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United States securities and exchange commission logo
August 23, 2021
Carter Culver
Senior Vice President & Deputy General Counsel
Constellation Newholdco, Inc.
c/o Exelon Corporation
10 South Dearborn Street
P.O. Box 805379
Chicago, Illinois 60680-5379
Re: Constellation
Newholdco, Inc.
Draft Registration
Statement on Form 10-12B
Submitted July 26,
2021
CIK 0001868275
Dear Mr. Culver:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form 10-12B
Summary, page 2
1. We note your disclosure
that your information statement contains estimates and
projections regarding
market and industry data that were obtained from internal Company
estimates as well as
third-party sources, such as market research, consultant surveys,
publicly available
information and industry publications and surveys. Please revise to
include the names and
dates of these studies or reports. To the extent that you
commissioned any of the
third-party data that you use in the prospectus, also provide the
consent of the
third-party in accordance with Rule 436. Please also provide us with
Carter Culver
FirstName LastNameCarter Culver
Constellation Newholdco, Inc.
Comapany
August 23, NameConstellation
2021 Newholdco, Inc.
August
Page 2 23, 2021 Page 2
FirstName LastName
supplemental support, or in the alternative provide citations, for all
statements that relate
to your competitive position within your industry or your market
opportunity.
2. You state that you are "America s leading clean energy company."
Revise to substantiate
this claim and your other competitive statements in the first
paragraph on page 1.
Reasons for the Separation, page 11
3. Please expand the disclosure to further describe the differences
between Exelon s
competitive generation and customer-facing energy businesses and
its regulated
electric distribution and transmission and gas distribution
businesses."
Our results could be negatively affected by the impacts of COVID-19, page 23
4. You disclose that COVID-19 "could" negatively affect your ability to
operate your
generating assets, your ability to access capital markets, and your
results of operations.
Please revise your disclosure here and elsewhere as appropriate to
clarify that COVID-19
has impacted you and disclose any material effects of COVID-19 on your
business,
financial condition and results of operations. In this regard, we note
your disclosure on
page 95 that the estimated impact to your net income was approximately
$170 million for
the year ended December 31, 2020. Also discuss what management expects
the
pandemic's future impact will be, how management is responding to
evolving events, and
how it is planning for COVID-19- related uncertainties. For guidance,
consider the
Division of Corporation Finance's Disclosure Guidance Topics Nos. 9 &
9A, available on
our website.
We could be negatively affected by the impacts of weather, page 25
5. You disclose on page 96 that beginning on February 15, 2021, your
Texas-based
generating assets within the ERCOT market, specifically Colorado Bend
II, Wolf Hollow
II, and Handley, experienced periodic outages as a result of
historically severe cold
weather conditions. You also disclose that Exelon and Generation
estimate a reduction in
net income of approximately $670 million to $820 million for the full
year 2021 arising
from these market and weather conditions. Please expand this risk
factor to reflect this
event.
The Separation
Background, page 38
6. Please revise to disclose whether the Exelon board of directors
considered alternatives to
the spin-off transaction and, if so, why those alternatives were not
pursued.
7. We note the disclosure on page 38 that "each holder of Exelon common
stock will receive
share of [y]our common stock for every share of Exelon common stock
held...on...the
record date." Please clarify that the issuance of shares of the
Company s common
stock is based on the current assumption of one share of your common
stock for each
Carter Culver
FirstName LastNameCarter Culver
Constellation Newholdco, Inc.
Comapany
August 23, NameConstellation
2021 Newholdco, Inc.
August
Page 3 23, 2021 Page 3
FirstName LastName
share of Exelon common stock outstanding on the record date on a pro
rata basis.
