8. Financing Activities

Credit Arrangements and Short-term Debt

(All Registrants)

The Registrants maintain credit facilities to enhance liquidity, provide credit support and act as a backstop to commercial paper programs. For reporting purposes, on a consolidated basis, the credit facilities and commercial paper programs of PPL Electric, LKE, LG&E and KU also apply to PPL and the credit facilities and commercial paper programs of LG&E and KU also apply to LKE. The amounts borrowed below are recorded as "Short-term debt" on the Balance Sheets except for borrowings under LG&E's term loan agreement, which are reflected in "Long-term debt" on the Balance Sheets. The following credit facilities were in place at:



	June 30, 2018									December 31, 2017
	Expiration Date	Capacity		Borrowed		Letters of Credit and Commercial Paper Issued		Unused Capacity		Borrowed		Letters of Credit and Commercial Paper Issued
PPL
U.K.
WPD plc
Syndicated Credit Facility (a)	Jan. 2023	£	210	£	150	£	—	£	60	£	148	£	—
Term Loan Facility (b)	Dec. 2018	130		130		—		—		—		—
WPD (South West)
Syndicated Credit Facility	July 2021	245		—		—		245		—		—
WPD (East Midlands)
Syndicated Credit Facility (c)	July 2021	300		99		—		201		180		—
WPD (West Midlands)
Syndicated Credit Facility (d)	July 2021	300		34		—		266		120		—
Uncommitted Credit Facilities		130		—		4		126		—		4
Total U.K. Credit Facilities (e)		£	1,315	£	413	£	4	£	898	£	448	£	4
U.S.
PPL Capital Funding
Syndicated Credit Facility	Jan. 2023	$	950	$	—	$	950	$	—	$	—	$	230
Syndicated Credit Facility	Nov. 2018	300		—		49		251		—		—
Bilateral Credit Facility	Mar. 2019	100		—		20		80		—		18
Total PPL Capital Funding Credit Facilities		$	1,350	$	—	$	1,019	$	331	$	—	$	248

PPL Electric
Syndicated Credit Facility	Jan. 2023	$	650	$	—	$	1	$	649	$	—	$	1

LKE
Syndicated Credit Facility	Oct. 2018	$	75	$	—	$	—	$	75	$	—	$	—

LG&E
Syndicated Credit Facility	Jan. 2023	$	500	$	—	$	183	$	317	$	—	$	199
Term Loan Credit Facility	Oct. 2019	200		200		—		—		100		—
Total LG&E Credit Facilities		$	700	$	200	$	183	$	317	$	100	$	199

KU
Syndicated Credit Facility	Jan. 2023	$	400	$	—	$	133	$	267	$	—	$	45
Letter of Credit Facility	Oct. 2020	198		—		198		—		—		198
Total KU Credit Facilities		$	598	$	—	$	331	$	267	$	—	$	243


(a)	The amounts borrowed at June 30, 2018 and December 31, 2017 were USD-denominated borrowings of $200 million for both periods, which bore interest at 2.81% and 2.17%. The unused capacity reflects the amount borrowed in GBP of £150 million as of the date borrowed.


(b)	The amount borrowed at June 30, 2018 was a GBP-denominated borrowing which equated to $173 million and bore interest at 1.75%.


(c)	The amounts borrowed at June 30, 2018 and December 31, 2017 were GBP-denominated borrowings which equated to $132 million and $244 million and bore interest at 0.90% and 0.89%.


(d)	The amounts borrowed at June 30, 2018 and December 31, 2017 were GBP-denominated borrowings which equated to $45 million and $162 million and bore interest at 0.90% and 0.89%.


(e)	At June 30, 2018, the unused capacity under the U.K. credit facilities was $1.2 billion.

PPL, PPL Electric, LG&E and KU maintain commercial paper programs to provide an additional financing source to fund short-term liquidity needs, as necessary. Commercial paper issuances, included in "Short-term debt" on the Balance Sheets, are supported by the respective Registrant's Syndicated Credit Facility. The following commercial paper programs were in place at:



	June 30, 2018							December 31, 2017
	Weighted - Average Interest Rate	Capacity		Commercial Paper Issuances		Unused Capacity		Weighted - Average Interest Rate	Commercial Paper Issuances
PPL Capital Funding	2.42%	$	1,000	$	999	$	1	1.64%	$	230
PPL Electric		650		—		650			—
LG&E	2.33%	350		183		167		1.83%	199
KU	2.34%	350		133		217		1.97%	45
Total		$	2,350	$	1,315	$	1,035		$	474

(PPL Electric, LKE, and LG&E)

See Note 11 for discussion of intercompany borrowings.

