonds in any jurisdiction where such offer or sale is prohibited. Please read the important information and qualifications on page 2 of this Preliminary Term Sheet.
Empire District Bondco, LLC
(Issuing Entity)
Preliminary TERM SHEET
$305,490,000 Securitized Utility Tariff Bonds, Series 2024-A
| Issuing Entity: | Empire District Bondco, LLC |
| Sponsor, Depositor and Initial Servicer: | The Empire District Electric Company d/b/a Liberty (“Liberty”) |
| Trustee: | The Bank of New York Mellon Trust Company, N.A. |
| Joint Bookrunners: |
Goldman Sachs & Co. LLC RBC Capital Markets, LLC |
| Expected Ratings (Moody’s/S&P): | Aaa (sf)/AAA (sf)(1) |
| Interest Payment Dates: | January 1 and July 1, commencing January 1, 2025 |
| Initial Securitized Utility Tariff Charge as a Percentage of Customer’s Bill: | The initial securitized utility tariff charge for the securitized utility tariff bonds offered hereby is expected to represent approximately 6.17%(2) of the total electric bill, as of January 8, 2024, received by a 1,000 kWh residential customer of Liberty. |
| (1) | A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. |
| (2) | Preliminary, subject to change |
| Tranche | Principal
Amount Offered | Expected
Weighted Average Life (years)* | Scheduled
Final Payment Date* | Final
Maturity Date* | CUSIP | ISIN | ||||||||
| A-1 | $ | 180,490,000 | 4.84 | 1/1/2033 | 1/1/2035 | 291918 AA8 | US291918AA87 | |||||||
| A-2 | $ | 125,000,000 | 11.06 | 1/1/2037 | 1/1/2039 | 291918 AB6 | US291918AB60 | |||||||
* Preliminary, subject to change.
Liberty and the Issuing Entity have filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Liberty and the Issuing Entity have filed with the SEC as exhibits to the registration statement for more complete information about the Issuing Entity and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, Liberty, the Issuing Entity, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Liberty collect at (905) 465-4500, Goldman Sachs & Co. LLC toll-free at (866) 471-2526 and RBC Capital Markets, LLC toll-free at (866) 375-6829.
This Preliminary Term Sheet is not required to contain all information that is required to be included in the prospectus for the securities offering to which this Preliminary Term Sheet relates. The prospectus contains material information not contained herein, and the prospective purchasers are referred to the prospectus, as it may be amended or supplemented. This Preliminary Term Sheet is not an offer to sell or a solicitation of an offer to buy these securities in any jurisdiction where such offer, solicitation or sale is not permitted.
The information in this Preliminary Term Sheet is preliminary and may be superseded by an additional term sheet provided to you prior to the time you enter into a contract of sale. This Preliminary Term Sheet is being delivered to you solely to provide you with information about the offering of the securities referred to herein. The securities are being offered when, as and if issued. In particular, you are advised that these securities, and the securitized utility tariff charges securing them, are subject to modification or revision (including, among other things, the possibility that one or more tranches of securities may be split, combined or eliminated), at any time prior to issuance or availability of a final prospectus. As a result, you may commit to purchase securities that have characteristics that may change, and you are advised that all or a portion of the securities may not be issued that have the characteristics described in these materials. The Issuing Entity’s obligation to sell securities to you is conditioned on the securities and the underlying transaction having the characteristics described in these materials.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS Preliminary Term Sheet IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price and availability of the securitized utility tariff bonds are subject to change without notice.
A contract of sale will come into being no sooner than the date on which the Bonds have been priced and the underwriters have confirmed the allocation of securities to be made to you; any “indications of interest” expressed by you, and any “soft circles” generated by the underwriters, will not create binding contractual obligations for you or the underwriters (or any other person or entity). You may withdraw your offer to purchase securities at any time prior to the underwriters’ acceptance of your offer.
Any legends, disclaimers or other notices that may appear at the bottom of the email communication to which this Preliminary Term Sheet is attached relating to (i) these materials not constituting an offer (or a solicitation of an offer), (ii) no representation that these materials are accurate or complete and may not be updated or (iii) these materials possibly being confidential are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.