Unaudited Pro Forma Condensed Consolidated Financial Statements, page 47
8. Please expand your disclosure to present historical basic and diluted
per share amounts
based on continuing operations attributable to the controlling
interests and the number of
shares used to calculate such per share amounts on the face of the pro
forma condensed
statement of operations. Refer to Rule 11-02-(a)(9)(i) of Regulation
S-X.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
95
9. You disclose under Our Competitive Strengths that your commitment to
an investment
grade credit rating remains paramount and that you view a strong
balance sheet as a
competitive strength that will position you to pursue value enhancing
opportunities. We
also note that S&P lowered your senior unsecured debt rating to BBB
from BBB+ on
November 4, 2020 and to BBB- from BBB on February 24,
2021. Please discuss and
analyze material changes in your financial position. Please refer to
Item 303 of
Regulation S-K.
Results of Operations , page 104
10. You disclose revenues net of purchased power and fuel expense ( RNF
) on
a consolidated and segment basis. Your current disclosure of RNF on a
consolidated basis
outside of the segment footnote is a non-GAAP measure. Given that this
measure reduces
your reported revenue by a non-revenue line item, explain to us your
basis for presenting
this as a measure of revenue. If revenues net of purchased power and
fuel expense is
intended to be presented as a measure of gross profit, tell us whether
you considered the
use of a different caption and the presentation of a reconciliation
for this non-
GAAP measure to the most directly comparable GAAP measures, i.e. gross
margin that
includes depreciation, depletion and amortization. See Item
10(e)(1)(i)(B) of
Regulation S-K.
11. Please discuss and analyze the operating revenues and purchased power
and fuel expense
line items on a consolidated basis in your results of operations.
Please also quantify the
underlying reasons for material changes in RNF by region disclosed on
page 108. Please
refer to Item 303(b) of Regulation S-K.
Liquidity and Capital Resources, page 110
12. You disclose that changes in your cash flows from operations were
generally consistent
with changes in results of operations, as adjusted by changes in
working capital in the
normal course of business. Please revise to discuss and analyze why
Changes in working
capital and other noncurrent assets and liabilities decreased by
$2.633 billion in 2020.
Please also discuss and analyze why net cash flows provided by
operating activities
declined from $3.9 billion in 2018 to $584 million in 2020.
Carter Culver
Constellation Newholdco, Inc.
August 23, 2021
Page 4
Certain Relationships and Related Party Transactions
Agreements with Exelon Related to the Separation, page 154
13. Please revise to describe the material terms of each of your transition
services agreement,
tax matters agreement, and employment matters agreement.
Financial Statements
Consolidated Statements of Cash Flows, page F-5
14. You disclose a $4.4 billion decrease in net cash flows provided by
operating activities in
Other Assets and Liabilities in 2020. Please disaggregate the material
amounts of Other
Assets and Liabilities that comprise the $4.4 billion net decrease in
cash flows provided
by operating activities in 2020.
Exhibits
15. We note your disclosure that you expect that Generation will enter into
an amended and
restated credit agreement providing for a revolving credit facility.
Please file a copy of
this agreement as an exhibit when it is available. In addition, please
file the indenture
governing Generation's $4.2 billion aggregate principal amount of senior
notes
outstanding and any material project financing credit agreements. Refer
to Item 601(b) of
Regulation S-K.
General
16. We note your disclosure that no vote of Exelon stockholders is required
in connection
with the spin-off. Please provide us with a legal analysis regarding the
basis for that
statement.
You may contact Robert Babula, Staff Accountant, at 202-551-3339 or Gus
Rodriguez,
Accounting Branch Chief, at 202-551-3752 if you have questions regarding
comments on the
financial statements and related matters. Please contact Irene
Barberena-Meissner, Staff
Attorney, at 202-551-6548 or Loan Lauren Nguyen, Legal Branch Chief, at
202-551-3642 with
any other questions.
Sincerely,
FirstName LastNameCarter Culver
Division of
Corporation Finance
Comapany NameConstellation Newholdco, Inc.
Office of Energy &
Transportation
August 23, 2021 Page 4
cc: Tiffany Chan, Esq.
FirstName LastName