Long-term Debt

(PPL)

In March 2018, WPD (South Wales) issued £30 million of 0.01% Index-linked Senior Notes due 2036. WPD (South Wales) received proceeds of £31 million, which equated to $44 million at the time of issuance, net of fees and including a premium. The principal amount of the notes is adjusted based on changes in a specified index, as detailed in the terms of the related indenture. The proceeds were used for general corporate purposes.

In May 2018, WPD (West Midlands) issued £30 million of 0.01% Index-linked Senior Notes due 2028. WPD (West Midlands) received proceeds of £31 million, which equated to $41 million at the time of issuance, net of fees and including a premium. The principal amount of the notes is adjusted based on changes in a specified index, as detailed in the terms of the related indenture. The proceeds were used for general corporate purposes.

In June 2018, PPL Capital Funding repaid the entire $250 million principal amount of its 1.90% Senior Notes upon maturity.

(PPL and PPL Electric)

In June 2018, PPL Electric issued $400 million of 4.15% First Mortgage Bonds due 2048. PPL Electric received proceeds of $394 million, net of a discount and underwriting fees, which were used to repay short-term debt and for general corporate purposes.

(PPL, LKE and LG&E)

In March 2018, the County of Trimble, Kentucky remarketed $28 million of Pollution Control Revenue Bonds, 2001 Series A (Louisville Gas and Electric Company Project) due 2026 previously issued on behalf of LG&E. The bonds were remarketed at a long-term rate and will bear interest at 2.30% through their mandatory purchase date of September 1, 2021.

In May 2018, the County of Trimble, Kentucky remarketed $35 million of Pollution Control Revenue Bonds, 2001 Series B (Louisville Gas and Electric Company Project) due 2027 previously issued on behalf of LG&E. The bonds were remarketed at a long-term rate and will bear interest at 2.55% through their mandatory purchase date of May 3, 2021.

In May 2018, the County of Jefferson, Kentucky remarketed $35 million of Pollution Control Revenue Bonds, 2001 Series B (Louisville Gas and Electric Company Project) due 2027 previously issued on behalf of LG&E. The bonds were remarketed at a long-term rate and will bear interest at 2.55% through their mandatory purchase date of May 3, 2021.

(PPL, LKE and KU)

In July 2018, KU redeemed, at par, its $9 million County of Trimble, Kentucky, Environmental Facilities Revenue Bonds, 2007 Series A (Kentucky Utilities Company Project) due 2037.

(LKE)

In May 2018, LKE borrowed $250 million from a PPL affiliate through the issuance of a 4% ten-year note due 2028. The proceeds were used to repay its outstanding notes payable with a PPL Energy Funding subsidiary. See Note 11 for additional information related to intercompany borrowings.

(PPL)

Equity Securities

Equity Forward Contracts

In May 2018, PPL completed a registered underwritten public offering of 55 million shares of its common stock. In conjunction with that offering, the underwriters exercised an option to purchase 8.25 million additional shares of PPL common stock solely to cover over-allotments.

In connection with the registered public offering, PPL entered into forward sale agreements with two counterparties covering the 63.25 million shares of PPL common stock. Settlement of these forward sale agreements will occur no later than November 2019. Upon any physical settlement of any forward sale agreement, PPL will issue and deliver to the applicable forward counterparty shares of its common stock in exchange for cash proceeds per share equal to the forward sale price. The forward sale price will be calculated based on an initial forward price of $26.7057 per share reduced during the period the applicable forward contract is outstanding as specified in such forward sale agreement. PPL may, in certain circumstances, elect cash settlement or net share settlement for all or a portion of its rights or obligations under each forward sale agreement. PPL will not receive any proceeds or issue any shares of common stock until settlement of the forward sale agreements. PPL intends to use any net proceeds that it receives upon settlement for general corporate purposes.

The forward sale agreements are classified as equity transactions. As a result, no amounts will be recorded in the consolidated financial statements until the settlement of the forward sale agreements. Prior to any settlements, the only impact to the financial statements will be the inclusion of incremental shares within the calculation of diluted EPS using the Treasury Stock Method. See Note 5 for information on the forward sale agreements impact on the calculation of diluted EPS.

ATM Program

In February 2018, PPL entered into an equity distribution agreement, pursuant to which PPL may sell, from time to time, up to an aggregate of $1.0 billion of its common stock through an at-the-market offering program; including a forward sales component. The compensation paid to the selling agents by PPL may be up to 2% of the gross offering proceeds of the shares. PPL issued 1.2 million and 4.2 million shares of common stock and received gross proceeds of $34 million and $119 million for the three and six months ended June 30, 2018.

Distributions

In May 2018, PPL declared a quarterly common stock dividend, payable July 2, 2018, of 41.0 cents per share (equivalent to $1.64 per annum). Future dividends, declared at the discretion of the Board of Directors, will depend upon future earnings, cash flows, financial and legal requirements and other factors.