This is an offering of Equity Units by PPL Corporation. Each Equity Unit will have a stated amount of $50 and will initially be in the form of Corporate Units, each of which consists of a purchase contract issued by us and, initially, a l/20, or 5.0%, undivided beneficial ownership interest in $1,000 principal amount of PPL Capital Funding, Inc. 4.625% junior subordinated notes due 2018, which we refer to as the notes. The notes will be fully and unconditionally guaranteed by PPL Corporation pursuant to subordinated guarantees of PPL Corporation. The purchase contract will obligate you to purchase from us, no later than July 1, 2013, for a price of $50 in cash, the following number of shares of our common stock, subject to anti-dilution adjustments: if the applicable market value, which is the average volume weighted average price, or VWAP, of our common stock over the 20-trading day period ending on the third scheduled trading day prior to July 1, 2013, equals or exceeds $28.80, 1.7361 shares of our common stock; if the applicable market value is less than $28.80 but greater than $24.00, a number of shares of our common stock having a value, based on the applicable market value, equal to $50; and if the applicable market value is less than or equal to $24.00, 2.0833 shares of our common stock.
The notes will initially bear interest at a rate of 4.625% per year, payable quarterly on January 1, April 1, July 1 and October 1 of each year (except where such date is not a business day, interest will be payable as of the next subsequent business day, without adjustment), commencing on October 1, 2010. The notes will initially be subordinated to all of PPL Capital Funding Inc.’s existing and future “Senior Indebtedness” (as defined under “Description of the Notes — Subordination”). In addition, the notes will be effectively subordinated to all liabilities of our subsidiaries (other than those of PPL Capital Funding, Inc.). Prior to July 1, 2015, PPL Capital Funding, Inc. will have the right to defer interest payments on the notes one or more times for one or more consecutive interest periods without giving rise to an event of default. The notes will be remarketed in two tranches and will be the senior or subordinated, unsecured obligations of PPL Capital Funding as described in this prospectus supplement. We may elect to remarket the notes as fixed-rate notes and/or as floating-rate notes and to modify certain other terms of the notes in connection with the remarketing. If the remarketing is successful, the interest rate on the notes will be reset and thereafter, if any of the remarketed notes are fixed-rate notes, interest on such notes will be payable semi-annually.
We will also pay you quarterly contract adjustment payments at a rate of 4.875% per year of the stated amount of $50 per Equity Unit, or $2.4375 per year, subject to our right to defer contract adjustment payments, as described in this prospectus supplement.
Other than during a blackout period (as defined herein) or after a successful remarketing, you can create Treasury Units from Corporate Units by substituting Treasury securities for your undivided beneficial ownership interest in the notes comprising a part of the Corporate Units, and you can recreate Corporate Units by substituting your undivided beneficial ownership interest in the notes for the Treasury securities comprising a part of the Treasury Units.
Your ownership interest in the notes (or after a successful optional remarketing, the applicable ownership interest in the Treasury portfolio) or the Treasury securities, as the case may be, will be pledged to us to secure your obligation under the related purchase contract.
If there is a successful optional remarketing of the notes as described in this prospectus supplement, and you hold Corporate Units, your applicable ownership interest in the Treasury portfolio purchased with the proceeds from the remarketing will be used to satisfy your payment obligations under the purchase contract.
If there is a successful final remarketing of the notes as described in this prospectus supplement, and you hold Corporate Units, the proceeds from the remarketing will be used to satisfy your payment obligations under the purchase contract, unless you have elected to settle with separate cash.