EXPECTED SINKING FUND SCHEDULE
| Payment Date | Tranche A-1 Principal | Tranche A-2 Principal | ||||||
| 1/1/2025 | $ | 15,939,301 | $ | 0 | ||||
| 7/1/2025 | $ | 9,050,760 | $ | 0 | ||||
| 1/1/2026 | $ | 9,268,159 | $ | 0 | ||||
| 7/1/2026 | $ | 9,490,780 | $ | 0 | ||||
| 1/1/2027 | $ | 9,718,749 | $ | 0 | ||||
| 7/1/2027 | $ | 9,952,193 | $ | 0 | ||||
| 1/1/2028 | $ | 10,191,245 | $ | 0 | ||||
| 7/1/2028 | $ | 10,436,039 | $ | 0 | ||||
| 1/1/2029 | $ | 10,686,712 | $ | 0 | ||||
| 7/1/2029 | $ | 10,943,407 | $ | 0 | ||||
| 1/1/2030 | $ | 11,206,268 | $ | 0 | ||||
| 7/1/2030 | $ | 11,475,442 | $ | 0 | ||||
| 1/1/2031 | $ | 11,751,082 | $ | 0 | ||||
| 7/1/2031 | $ | 12,033,343 | $ | 0 | ||||
| 1/1/2032 | $ | 12,322,384 | $ | 0 | ||||
| 7/1/2032 | $ | 12,618,368 | $ | 0 | ||||
| 1/1/2033 | $ | 3,405,768 | $ | 9,515,693 | ||||
| 7/1/2033 | $ | 0 | $ | 13,237,449 | ||||
| 1/1/2034 | $ | 0 | $ | 13,563,222 | ||||
| 7/1/2034 | $ | 0 | $ | 13,897,013 | ||||
| 1/1/2035 | $ | 0 | $ | 14,239,019 | ||||
| 7/1/2035 | $ | 0 | $ | 14,589,441 | ||||
| 1/1/2036 | $ | 0 | $ | 14,948,487 | ||||
| 7/1/2036 | $ | 0 | $ | 15,316,370 | ||||
| 1/1/2037 | $ | 0 | $ | 15,693,305 | ||||
| Total Payments(1) | $ | 180,490,000 | $ | 125,000,000 | ||||
(1) Totals may not add up due to rounding.
EXPECTED AMORTIZATION SCHEDULE
| Payment Date | Tranche A-1 Balance | Tranche A-2 Balance | ||||||
| Closing Date | $ | 180,490,000 | $ | 125,000,000 | ||||
| 1/1/2025 | $ | 164,550,699 | $ | 125,000,000 | ||||
| 7/1/2025 | $ | 155,499,939 | $ | 125,000,000 | ||||
| 1/1/2026 | $ | 146,231,780 | $ | 125,000,000 | ||||
| 7/1/2026 | $ | 136,741,000 | $ | 125,000,000 | ||||
| 1/1/2027 | $ | 127,022,251 | $ | 125,000,000 | ||||
| 7/1/2027 | $ | 117,070,058 | $ | 125,000,000 | ||||
| 1/1/2028 | $ | 106,878,813 | $ | 125,000,000 | ||||
| 7/1/2028 | $ | 96,442,775 | $ | 125,000,000 | ||||
| 1/1/2029 | $ | 85,756,062 | $ | 125,000,000 | ||||
| 7/1/2029 | $ | 74,812,655 | $ | 125,000,000 | ||||
| 1/1/2030 | $ | 63,606,388 | $ | 125,000,000 | ||||
| 7/1/2030 | $ | 52,130,946 | $ | 125,000,000 | ||||
| 1/1/2031 | $ | 40,379,863 | $ | 125,000,000 | ||||
| 7/1/2031 | $ | 28,346,520 | $ | 125,000,000 | ||||
| 1/1/2032 | $ | 16,024,136 | $ | 125,000,000 | ||||
| 7/1/2032 | $ | 3,405,768 | $ | 125,000,000 | ||||
| 1/1/2033 | $ | 0 | $ | 115,484,307 | ||||
| 7/1/2033 | $ | 0 | $ | 102,246,858 | ||||
| 1/1/2034 | $ | 0 | $ | 88,683,635 | ||||
| 7/1/2034 | $ | 0 | $ | 74,786,622 | ||||
| 1/1/2035 | $ | 0 | $ | 60,547,603 | ||||
| 7/1/2035 | $ | 0 | $ | 45,958,162 | ||||
| 1/1/2036 | $ | 0 | $ | 31,009,675 | ||||
| 7/1/2036 | $ | 0 | $ | 15,693,305 | ||||
| 1/1/2037 | $ | 0 | $ | 0 | ||||
Weighted Average Life Sensitivity
| -5% (1.19 Standard Deviations from Mean) | -15% (3.80 Standard Deviations from Mean) | |||||||||
| Tranche | Expected Weighted Average Life (Years)(2) | WAL (yrs)(2) | Change (days)(1)(2) | WAL (yrs)(2) | Change (days)(1)(2) | |||||
| A-1 | 4.84 | 4.84 | 0 | 4.84 | 0 | |||||
| A-2 | 11.06 | 11.06 | 0 | 11.06 | 0 | |||||
| (1) | Number is rounded to whole days |
| (2) | Preliminary, subject to change. |
For the purposes of preparing the above chart, the following assumptions, among others, have been made: (i) in relation to the initial forecast, the forecast error stays constant over the life of the securitized utility tariff bonds and is equal to an overestimate of electricity consumption of 5% (1.19 standard deviations from mean) or 15% (3.80 standard deviations from mean), (ii) the servicer makes timely and accurate submissions to true-up the securitized utility tariff charges annually, (iii) customer write-off rates are held constant at 0.32%, (iv) Liberty remits all securitized utility tariff charges on average 74 days after such charges are billed to customers, (v) ongoing financing costs including estimated annual transaction expenses of $395,000 are equal to projections, (vi) annual income taxes estimated at $2,105,744 are paid after interest and principal in the waterfall, (vii) there is no acceleration of the final maturity date of the securitized utility tariff bonds, (viii) a permanent loss of all customers has not occurred, and (ix) the issuance date of the securitized utility tariff bonds is January 30, 2024. There can be no assurance that the weighted average lives of the securitized utility tariff bonds will be as shown.