As filed with the Securities and Exchange Commission on December 20, 2022

REGISTRATION NOS. 333-         and 333-         -01        

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM SF-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

EVERGY MISSOURI WEST, INC.		EVERGY MISSOURI WEST STORM FUNDING I, LLC
(Exact name of registrant, sponsor and depositor as specified in its charter)		(Exact name of registrant and issuing entity as specified in its charter)
Delaware		Delaware
(State or other jurisdiction of incorporation or organization)		(State or other jurisdiction of incorporation or organization)
0001955722		0001955844
(Central Index Key Number)		(Central Index Key Number)
44-0541877		92-1105743
(I.R.S. Employer Identification Number)		(I.R.S. Employer Identification Number)
1200 Main Street Kansas City, Missouri 64105 (816) 556-2200		818 S. Kansas Avenue Topeka, Kansas 66612 (785) 575-6300
(Address, including zip code, and telephone number, including area code, of depositor’s principal executive offices)		(Address, including zip code, and telephone number, including area code, of issuing entity’s principal executive offices)

 

 

Heather A. Humphrey

Senior Vice President, General Counsel and Corporate Secretary

Evergy Missouri West, Inc.

1200 Main Street

Kansas City, Missouri 64105

(816) 556-2200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

With Copies to:

 

Michael F. Fitzpatrick, Jr., Esq.		Eric D. Tashman, Esq.
Adam R. O’Brian, Esq.		Norton Rose Fulbright US LLP
Hunton Andrews Kurth LLP		555 California Street
200 Park Avenue		San Francisco, California 94104
New York, New York 10166		(628) 231-6803
(212) 309-1000

 

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration Statement.

 

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 20, 2022

PRELIMINARY PROSPECTUS

$                 Securitized Utility Tariff Bonds, Series 2023-A

Evergy Missouri West, Inc.

Sponsor, Depositor and Initial Servicer

Central Index Key Number: 0001955722

Evergy Missouri West Storm Funding I, LLC

Issuing Entity

Central Index Key Number: 0001955844

 

 

 

Tranche

Expected Weighted Average Life (Years)

Principal Amount Offered

Scheduled Final Payment Date

Final Maturity Date

Interest Rate

Initial Price to Public (1)

Underwriting Discounts and Commissions

Proceeds to Issuing Entity (Before Expenses)

 

(1)	Interest on the securitized utility tariff bonds will accrue from                , 2023 and must be paid by the purchaser if the bonds are delivered after that date.

The total initial price to the public is $                . The total amount of the underwriting discounts and commissions is $                . The    total amount of proceeds to the issuing entity before deduction of expenses (estimated to be $                ) is $                . The distribution frequency is semi-annually. The first expected payment date is                 .

Investing in the Securitized Utility Tariff Bonds involves risks. Please read “Risk Factors” beginning on page 17 in this prospectus to read about factors you should consider before buying the securitized utility tariff bonds.

Evergy Missouri West, Inc., as “sponsor”, is offering $                 Securitized Utility Tariff Bonds, Series 2023-A, referred to herein as the “securitized utility tariff bonds” or “bonds”, in                  tranches to be issued by Evergy Missouri West Storm Funding I, LLC, as the “issuing entity”. Evergy Missouri West, Inc. is also the “seller”, initial “servicer” and “depositor” with regard to the securitized utility tariff bonds. The securitized utility tariff bonds are senior secured obligations of the issuing entity supported by “securitized utility tariff property”, which includes the right to a special, irrevocable non-bypassable charge, known as “securitized utility tariff charges”, and paid by all existing or future retail customers receiving electrical service from the electrical corporation or its successors or assignees under commission-approved rate schedules, except for customers receiving electrical service under special contracts as of August 28, 2021, even if a retail customer elects to purchase electricity from an alternative electricity supplier following a fundamental change in regulation of public utilities in this state. The Securitization Law (as defined below) requires that securitized utility tariff charges be adjusted (or “trued-up”) at least annually, and the Missouri Public Service Commission (the “MPSC”) has authorized the securitized utility tariff charges to be adjusted more frequently to ensure the expected recovery of securitized utility tariff charge revenues sufficient to timely provide all scheduled payments of principal and interest on the securitized utility tariff bonds and related financing costs, as described further in this prospectus. Credit enhancement for the securitized utility tariff bonds will be provided by such “true-up” mechanisms as well as by accounts held under the indenture.

The securitized utility tariff bonds will be issued pursuant to Section 393.1700 of the Revised Statutes of Missouri (the “Securitization Law”), and an irrevocable financing order issued by the MPSC on November 17, 2022, which became effective on November 27, 2022, approving the issuance of the securitized utility tariff bonds (the “financing order”). The financing order is irrevocable and the MPSC shall neither reduce, impair, postpone, terminate, or otherwise adjust the securitized utility tariff charges authorized under a financing order, except for the true-up adjustments to the securitized utility tariff charges.

The securitized utility tariff bonds represent obligations only of the issuing entity, Evergy Missouri West Storm Funding I, LLC, and do not represent obligations of the sponsor or any of its affiliates other than the issuing entity. The securitized utility tariff bonds are secured by the collateral, consisting principally of the securitized utility tariff property acquired pursuant to the sale agreement and funds on deposit in the collection account for the securitized utility tariff bonds and related subaccounts. Please read “Security for the Securitized Utility Tariff Bonds” in this prospectus. Neither the State of Missouri nor its political subdivisions are liable for the securitized utility tariff bonds, and the bonds are not a debt or general obligation of the State of Missouri or any of its political subdivisions, agencies or instrumentalities, nor are they indebtedness of the State of Missouri or any agency or political subdivision. The securitized utility tariff bonds do not, directly, indirectly, or contingently, obligate the State of Missouri or any agency, political subdivision, or instrumentality of the State of Missouri to levy any tax or make any appropriation for payment of the securitized utility tariff bonds, other than in their capacity as consumers of electricity.

Interest will accrue on the securitized utility tariff bonds from the date of issuance. The securitized utility tariff bonds are scheduled to pay principal and interest semi-annually on                 and                  of each year. The first scheduled payment date is                 . On each payment date, each securitized utility tariff bond will be entitled to payment of principal, sequentially, but only to the extent funds are available in the collection account after payment of certain fees and expenses and after payment of interest.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The underwriters expect to deliver the securitized utility tariff bonds through the book-entry facilities of The Depository Trust Company for the accounts of its participants, including Clearstream Banking, S.A. and Euroclear Bank SA/NV, as operator of the Euroclear System, against payment in immediately available funds on or about                 , 2023.

