Pepco Holdings Announces Pricing of Common Stock Offering

WASHINGTON--(BUSINESS WIRE)--

Pepco Holdings, Inc. (the “Company”) POM announced today that it has priced an offering of 15,584,415 shares of its common stock at $19.25 per share. For a period of 30 days following the offering, the underwriters of the offering have been granted an option to purchase up to an additional 2,337,662 shares of the Company's common stock solely to cover over-allotments, if any. Subject to certain conditions, all shares are being offered in connection with the execution by the Company of one or more forward sale agreements described below.

The Company intends to use any net proceeds that it receives upon any issuance and sale to the underwriters of shares of its common stock in the offering or upon settlement of the forward sale agreement(s) described below to make capital contributions to its utility subsidiaries, to repay short-term debt obligations, to fund working capital needs and for other general corporate purposes.

Morgan Stanley, J.P. Morgan, BofA Merrill Lynch, and Citigroup are acting as joint book-running managers for the offering. Barclays Capital, Credit Suisse, RBS, Scotiabank and Wells Fargo Securities are acting as co-managers for the offering.

The offering is being made under the Company's existing shelf registration statement filed with the Securities and Exchange Commission, which became automatically effective on September 20, 2010.

In connection with the offering, the Company entered into a forward sale agreement (and, to the extent that the underwriters exercise their over-allotment option, the Company may, in its sole discretion, enter into an additional forward sale agreement) with Morgan Stanley (the “Counterparty”) under which the Company agreed to issue and sell to the Counterparty (subject to the Company's right to cash settle or net share settle the forward sale agreement(s)) the same number of shares of the Company's common stock sold by the Counterparty to the underwriters in the public offering at the public offering price in the offering, less underwriting discounts and commissions and subject to certain adjustments.

In connection with the forward sale agreement(s), the Counterparty (or its affiliate) is expected to borrow from third-party lenders and sell to the underwriters up to 15,584,415 shares of the Company's common stock (assuming no exercise of the over-allotment option) at the close of this offering. If the underwriters exercise their over-allotment option and the Company elects not to enter into an additional forward sale agreement with the Counterparty, the Company will issue and sell to the underwriters the number of shares of common stock in respect of which the over-allotment option is exercised.

Settlement of the forward sale agreement(s) will occur no later than 12 months following the date of pricing. Upon any physical settlement of the forward sale agreement(s), the Company will issue and deliver to the Counterparty shares of its common stock in exchange for cash proceeds per share equal to the forward sale price, which will initially be $18.57625, the public offering price, less underwriting discounts and commissions, and will be subject to certain adjustments as provided in the forward sale agreement(s). The Company may, in certain circumstances, elect cash settlement or net share settlement for all or a portion of its rights or obligations under the forward sale agreement(s).

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, and no offer, solicitation or sale of any securities shall be made, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering of these securities will be made only by means of a prospectus and a related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933. A copy of the prospectus supplement and accompanying prospectus with respect to this offering may be obtained by contacting:

Morgan Stanley					J.P. Morgan
Attn: Prospectus Dept.					via Broadridge Financial Solutions
180 Varick Street, 2nd Floor					1155 Long Island Avenue
New York, New York 10014					Edgewood, New York 11717
Telephone number: (866) 718-1649					Telephone number: (866) 803-9204
Email: prospectus@morganstanley.com
BofA Merrill Lynch					Citigroup
4 World Financial Center					Attn: Prospectus Department
New York, New York 10080					Brooklyn Army Terminal
Attn: Prospectus Department					140 58th Street, 8th Floor
Email: dg.prospectus_requests@baml.com					Brooklyn, New York 11220
					Telephone number: (800) 831-9146

About PHI: Pepco Holdings, Inc. POM is one of the largest energy delivery companies in the Mid-Atlantic region, serving about 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey. PHI subsidiaries Pepco, Delmarva Power and Atlantic City Electric provide regulated electricity service; Delmarva Power also provides natural gas service. PHI also provides energy efficiency and renewable energy services through Pepco Energy Services.

Forward-Looking Statements: Some of the statements contained in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements include declarations regarding our intents, beliefs, estimates and current expectations regarding us or our subsidiaries. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “could,” “expects,” “intends,” “assumes,” “seeks to,” “plans,” “anticipates,” “believes,” “projects,” “estimates,” “predicts,” “potential,” “future,” “goal,” “objective,” or “continue” or the negative of such terms or other variations thereof or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause our or our subsidiaries' actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Therefore, forward-looking statements are not guarantees or assurances of future performance, and actual results could differ materially from those indicated by the forward-looking statements. These forward-looking statements are qualified by, and should be read together with, the risk factors and other statements included in (i) the prospectus supplement and the prospectus for this offering (including the documents incorporated by reference therein), (ii) Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2011, and (iii) our other filings with the SEC, all of which may be difficult to predict, contain uncertainties, are beyond the Company's or its subsidiaries' control and may cause actual results to differ materially from those contained in forward-looking statements. Investors should refer to these risk factors and other statements in evaluating the forward-looking statements contained in this news release. Any forward-looking statements speak only as of the date of this news release and the Company does not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for the Company to predict all such factors, nor can the impact of any such factor be assessed on the Company's or its subsidiaries' business (viewed independently or collectively) or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The factors described above should not be construed as exhaustive.