Item 1.01 Entry into a Material Definitive Agreement.
On January 28, 2021, Duke Energy Corporation (“Duke
Energy”), along with certain of its subsidiaries, entered into a definitive agreement providing for an acquisition of a 19.9% interest in
Duke Energy Indiana, LLC (“DEI”), with an affiliate of GIC Private Limited, Singapore's sovereign wealth fund and an
experienced investor in U.S. infrastructure.
As stated above, on January 28, 2021, Cinergy Corp., (“Cinergy”),
Duke Energy Indiana Holdco, LLC (“DEI Holdco”) and Duke entered into an Investment Agreement (the “Investment
Agreement”) with Epsom Investment Pte. Ltd. (“Investor”), pursuant to which DEI Holdco agreed to
issue and sell to Investor, and Investor agreed to purchase from DEI Holdco, certain newly issued membership interests of DEI
Holdco such that Investor will own 19.9% of the issued and outstanding membership interests of DEI Holdco (the “Acquired
DEI Holdco Interests”) following two closings, for an aggregate purchase price of $2,050,000,000. At the first closing
(the “First Closing”), DEI Holdco will issue and sell to Investor 11.05% (the “First Closing Acquired
Percentage”) of the DEI Holdco membership interests issued and outstanding immediately after the First Closing in exchange
for 50% of the purchase price, subject to adjustment. At the second closing (the “Second Closing”), DEI Holdco
will issue and sell to Investor additional DEI Holdco membership interests such that Investor will own 19.9% of DEI Holdco immediately
after the Second Closing in exchange for 50% of the purchase price.
Prior to the First Closing, Cinergy plans to contribute to DEI
Holdco 100% of the issued and outstanding membership interests of DEI (the “DEI Membership Interests”) such
that DEI Holdco owns 100% of the DEI Membership Interests.
The purchase price with respect to the First Closing is subject
to adjustment based on capital contributions made to DEI Holdco and its subsidiaries by Cinergy or any of its affiliates on or
after the date of the Investment Agreement and prior to the First Closing.
The issuance of membership interests under the Investment Agreement
is subject to the satisfaction of certain customary conditions described in the Investment Agreement, including receipt of the
approval of the Federal Energy Regulatory Commission and completion of review by the Committee on Foreign Investments in the United
States. The First Closing will occur following the date on which the applicable conditions have been satisfied, and the Second
Closing will occur on a date to be proposed by DEI Holdco that is no later than January 18, 2023 and on which the applicable
conditions have been satisfied.
In addition, each of the parties has agreed to customary covenants,
including, among others, the following: (i) Cinergy will conduct the business of DEI and DEI Holdco and its subsidiaries in
the ordinary course of business consistent with past practices and will preserve, maintain and protect the assets of DEI and DEI
Holdco and its subsidiaries in material compliance with applicable laws and material permits and contracts; (ii) the parties
will cooperate and use reasonable best efforts to obtain the required consents as soon as reasonably practicable; and (iii) the
parties will take all action and do all things necessary, proper or advisable under applicable laws to consummate the transactions,
including executing documents and taking actions as may be reasonably requested by another party in order to consummate the transactions.
The Investment Agreement contains representations and warranties
by Cinergy and Investor which are customary for transactions of this type. It also obligates the parties to indemnify each other
for losses arising out of breaches of the Investment Agreement or failure by such party to perform with respect to the representations,
warranties or covenants contained in the Investment Agreement, among other things, subject to customary limitations. The Investment
Agreement contains termination rights for both Cinergy and Investor. The Investment Agreement may be terminated: (i) by mutual
consent of the parties; (ii) by either Investor or Cinergy if the First Closing has not occurred within six (6) months,
subject to possible extension; (iii) by either party, as the case may be, prior to the First Closing upon certain material
breaches or failures to perform any of the representations, warranties, covenants or agreements by the other party; or (iv) by
either party prior to the First Closing in the event of a final and non-appealable order or action restraining, enjoining or otherwise
prohibiting the transactions.
In connection with the First Closing, Investor, DEI
Holdco and Cinergy will enter into an Amended and Restated Limited Liability Company Operating Agreement of DEI Holdco (the
“LLC Agreement”), the form of which has been agreed to by the parties. The LLC Agreement will establish
the general framework governing the relationship between Investor and Cinergy, and their respective successors and
transferees, as members of DEI Holdco and will provide Investor with limited minority governance rights commensurate with
its ownership. Certain transfer restrictions and other transfer rights apply to Investor and Cinergy under the LLC
Agreement, including the right of Investor to require Cinergy to acquire Investor’s interests in certain circumstances.
The foregoing summaries of the Investment Agreement and
the LLC Agreement and the transactions contemplated thereby are subject to, and qualified in their entirety by, the full
terms of the Investment Agreement, which will be filed with Duke Energy’s and DEI’s Quarterly Report on
Form 10-Q for the period ended March 31, 2021, and the full terms of the LLC Agreement, which will be
filed no later than with Duke Energy’s and DEI’s Quarterly Report on Form 10-Q for
the period in which the parties enter into the LLC Agreement.