 

 

Joint Book-Running Managers

The date of this prospectus is                 , 2023

 

TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS			1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION			2
PROSPECTUS SUMMARY OF TERMS			3
SUMMARY OF RISK FACTORS			15
RISK FACTORS			17
RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE OR REGULATORY ACTIONS			18
SERVICING FORECASTING RISKS			21
RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE SECURITIZED UTILITY TARIFF PROPERTY			24
NATURAL DISASTER-RELATED RISKS			25
RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF THE SELLER OR THE SERVICER			26
OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE SECURITIZED UTILITY TARIFF BONDS			30
REVIEW OF SECURITIZED UTILITY TARIFF PROPERTY			35
THE SECURITIZED UTILITY TARIFF PROPERTY AND THE SECURITIZATION LAW			39
EVERGY MISSOURI WEST’S FINANCING ORDER			44
THE DEPOSITOR, SELLER, INITIAL SERVICER AND SPONSOR			47
EVERGY MISSOURI WEST STORM FUNDING I, LLC, THE ISSUING ENTITY			53
DESCRIPTION OF THE SECURITIZED UTILITY TARIFF BONDS			56
EXPECTED SINKING FUND SCHEDULE			60
EXPECTED AMORTIZATION TABLE			61
THE TRUSTEE			80
SECURITY FOR THE SECURITIZED UTILITY TARIFF BONDS			82
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE SECURITIZED UTILITY TARIFF BONDS			87
THE SALE AGREEMENT			89
THE SERVICING AGREEMENT			98
HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT			107
USE OF PROCEEDS			111
PLAN OF DISTRIBUTION			112
AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			113
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES			114
STATE AND OTHER TAX CONSEQUENCES			118
ERISA CONSIDERATIONS			119
LEGAL PROCEEDINGS			123
RATINGS FOR THE SECURITIZED UTILITY TARIFF BONDS			124
WHERE YOU CAN FIND MORE INFORMATION			125
INCORPORATION BY REFERENCE			126
INVESTMENT COMPANY ACT OF 1940 AND VOLCKER RULE MATTERS			127
RISK RETENTION			128
LEGAL MATTERS			129
OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS			130
GLOSSARY OF DEFINED TERMS			133

 

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement filed with the Securities and Exchange Commission, or “SEC”. This prospectus provides information about the issuing entity, the securitized utility tariff bonds and Evergy Missouri West Inc., or “Evergy Missouri West”, the depositor, sponsor and initial servicer. This prospectus describes the terms of the securitized utility tariff bonds offered hereby. You should carefully review this prospectus, any free writing prospectus the issuing entity files with the SEC, and the information, if any, contained in the documents referenced in this prospectus under the heading “Where You Can Find More Information”.

References in this prospectus to the term “we”, “us”, or the “issuing entity” mean Evergy Missouri West Storm Funding I, LLC, the entity which will issue the securitized utility tariff bonds. References to the “securitized utility tariff bonds”, unless the context otherwise requires, mean the securitized utility tariff bonds offered pursuant to this prospectus. References to “Evergy Missouri West”, the “seller”, the “depositor” or the “sponsor” mean Evergy Missouri West, Inc. References to the “bondholders” or the “holders” refer to the registered holders of the securitized utility tariff bonds. References to the “securitized utility tariff property” mean the securitized utility tariff property sold to the issuing entity by Evergy Missouri West pursuant to the sale agreement and pledged to the payment of the securitized utility tariff bonds. References to the “servicer” refer to Evergy Missouri West and any successor servicer under the servicing agreement referred to in this prospectus. References to the “MPSC” refer to the Missouri Public Service Commission. References to the “Securitization Law” refer to Section 393.1700 of the Revised Statutes of Missouri. Unless the context otherwise requires, references to a “financing order” are to the irrevocable financing order issued by the MPSC as File No. EF-2022-0155, on November 17, 2022, which became effective on November 27, 2022. Unless the context otherwise requires, the term “customer” means “customer” within the meaning of Securitization Law. Under the Securitization Law, the securitized utility tariff charge will be paid by all existing or future retail customers receiving electrical service from the Evergy Missouri West or its successors or assignees under MPSC-approved rate schedules, except for customers receiving electrical service under special contracts as of August 28, 2021, even if a retail customer elects to purchase electricity from an alternative electricity supplier following a fundamental change in regulation of public utilities in the State of Missouri. You can find a glossary of some of the other defined terms used in this prospectus on page 133 of this prospectus.

This prospectus includes cross-references to sections in this prospectus where you can find further related discussions. You can also find key topics in the preceding pages. Check the table of contents to locate these sections.

You should rely only on the information contained or incorporated by reference in this prospectus and in any free writing prospectus from us or the underwriters specifying the terms of this offering. Neither the issuing entity nor any underwriter, agent, dealer, salesperson, the MPSC or Evergy Missouri West has authorized anyone else to provide you with any different information. If anyone provides you with different or inconsistent information, you should not rely on it. The securitized utility tariff bonds are not being offered in any jurisdiction where the offer or sale is not permitted. The information in this prospectus and any free writing prospectus is current only as of the date of this prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This prospectus and the documents incorporated by reference in this prospectus contain forward-looking statements that are necessarily subject to various risks and uncertainties. These statements reflect management’s judgment and opinions that are based on current estimates, expectations and projections about future events and assumptions regarding these events and management’s knowledge of facts as of the date of this prospectus. These forward-looking statements relate to, among other matters, estimated losses, including penalties and fines, associated with various investigations and proceedings; forecasts of capital expenditures; forecasts of expense reduction; estimates and assumptions used in critical accounting estimates, including those relating to insurance receivables, regulatory assets and liabilities, environmental remediation, litigation, third-party claims, and other liabilities; and the level of future equity or debt issuances. Forward-looking statements are often accompanied by forward-looking words such as “anticipates,” “believes,” “expects,” “estimates,” “forecasts,” “should,” “could,” “may,” “seeks,” “intends,” “proposed,” “projects,” “planned,” “target,” “outlook,” “remain confident,” “goal,” “will” or other words of similar meaning. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the forward-looking information include, but are not limited to:

 

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the impact of federal, state and local political, legislative, judicial and regulatory actions or developments, including deregulation, re-regulation, securitization and restructuring of the electrical corporation industry and changes in, or changes in application of, laws or regulations applicable to various aspects of Evergy Missouri West’s business;

 

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the accuracy of the servicer’s estimates of market demand and prices for energy;

 

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the accuracy of the servicer’s estimates of industrial, commercial and residential growth;

 

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the accuracy of the servicer’s forecast of electrical consumption or the payment of securitized utility tariff charges;

 

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changes in the energy trading markets in which Evergy Missouri West participates, including retroactive repricing of transactions by regional transmission organizations (“RTO”) and independent system operators;

 

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changes in market demand and demographic patterns;

 

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the impact of climate change, including increased frequency and severity of significant weather events and the extent to which counterparties are willing to do business with, finance the operations of or purchase energy from Evergy Missouri West due to the fact that Evergy Missouri West operates coal-fired generation; prices and availability of electricity in wholesale markets which may impact Evergy Missouri West’s ability to supply electricity to customers or Evergy Missouri West’s ability to service the securitized utility tariff property;

 

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the impact of the Coronavirus (“COVID-19”) pandemic on, among other things, sales, results of operations, financial condition, liquidity and cash flows, and also on operational issues, such as supply chain issues and the availability and ability of Evergy Missouri West’s employees and suppliers to perform the functions that are necessary to operate Evergy Missouri West;

 

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the operating performance of Evergy Missouri West’s facilities and the facilities of third party suppliers of electric energy; and

 

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other factors discussed in this prospectus.

