The revision of the stock for stock exchange offer to .545 EXC shares (from .485 shares) for each NRG (IDR 'B' on Watch Evolving) share has no cash impact on EXC. The Negative Watch reflects the increase in leverage that results from the assumption of approximately $8.8 billion of NRG debt and preferred stock. Resolution of the Negative Watch will also consider the cash flow impact of lower gas and energy prices, which are expected to persist for several years, the increased capital expenditures associated with ExGen's recently announced nuclear uprate program and the impact of planned asset sales. The revised exchange offer is valued at approximately $7.2 billion; including the debt and preferred stock assumption increases the enterprise value to approximately $16 billion.

The ratings of EXC's regulated utility subsidiaries PECO Energy Co. (PECO) and Commonwealth Edison (Comed) are not affected by the rating action. A full list of the ratings is shown below.

EXC enters this transaction in a strong credit position relative to its existing ratings, which provides a cushion against the additional debt and interest expense to be incurred to complete this transaction. Consequently, Fitch anticipates the ratings of EXC and ExGen will remain in the investment grade category. EXC management has announced it intends to use proceeds from the planned issuance of $1.1 billion of equity or mandatory convertible debt and asset sales to reduce debt. Management estimates asset sales will net aggregate proceeds of $1.6 billion.

Completion of the transaction is subject to refinancing risk since all of the NRG debt contains change of control provisions. Approximately $5.4 billion of the NRG debt is publicly traded bonds and the remainder bank debt. Completion of the transaction is also subject to regulatory approval in four states (Texas, New York, Pennsylvania and California), the Federal Energy Commission (FERC) and the Department of Justice.

Shareholder acceptance of the revised offer should be apparent shortly after the NRG shareholders' meeting scheduled for July 21, 2009. EXC has nominated four directors to run in opposition to the incumbent directors up for re-election and has submitted a resolution to increase the size of the NRG board to 19 Directors from 14 Directors.

The following ratings are unchanged and remain on Rating Watch Negative:

Exelon Corp.

--IDR 'BBB+';

--Senior unsecured debt 'BBB+';

--Commercial paper 'F2';

--Short-term IDR 'F2'.

Exelon Generation Co., LLC

--IDR 'BBB+';

--Senior unsecured debt 'BBB+';

--Commercial paper 'F2';

--Short-term IDR 'F2'.

The following ratings are unchanged:

PECO Energy Co.

--IDR 'BBB+';

--First mortgage bonds 'A';

--Preferred stock 'BBB+';

--Commercial paper 'F2';

--Short-term IDR 'F2'.

PECO Energy Capital Trusts III

--Preferred stock 'BBB+'.

PECO Energy Capital Trusts IV

--Preferred stock 'BBB+'.

Commonwealth Edison Co.

--IDR 'BB+';

--First mortgage bonds 'BBB';

--Senior unsecured debt 'BBB-';

--Preferred stock 'BB';

--Commercial paper 'B'.

ComEd Financing Trust III

--Preferred securities 'BB'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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