You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and the issuing entity will undertake no obligation to update or revise any forward-looking statement, including unanticipated events, after the date on which such statement is made, except as required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

 

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SUMMARY OF RISK FACTORS

Set forth below is a summary of the material risk factors which you should consider before deciding whether to invest in the securitized utility tariff bonds. These risks can affect the timing or ultimate payment of the securitized utility tariff bonds and value of your security. A description of such risk factors in greater details follows this summary.

Limited Source of Payment for the Securitized Utility Tariff Bonds: The only source of funds for the securitized utility tariff bonds is the securitized utility tariff property and the other limited moneys held by the trustee. At the time of issuance of the securitized utility tariff bonds, the issuing entity will have no other assets and the securitized utility tariff bonds are non-recourse to Evergy Missouri West. Therefore, the sources for repayment of the securitized utility tariff bonds are limited. You must rely for payment of the securitized utility tariff bonds solely upon the Securitization Law, state and federal constitutional rights to enforcement of the provisions of the Securitization Law, the irrevocable financing order, collections of the securitized utility tariff charges and funds on deposit in the related accounts held by the trustee.

Risks Associated with Potential Judicial, Legislative or Regulatory Actions: The securitized utility tariff property is an asset created under the Securitization Law and through regulatory proceedings at the MPSC. The Securitization Law may be challenged in court.

The Missouri legislature, or the voters of the State using their initiative powers, may attempt to amend the Securitization Law, which could potentially impair the value of the securitized utility tariff property. Further, Evergy Missouri West may fail or be unsuccessful in challenging such actions. Neither the issuing entity nor Evergy Missouri West will indemnify you for any changes of law, whether as a result of constitutional amendment, legislative enactment, any regulatory or administrative action or any judicial proceedings.

In addition, the MPSC retains the power to adopt, revise or rescind rules or regulations affecting Evergy Missouri West and may attempt to take actions which could potentially impair the value of the securitized utility tariff property. Also, true-up adjustment submissions made with the MPSC may be challenged before the MPSC or in court, resulting in delays in implementation of the true-up adjustment. Additionally, subject to any required MPSC approval, Evergy Missouri West may establish billing, collection and posting arrangements with customers which could impact the timing and amount of customer payments.

Also, a municipality may seek to acquire portions of Evergy Missouri West’s service territory, and may dispute their obligation to pay the securitized utility tariff charges, or even if obligated to do so, may fail to bill and remit the securitized utility tariff charges on a timely basis.

Servicing Forecasting and Related Servicing Risks: The collection of securitized utility tariff charges on a timely and sufficient basis depends upon the ability of the servicer to accurately forecast customer usage. If the servicer inaccurately forecasts consumption or underestimates customer delinquencies for any reason, there could be a shortfall or material delay in securitized utility tariff charge collections. Factors which might cause inaccurate projections of usage or customer delinquencies, include unanticipated weather conditions, rolling blackouts due to capacity constraints, cyber-attacks on Evergy Missouri West infrastructure, general economic conditions, natural or man-made disasters, such as earthquakes or pandemics, such as the pandemic caused by COVID-19. Evergy Missouri West’s ability to collect securitized utility tariff charges from customers may also be impacted by some of these same factors.

It may be difficult for the issuing entity to find a replacement servicer should Evergy Missouri West default in its obligations. Assuming the issuing entity can obtain a successor servicer, the successor servicer may be less effective in servicing the charges, potentially resulting in delay in collections, which might reduce the value of your investment.

Risks Associated with the Unusual Nature of Securitized Utility Tariff Property: The unusual nature of the securitized utility tariff property makes it unlikely that, in the event of a default, the securitized utility tariff property could be sold. Although the securitized utility tariff bonds may be accelerated in the event of a default, as a practical matter, the securitized utility tariff charges would likely not be accelerated.

 

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Natural Disaster-Related Risk: Severe weather events and other natural disasters, including, storms, tornadoes, floods, extreme heat events, drought, lightning, solar events, electromagnetic events, wind events or other weather-related conditions, climate change, or natural disasters, could result in severe business disruptions, prolonged power outages, property damage, injuries and loss of life, significant decreases in revenues and earnings, and significant additional costs to Evergy Missouri West. Transmission and/or distribution and generation facilities could be damaged or destroyed and usage of electricity could be interrupted temporarily, reducing the collections of securitized utility tariff charges or otherwise impacting Evergy Missouri West’s ability to service the securitized utility tariff property. As the securitized utility tariff charge is a consumption-based charge, any unexpected failure to deliver electricity may impact the collection of securitized utility tariff charges. Further, there could be longer-lasting weather-related adverse effects on residential and commercial development and economic activity among Evergy Missouri West’s customers. As a consequence of and in response to these severe events, legislative action adverse to the bondholders might be taken, and such legislation, if challenged as a violation of the State Pledge, might be defended on the basis of public necessity.

Risks Associated with Potential Bankruptcy of the Seller or the Servicer: In the event of a bankruptcy by Evergy Missouri West, you may experience a delay in payment or a default on payment of the securitized utility tariff bonds due to various factors, including the comingling of securitized utility tariff charges with other revenue of the servicer, a challenge to the characterization of the sale of the securitized utility tariff property as a financing transaction, an effort to substantively consolidate the issuing entity’s assets and liabilities with those of Evergy Missouri West, a characterization of fixed recovery payments to the trustee as preferential transfers, the treatment of the issuing entity’s claims against the seller as unsecured claims and a general limitation on the remedies available in a bankruptcy, including the risk of an automatic stay.

Other Risks Associated with an Investment in the Securitized Utility Tariff Bonds: Other risks associated with the purchase of the securitized utility tariff bonds include the inadequacy of any indemnification obligations provided by the seller, the impact of a change of ratings or the issuance of an unsolicited rating, the absence of a secondary market for the securitized utility tariff bonds, the issuance of additional securitized utility tariff bonds or similar instruments creating greater burdens on the same customers, regulatory actions affecting certain investors and losses on investments held by the trustee.

 

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RISK FACTORS

Please carefully consider all the information the depositor has included or incorporated by reference in this prospectus, including the risks described below and the statements contained under the heading “Cautionary Statement Regarding Forward-Looking Information” in this prospectus before deciding whether to invest in the securitized utility tariff bonds.

You may experience material payment delays or incur a loss on your investment in the securitized utility tariff bonds because the source of funds for payment is limited.

The only source of funds for payment of the securitized utility tariff bonds will be the collateral, which consists of:

 

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the securitized utility tariff property securing the securitized utility tariff bonds, including the right to impose, collect and receive related securitized utility tariff charges and the issuing entity’s rights under the financing order to the true-up mechanism;

 

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the funds on deposit in the accounts for the securitized utility tariff bonds held by the trustee; and

 

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the issuing entity’s rights under various contracts the issuing entity describes in this prospectus.

The securitized utility tariff bonds will not be insured or guaranteed by Evergy Missouri West, including in its capacity as sponsor, depositor, seller or servicer, or by its parent, Evergy, any of their respective affiliates, the trustee or any other person or entity. The securitized utility tariff bonds will be nonrecourse obligations, secured only by the collateral. Delays in payment on the securitized utility tariff bonds might result in a reduction in the market value of the securitized utility tariff bonds and, therefore, the value of your investment in the securitized utility tariff bonds.

Thus, you must rely for payment of the securitized utility tariff bonds solely upon the Securitization Law, state and federal constitutional rights to enforcement of the Securitization Law, the irrevocable financing order, collections of the securitized utility tariff charges and funds on deposit in the related accounts held by the trustee. If these amounts are not sufficient to make payments or there are delays in recoveries, you may experience material payment delays or incur a loss on your investment in the securitized utility tariff bonds. The issuing entity’s organizational documents will restrict the issuing entity’s right to acquire other assets unrelated to the transactions described in this prospectus. Please read “Evergy Missouri West Storm Funding I, LLC, The Issuing Entity” in this prospectus.

 

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RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE OR REGULATORY ACTIONS

The issuing entity will not be obligated to indemnify you for changes in law.

Neither the issuing entity nor Evergy Missouri West will indemnify you for any changes in the law, including any federal preemption or repeal or amendment of the Securitization Law, that may affect the value of your utility tariff bonds. Evergy Missouri West will agree in the sale agreement to institute any action or proceeding as may be reasonably necessary to block or overturn any attempts to cause a repeal, modification or amendment to the Securitization Law that would be materially adverse to the issuing entity, the trustee or bondholders. However, Evergy Missouri West may not be able to take such action and, if Evergy Missouri West does take action, such action may not be successful. Although Evergy Missouri West or any successor seller might be required to indemnify the issuing entity if legal action based on the law in effect at the time of the issuance of the utility tariff bonds invalidates the securitized utility tariff property, such indemnification obligations do not apply for any changes in law after the date the utility tariff bonds are issued, whether such changes in law are effected by means of any legislative enactment, any constitutional amendment, any regulatory or administrative action or any final and non-appealable judicial decision. Please read “The Sale Agreement—Seller Representations and Warranties” and “The Servicing Agreement—Servicing Standards and Covenants” in this prospectus.

Future judicial action could reduce the value of your investment in the utility tariff bonds.

The securitized utility tariff property is created pursuant to the Securitization Law, the financing order and the issuance advice letter relating to the utility tariff bonds. The Securitization Law initially became effective on August 28, 2021. Evergy Missouri West is one of the first utilities to issue utility tariff bonds under the Securitization Law.

Missouri and other states have passed laws permitting the securitization of electrical corporation costs similar to the Securitization Law, such as costs associated with the deregulation of the electric market, environmental control costs and hurricane recovery costs. Some of the laws have been challenged by judicial actions or in utility commission proceedings. To date, none of these challenges has succeeded, but future challenges might ensue. An unfavorable decision regarding another state’s law would not automatically invalidate the Securitization Law or the financing order, but it might provoke a challenge to the Securitization Law, establish a non-binding legal precedent for a successful challenge to the Securitization Law or heighten awareness of the political and other risks of the utility tariff bonds, and in that way may limit their liquidity and value. Therefore, legal activity in other states may indirectly affect the value of your investment in the utility tariff bonds.

Future state legislative action, including a voter initiative, might attempt to reduce the value of your investment in the utility tariff bonds.

In the Securitization Law, the State has pledged that the State and its agencies including the MPSC, will not take or permit any action that impairs or would impair the value of the securitized utility tariff property or, except for changes made pursuant to the true-up mechanism, reduce, alter or impair the securitized utility tariff charges until the utility tariff bonds, together with the interest thereon and related financing costs, are fully paid. For a description of the State Pledge, please read “The Securitized Utility Tariff Property and the Securitization Law—The Financing Order and the Securitized Utility Tariff— State Pledge” in this prospectus. However, the Securitization Law further provides that nothing therein precludes limitation or alteration if full compensation is made by law for the full protection of the securitized utility tariff charges collected pursuant to the financing order and of the bondholders and any assignee or financing party entering into a contact with Evergy Missouri West. It is unclear how “full compensation” would be “made by law for the full protection” of holders of utility tariff bonds by the State if such limitation or alteration were attempted. Accordingly, that full protection could conceivably have an adverse effect on the market value of the utility tariff bonds or the timing of receipt of payments with respect to the utility tariff bonds.

In addition, under Article III of the Missouri Constitution, legal voters have the right through an initiative petition to propose laws as well as amendments to the Missouri Constitution. Generally, any matter that is a proper subject of legislation can become the subject of an initiative, however, under Article III, Section 51 an initiative cannot be used for the appropriation of money other than of new revenues created and provided thereby. For an initiative

 

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measure to qualify for an election, the initiative measure must, among other procedural requirements, be submitted to the Missouri Secretary of State. Initiative petitions proposing amendments to the Missouri Constitution shall be signed by eight percent of the legal voters in each of two-thirds of the congressional districts in the state, and petitions proposing laws shall be signed by five percent of such voters. Any measure proposed shall take effect when approved by a majority of the votes cast thereon.

As of the date of this prospectus, the depositor is not aware of any pending Missouri legislation or voter initiative that would materially and adversely affect any of the provisions of the Securitization Law. Nevertheless, the depositor cannot assure you that a repeal or amendment of the Securitization Law will not be adopted or sought, either by the Missouri legislature, or the electorate acting through its initiative powers, or that any action or refusal to act by the State of Missouri will not occur, any of which may constitute a violation of the State Pledge with the holders. If a violation of the State Pledge occurs, costly and time-consuming litigation might ensue. Any litigation might materially and adversely affect the price of the utility tariff bonds and your ability to resell the utility tariff bonds and might delay the timing of payments on the utility tariff bonds. Moreover, given the lack of controlling precedent directly addressing the utility tariff bonds and the State Pledge, the depositor cannot predict the outcome of any litigation with certainty. Accordingly, such litigation could result in delays in receipt of payments on the utility tariff bonds or losses on your investment in the utility tariff bonds.

The MPSC might attempt to take actions that could reduce the value of your investment in the utility tariff bonds.

The Securitization Law provides that a financing order is irrevocable and that, except for changes made pursuant to the true-up adjustment, the MPSC may not amend, modify or terminate the financing order by any subsequent action or reduce, impair, postpone, terminate or otherwise adjust the securitized utility tariff charges approved in the financing order. However, the MPSC retains the power to adopt, revise or rescind rules or regulations affecting Evergy Missouri West.

The servicer is required to submit with the MPSC, on the issuing entity’s behalf, certain adjustments of the securitized utility tariff charges. Please read “Evergy Missouri West’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” and “The Servicing Agreement— True-Up Adjustment Submissions” in this prospectus. Challenges to or delays in the true-up process might adversely affect the market perception and valuation of the utility tariff bonds. Also, any litigation might not only be costly and time-consuming, but also materially interrupt securitized utility tariff charge collections due to delayed implementation of true-up adjustments and might result in missing payments or payment delays and lengthened weighted-average lives of the utility tariff bonds.

The servicer may not fulfill its obligations to act on behalf of the bondholders to protect bondholders from actions by the MPSC or the State of Missouri, or the servicer may be unsuccessful in any such attempt.

The servicer will agree in the servicing agreement to take any action or proceeding necessary to compel performance by the MPSC and the State of Missouri of any of their obligations or duties under the Securitization Law or the financing order, including any actions reasonably necessary to block or overturn attempts to cause a repeal or modification of the Securitization Law or the financing order. The servicer, however, may not be able to take those actions for a number of reasons, including legal or regulatory restrictions, financial constraints and practical difficulties in challenging any such legislative enactment or constitutional amendment. Additionally, any action the servicer is able to take may not be successful. Any such failure to perform the servicer’s obligations or to successfully compel performance by the MPSC or the State of Missouri could negatively affect bondholders’ rights and result in a loss of their investment.

 

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It may be difficult to accurately estimate and collect securitized utility tariff charges from consumers who self- generate and who disconnect from Evergy Missouri West’s grid.

Broader use of distributed generation by consumers may result from consumers’ changing perceptions of the merits of utilizing existing generation technology, tax or other economic incentives or from technological developments resulting in smaller-scale, more fuel efficient, more environmentally friendly and/or more cost effective distributed generation. Moreover, an increase in distributed generation may result if extreme weather conditions result in shortages of grid-supplied energy or if other factors cause grid-supplied energy to be less reliable. More widespread use of distributed generation, particularly battery storage, might allow greater numbers of consumers to reduce or eliminate their payment of securitized utility tariff charges causing securitized utility tariff charges to remaining consumers to increase.

 

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SERVICING FORECASTING RISKS

Inaccurate consumption or collection forecasting might reduce scheduled payments on the securitized utility tariff bonds.

The securitized utility tariff charges are calculated based on forecasted customer usage. The amount and the rate of securitized utility tariff charge collections will depend in part on actual electricity consumption and the timing of collections and write-offs. The financing order approves the methodology by which the securitized utility tariff charges will be calculated and adjusted from time to time by the servicer pursuant to true-up advice letters submitted to the MPSC as described below. Pursuant to the financing order, except for Exempted Customers, the securitized utility tariff charge will be an equal cent per kWh charge across all customer classes that is adjusted for line losses determined for each voltage level class. If the servicer inaccurately forecasts either electricity consumption or underestimates customer delinquency or write-offs when setting or adjusting the securitized utility tariff charge, there could be a shortfall or material delay in securitized utility tariff charge collections, which might result in missed or delayed payments of principal and interest and lengthened weighted average life of the securitized utility tariff bonds. Please read “Evergy Missouri West’s Financing Order—Securitized Utility Tariff Charges—The Financing Order Approves the Methodology used to Calculate the Securitized Utility Tariff Charges” and “The Servicing Agreement— True-Up Adjustment Submissions” in this prospectus.

Inaccurate forecasting of electricity consumption by the servicer might result from, among other things:

 

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unanticipated weather or economic conditions, resulting in less electricity consumption than forecast;

 

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general economic conditions causing customers to migrate from Evergy Missouri West’s service territory or reduce their electricity consumption;

 

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the occurrence of a natural disaster, or an act of war or terrorism, or other catastrophic event, including pandemics, unexpectedly disrupting electrical service and reducing electricity consumption;

 

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unanticipated changes in the market structure of the electric industry;

 

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large customers unexpectedly ceasing business or departing Evergy Missouri West’s service territory;

 

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dramatic and unexpected changes in energy prices resulting in decreased electricity consumption;

 

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customers consuming less electricity than anticipated because of increased energy prices, unanticipated increases in conservation efforts or unanticipated increases in electric consumption efficiency; or

 

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differences or changes in forecasting methodology.

Inaccurate forecasting of delinquencies or write-offs by the servicer could result from, among other things:

 

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unexpected deterioration of the economy, the occurrence of a natural disaster, an act of war or terrorism or other catastrophic events, including pandemics, causing greater write-offs than expected or forcing Evergy Missouri West or a successor utility to grant additional payment relief to more customers; or

 

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an unexpected change in law that makes it more difficult for Evergy Missouri West or a successor distribution company to terminate service to nonpaying customers, or that requires Evergy Missouri West or a successor to apply more lenient credit standards for customers.

 

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The spread of COVID-19 and resulting impact on business and economic conditions could continue to negatively affect Evergy Missouri West’s business and operations, which could impact Evergy Missouri West’s ability to collect and service the securitized utility tariff charges and might reduce scheduled payments on the securitized utility tariff bonds.

The COVID-19 pandemic has had, and may continue to have, a significant impact on the way that Evergy Missouri West conducts its operations and could adversely impact its results of operations, financial condition and cash flows. Further, the spread of COVID-19 has resulted in efforts to contain the virus, such as quarantines, restrictions on travel, closures and reduced operations of businesses, governmental agencies and other institutions. The pandemic, along with the efforts to contain the virus, has caused and could continue to cause an economic slowdown or recession, result in significant disruptions or reductions in various public, commercial or industrial activities, cause employee absences and contractor or third party service provider disruptions, which could interfere with Evergy Missouri West’s operations or the operations of its customers and its obligation to act as servicer.

The COVID-19 pandemic has altered electricity usage patterns, including an overall reduction in demand and shifting usage away from customers with relatively higher load requirements, such as industrial and commercial customers, toward customers with relatively lower load requirements, such as residential customers. These changes in electricity usage patterns and the extent to which some of these shifts could become long-term or permanent could result in a significant decrease in Evergy Missouri West’s sales of electricity.

Evergy Missouri West has also temporarily implemented policies, and in the future may implement additional policies, that are intended to ease the financial burden of the pandemic on customers, such as temporarily extending payment options and offering incentives for customer payments on overdue balances as well as the elimination of late payment fees and disconnections for non-payment. There is also the possibility that legislation or regulations could be enacted at the federal or state level that would further restrict Evergy Missouri West’s ability to discontinue service to customers in the event of non-payment or to collect amounts owed from customers for service provided. These measures could result in an overall increase in customer non-payment or delay in the timely receipt of customer payments, which could result in delays in the collection of securitized utility tariff charges.

In addition, the COVID-19 pandemic has changed the way Evergy Missouri West operates and has increased the use of technology to enable remote-working arrangements, which may increase or expose previously unknown vulnerabilities. Public reports have also indicated an increase in cyberattacks in general since the start of the pandemic due, in part, to the increase in the number of employees working remotely and the proliferation of the different ways in which employees and third parties interact with Evergy Missouri West’s information technology infrastructure. A successful attack against Evergy Missouri West or cyberattacks to interconnected utilities, municipalities, others or widespread attacks to the utility industry could result in disruption to Evergy Missouri West’s generation, transmission and distribution and reduce sales, which could result in delays for billing and collections of the securitized utility tariff charges.

Any of these circumstances, or other impacts of the COVID-19 pandemic, could adversely affect customer demand or revenues, impact the ability of Evergy Missouri West’s suppliers, vendors or contractors to perform, or cause other unpredictable events, which could have a significant adverse impact on Evergy Missouri West’s results of operations, financial position and cash flows. The financing order requires that the servicer submit with the MPSC periodic true-up advice letters to adjust the securitized utility tariff charges to ensure the recovery of revenues sufficient to provide for the timely payment of the periodic payment requirement. Standard annual true-up adjustment advice letters, standard semi-annual true-up advice letters, and standard interim true-up adjustment advice letters must be submitted not less than thirty (30) days before the billing cycle of the month in which the revised securitized utility tariff charge will be ineffective. Given that there is at least thirty days between submission of a true-up advice letter and the effective date of an adjustment, a reduction in collections as the result of the imposition of a new moratorium or similar customer protection measure and delay of implementing an adjustment may reduce scheduled payments on the securitized utility tariff bonds. Please read “The Depositor, Seller, Initial Servicer and Sponsor—COVID-19 Customer Protections” in this prospectus.

Evergy Missouri West expects additional financial impacts in the future as a result of the COVID-19 pandemic but is unable to predict the timing, duration or intensity of the COVID-19 pandemic situation.

 

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Your investment in the securitized utility tariff bonds depends on Evergy Missouri West or its successor or assignee, acting as servicer of the securitized utility tariff property.

Evergy Missouri West, as servicer, will be responsible for, among other things, calculating, billing and collecting the securitized utility tariff charges from customers, submitting requests to the MPSC to adjust these charges, monitoring the collateral for the securitized utility tariff bonds and taking certain actions in the event of non-payment by customers. The trustee’s receipt of collections in respect of the securitized utility tariff charges, which will be used to make payments on securitized utility tariff bonds, will depend in part on the skill and diligence of the servicer in performing these functions. The systems that the servicer has in place for securitized utility tariff charge billings and collections, together with any MPSC regulations governing electric service providers (“ESPs”), might, in particular circumstances, cause the servicer to experience difficulty in performing these functions in a timely and completely accurate manner. If the servicer fails to make collections for any reason, then the servicer’s payments to the trustee in respect of the securitized utility tariff charges might be delayed or reduced. In that event, the issuing entity’s payments on the securitized utility tariff bonds might be delayed or reduced.

If the issuing entity replaces Evergy Missouri West as the servicer, the issuing entity may experience difficulties finding and using a replacement servicer.

If Evergy Missouri West ceases to service the securitized utility tariff property related to the securitized utility tariff bonds, it might be difficult to find a successor servicer. Also, any successor servicer might have less experience and ability than Evergy Missouri West and might experience difficulties in collecting securitized utility tariff charges and determining appropriate adjustments to the securitized utility tariff charges and billing and/or payment arrangements may change, resulting in delays or disruptions of collections. A successor servicer might not be willing to perform except for fees higher than those approved by the MPSC pursuant to the financing order and might charge fees that, while permitted under the financing order, are substantially higher than the fees paid to Evergy Missouri West as servicer. Although a true-up adjustment would be required to allow for the increase in fees, there could be a gap between the incurrence of those fees and the implementation of a true-up adjustment to adjust for that increase that might adversely affect distributions to bondholders. In the event of the commencement of a case by or against the servicer under Title 11 of the United States Code, as amended, of the Bankruptcy Code, or similar laws, the issuing entity and the trustee might be prevented from effecting a transfer of servicing due to operation of the Bankruptcy Code. Any of these factors might delay the timing of payments and reduce the value of your investment.

It might be difficult for successor servicers to collect the securitized utility tariff charges from Evergy Missouri West’s customers.

Any successor servicer may bring an action against a customer for non-payment of the securitized utility tariff charge, but only a successor servicer that is a successor electrical corporation may terminate service for failure to pay the securitized utility tariff charges. A successor servicer that does not have the threat of termination of service available to enforce payment of the securitized utility tariff charge would need to rely on the successor electrical corporation to threaten to terminate service for nonpayment of other portions of monthly electrical corporation bills. This inability might reduce the value of your investment.

 

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RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE SECURITIZED UTILITY TARIFF PROPERTY

Foreclosure of the trustee’s lien on the securitized utility tariff property for the securitized utility tariff bonds might not be practical, and acceleration of the securitized utility tariff bonds before maturity might have little practical effect.

Under the Securitization Law and the indenture, the trustee or the bondholders have the right to foreclose or otherwise enforce the lien on the securitized utility tariff property securing the securitized utility tariff bonds. However, in the event of foreclosure, there is likely to be a limited market, if any, for the securitized utility tariff property. Therefore, foreclosure might not be a realistic or practical remedy. Moreover, although principal of the securitized utility tariff bonds will be due and payable upon acceleration of the securitized utility tariff bonds before maturity, securitized utility tariff charges likely would not be accelerated and the nature of the issuing entity’s business will result in principal of the securitized utility tariff bonds being paid as funds become available. If there is an acceleration of the securitized utility tariff bonds, all tranches of the securitized utility tariff bonds will be paid pro rata; therefore, some tranches might be paid earlier than expected and some tranches might be paid later than expected.

 

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NATURAL DISASTER-RELATED RISKS

Weather is a major driver of Evergy Missouri West’s results of operations, financial position and cash flows and Evergy Missouri West is subject to risks associated with climate change.

Weather conditions directly influence the demand for and price of electricity. Evergy Missouri West is significantly impacted by seasonality, and, due to energy demand created by air conditioning load, highest revenues are typically recorded in the third quarter. Unusually mild winter or summer weather can adversely affect sales. In addition, severe weather and events, including tornadoes, snow, fire, rain, flooding, drought and ice storms, can be destructive and cause outages and property damage that can result in increased expenses, lower revenues and additional restoration costs. Additionally, because many of Evergy Missouri West’s generating stations utilize water for cooling, low water and flow levels can increase maintenance costs at these stations, result in limited power production and require modifications to plant operations. High water conditions can also impair planned deliveries of fuel to generating stations or otherwise adversely impact its ability to operate these stations. Climate change may produce more frequent or severe weather events, such as storms, droughts or floods and could also impact the economic health of Evergy Missouri West’s service territories. An increase in the frequency or severity of extreme weather events or a deterioration in the economic health of Evergy Missouri West’s service territories could have a material adverse effect on its results of operations, and cash flows resulting in reduced securitized utility tariff charge collections.

If Evergy Missouri West’s rates cannot be adjusted to reflect the impact of events or conditions caused by climate change, Evergy Missouri West’s financial condition, results of operations, liquidity, and cash flows could be materially affected, which, in turn, could reduce the collections of securitized utility tariff charges or otherwise impact Evergy Missouri West’s ability to service the securitized utility tariff property.

 

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RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF THE SELLER OR THE SERVICER

For a more detailed discussion of the following bankruptcy risks, please read “How a Bankruptcy May Affect Your Investment” in this prospectus.

The servicer will commingle the securitized utility tariff charges with other revenues it collects, which might obstruct access to the securitized utility tariff charges in case of the servicer’s bankruptcy and reduce the value of your investment in the securitized utility tariff bonds.

The servicer will be required to remit estimated securitized utility tariff charge collections to the trustee no later than the second servicer business day of receipt. The servicer will not segregate the securitized utility tariff charges from the other funds it collects from customers or its general funds. The securitized utility tariff charges will be estimated and segregated only when the servicer remits them to the trustee.

Despite this requirement, the servicer might fail to remit the full amount of the securitized utility tariff charges payable to the trustee or might fail to do so on a timely basis. This failure, whether voluntary or involuntary, might materially reduce the amount of securitized utility tariff charge collections available to make payments on the securitized utility tariff bonds.

Absent a default under the servicing agreement, Evergy Missouri West will be permitted to remit estimated securitized utility tariff charges to the trustee. While Evergy Missouri West will be responsible for identifying and calculating the actual amount of securitized utility tariff charges in the event of a default under the servicing agreement, it may be difficult for Evergy Missouri West to identify such charges, given existing limitations in its billing system.

The Securitization Law provides that the priority of a lien and security interest perfected in securitized utility tariff property is not impaired by the commingling of the funds arising from securitized utility tariff charges with any other funds. In a bankruptcy of the servicer, however, a bankruptcy court might rule that federal bankruptcy law takes precedence over the Securitization Law and might decline to recognize the issuing entity’s right to collections of the securitized utility tariff charges that are commingled with other funds of the servicer as of the date of bankruptcy. If so, the collections of the securitized utility tariff charges held by the servicer as of the date of bankruptcy would not be available to pay amounts owing on the securitized utility tariff bonds. In this case, the issuing entity would have only a general unsecured claim against the servicer for those amounts. This decision could cause material delays in payments of principal or interest, or losses, on your securitized utility tariff bonds and could materially reduce the value of your investment in the securitized utility tariff bonds.

The bankruptcy of Evergy Missouri West or any successor seller might result in losses or delays in payments on the securitized utility tariff bonds.

The seller will represent and warrant in the sale agreement that the transfer of the securitized utility tariff property to the issuing entity under that sale agreement is a valid sale and assignment of that securitized utility tariff property from the seller to the issuing entity. The seller will also represent, warrant, and covenant that it will take the appropriate actions under the Securitization Law to perfect this sale. The Securitization Law provides that the transactions described in the sale agreement shall constitute a sale of the securitized utility tariff property to the issuing entity, and the seller and the issuing entity will treat the transaction as a sale under applicable law, although for financial reporting and tax reporting purposes the transaction will be treated as debt of the seller. If the seller were to become a debtor in a bankruptcy case, and a party in interest (including the seller itself) were to take the position that the sale of the securitized utility tariff property to the issuing entity should be recharacterized as the grant of a security interest in such securitized utility tariff property to secure a borrowing of the seller, delays in payments on the securitized utility tariff bonds could result. If a court were to adopt such position, then delays or reductions in payments on the securitized utility tariff bonds could result.

 

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Pursuant to the Securitization Law and the financing order, upon the sale of the securitized utility tariff property, the securitized utility tariff property is created as a present intangible property right, and it thereafter exists until the securitized utility tariff bonds are paid in full and all financing costs and other costs of the securitized utility tariff bonds have been recovered in full. Nonetheless, if the seller were to become the debtor in a bankruptcy case, a party in interest (including the seller itself) may take the position that, because the securitized utility tariff charges are usage-based charges, securitized utility tariff property comes into existence only as customers use electricity. If a court were to adopt this position, no assurance can be given that the court would not also rule that any securitized utility tariff property relating to electricity consumed after the commencement of the seller’s bankruptcy case was not required to be transferred to the issuing entity, thus resulting in delays or reductions of payments on the securitized utility tariff bonds.

A bankruptcy court generally follows state property law on issues such as those addressed by the state law provisions described above. However, a bankruptcy court does not follow state law if it determines that the state law is contrary to a paramount federal bankruptcy policy or interest. If a bankruptcy court in an Evergy Missouri West bankruptcy refused to enforce one or more of the state property law provisions described above, the effect of this decision on you as a beneficial owner of the securitized utility tariff bonds might be similar to the treatment you would receive in an Evergy Missouri West bankruptcy if the securitized utility tariff bonds had been issued directly by Evergy Missouri West. A decision by the bankruptcy court that, despite the issuing entity’s separateness from Evergy Missouri West, the issuing entity’s assets and liabilities and those of Evergy Missouri West should be consolidated would have a similar effect on you as a bondholder.

The issuing entity has taken steps together with Evergy Missouri West, as the seller, to reduce the risk that in the event the seller or an affiliate of the seller were to become the debtor in a bankruptcy case, a court would order that the issuing entity’s assets and liabilities be substantively consolidated with those of Evergy Missouri West or an affiliate.

Nonetheless, these steps might not be completely effective, and thus if Evergy Missouri West or an affiliate of the seller were to become a debtor in a bankruptcy case, a court might order that the issuing entity’s assets and liabilities be consolidated with those of Evergy Missouri West or an affiliate of the seller. This might cause material delays in payment of, or losses on, your securitized utility tariff bonds and might materially reduce the value of your investment in the securitized utility tariff bonds. For example:

 

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without permission from the bankruptcy court, the trustee might be prevented from taking actions against Evergy Missouri West or recovering or using funds on your behalf or replacing Evergy Missouri West as the servicer;

 

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the bankruptcy court might order the trustee to exchange the securitized utility tariff property for other property of lower value;

 

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tax or other government liens on Evergy Missouri West’s property might have priority over the trustee’s lien and might be paid from collected securitized utility tariff charges before payments on the securitized utility tariff bonds;

 

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the trustee’s lien might not be properly perfected in the collected securitized utility tariff property collections prior to or as of the date of Evergy Missouri West’s bankruptcy, with the result that the securitized utility tariff bonds would represent only general unsecured claims against Evergy Missouri West;

 

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the bankruptcy court might rule that neither the issuing entity’s property interest nor the trustee’s lien extends to securitized utility tariff charges in respect of electricity consumed after the commencement of Evergy Missouri West’s bankruptcy case, with the result that the securitized utility tariff bonds would represent only general unsecured claims against Evergy Missouri West;

 

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the issuing entity and Evergy Missouri West might be relieved of any obligation to make any payments on the securitized utility tariff bonds during the pendency of the bankruptcy case and might be relieved of any obligation to pay interest accruing after the commencement of the bankruptcy case;

 

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Evergy Missouri West might be able to alter the terms of the securitized utility tariff bonds as part of its plan of reorganization;

 

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the bankruptcy court might rule that the securitized utility tariff charges should be used to pay, or that the issuing entity should be charged for, a portion of the cost of providing electric service; or

 

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the bankruptcy court might rule that the remedy provisions of the sale agreement are unenforceable, leaving the issuing entity with an unsecured claim for actual damages against Evergy Missouri West that may be difficult to prove or, if proven, to collect in full.

Furthermore, if Evergy Missouri West enters bankruptcy proceedings, it might be permitted to stop acting as servicer, and it may be difficult to find a third party to act as servicer. The failure of the servicer to perform its duties or the inability to find a successor servicer might cause payment delays or losses on your investment in the securitized utility tariff bonds. Also, the mere fact of a servicer or seller bankruptcy proceeding might have an adverse effect on the resale market for the securitized utility tariff bonds and on the value of the securitized utility tariff bonds.

The sale of the securitized utility tariff property might be construed as a financing and not a sale in a case of Evergy Missouri West’s bankruptcy which might delay or limit payments on the securitized utility tariff bonds.

The Securitization Law provides that the transfer of securitized utility tariff property will be as a sale or other absolute transfer if the documents governing the transaction expressly state that the transaction is a sale or other absolute transfer other than for federal and state income tax purposes. The issuing entity and Evergy Missouri West will treat the transaction as a sale under applicable law, although for financial reporting and income and franchise tax purposes the transaction is intended to be treated as a financing. In the event of a bankruptcy of Evergy Missouri West, a party in interest in the bankruptcy might assert that the sale of the securitized utility tariff property to the issuing entity was a financing transaction and not a “sale or other absolute transfer” and that the treatment of the transaction for financial reporting and tax purposes as a financing and not a sale, lends weight to that position. If a court were to characterize the transaction as a financing, the issuing entity expects that it would, on behalf of itself and the trustee, be treated as a secured creditor of Evergy Missouri West in the bankruptcy proceedings, although a court might determine that the issuing entity only has an unsecured claim against Evergy Missouri West. Even if the issuing entity had a security interest in the securitized utility tariff property, the issuing entity would not likely have access to the related securitized utility tariff charge collections during the bankruptcy and would be subject to the risks of a secured creditor in a bankruptcy case, including the possible bankruptcy risks described in the immediately preceding risk factor. As a result, repayment of the securitized utility tariff bonds might be significantly delayed and a plan of reorganization in the bankruptcy might permanently modify the amount and timing of payments to the issuing entity of the related securitized utility tariff charge collections and therefore the amount and timing of funds available to the issuing entity to pay bondholders.

If the servicer enters bankruptcy proceedings, the collections of the securitized utility tariff charges held by the servicer as of the date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing on the securitized utility tariff bonds.

In the event of a bankruptcy of the servicer, a party in interest might take the position that the remittance of funds prior to bankruptcy of the servicer, pursuant to the servicing agreement, constitutes a preference under bankruptcy law if the remittance of those funds was deemed to be paid on account of a preexisting debt. If a court were to hold that the remittance of funds constitutes a preference, any such remittance within 90 days of the filing of the bankruptcy petition could be avoidable, and the funds could be required to be returned to the bankruptcy estate of the servicer. To the extent that securitized utility tariff charges have been commingled with the general funds of the servicer, the risk that a court would hold that a remittance of funds was a preference would increase. Also, the issuing entity may be considered an “insider” of the servicer. If the issuing entity is considered to be an “insider” of the servicer, any such remittance to the issuing entity made within one year of the filing of the bankruptcy petition could be avoidable as well if the court were to hold that such remittance constitutes a preference. In either case, the issuing entity or the trustee would merely be an unsecured creditor of the servicer. If any funds were required to be returned to the bankruptcy estate of the servicer, the issuing entity would expect that the amount of any future securitized utility tariff charges would be increased through the statutory true-up mechanism to recover such amount, though this would not eliminate the risk of payment delays or losses on your investment in the securitized utility tariff bonds.

 

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Claims against Evergy Missouri West or any successor seller might be limited in the event of a bankruptcy of the seller.

If the seller were to become a debtor in a bankruptcy case, claims, including indemnity claims, by the issuing entity against the seller under the sale agreement and the other documents executed in connection with the sale agreement would be unsecured claims and would be adjudicated in the bankruptcy case. In addition, the bankruptcy court might estimate any contingent claims that the issuing entity has against the seller and, if it determines that the contingency giving rise to these claims is unlikely to occur, estimate the claims at a lower amount. A party in interest in the bankruptcy of the seller might challenge the enforceability of the indemnity provisions in a sale agreement. If a court were to hold that the indemnity provisions were unenforceable, the issuing entity would be left with a claim for actual damages against the seller based on breach of contract principles, which would be subject to estimation and/or calculation by the court. The issuing entity cannot give any assurance as to the result if any of the above-described actions or claims were made. Furthermore, the issuing entity cannot give any assurance as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving the seller.

The bankruptcy of Evergy Missouri West or any successor seller might limit the remedies available to the trustee.

Upon an event of default for the securitized utility tariff bonds under the indenture, the Securitization Law permits the trustee to enforce the security interest in the securitized utility tariff property in accordance with the terms of the indenture. In this capacity, and pursuant to the Securitization Law and the financing order, the trustee is permitted to request the MPSC to order amounts arising from the securitized utility tariff charges to be transferred to a separate account for the bondholders benefit or request that a circuit court for the county or city where Evergy Missouri West is located to order the sequestration and payment to bondholders of all revenues arising with respect to the related securitized utility tariff charges. There can be no assurance, however, that the MPSC or a court would issue either order after an Evergy Missouri West bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee would be required to seek an order from the bankruptcy court lifting the automatic stay to permit this action by the MPSC or a court, and an order requiring an accounting and segregation of the revenues arising from the securitized utility tariff property. There can be no assurance that a court would grant either order.

 

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OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE SECURITIZED UTILITY TARIFF BONDS

Evergy Missouri West’s indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the securitized utility tariff bonds.

Evergy Missouri West is obligated under the sale agreement to indemnify the issuing entity and the trustee, for itself and on behalf of the bondholders, only in specified circumstances and will not be obligated to repurchase any securitized utility tariff property in the event of a breach of any of its representations, warranties or covenants regarding the securitized utility tariff property. Similarly, Evergy Missouri West is obligated under the servicing agreement to indemnify the issuing entity and the trustee, for itself and on behalf of the bondholders, only in specified circumstances. Please read “The Sale Agreement” and “The Servicing Agreement” in this prospectus.

Neither the trustee nor the bondholders will have the right to accelerate payments on the securitized utility tariff bonds as a result of a breach under the sale agreement or servicing agreement, absent an event of default under the indenture relating to the securitized utility tariff bonds as described under “Description of the Securitized Utility Tariff Bonds—Events of Default; Rights Upon Event of Default” in this prospectus. Furthermore, Evergy Missouri West might not have sufficient funds available to satisfy its indemnification obligations under these agreements, and the amount of any indemnification paid by Evergy Missouri West might not be sufficient for you to recover all of your investment in the securitized utility tariff bonds. In addition, if Evergy Missouri West becomes obligated to indemnify bondholders, the then-current ratings on the securitized utility tariff bonds will likely be downgraded as a result of the circumstances causing the breach and the fact that bondholders will be unsecured creditors of Evergy Missouri West with respect to any of these indemnification amounts. Evergy Missouri West will not indemnify any person for any loss, damages, liability, obligation, claim, action, suit or payment resulting solely from a downgrade in the ratings on the securitized utility tariff bonds, or for any consequential damages, including any loss of market value of the securitized utility tariff bonds resulting from a default or a downgrade of the ratings of the securitized utility tariff bonds. Please read “The Sale Agreement—Seller Representations and Warranties” and “The Sale Agreement—Indemnification” in this prospectus.

The issuing entity will issue several tranches of the securitized utility tariff bonds.

The financing order authorizes the issuing entity to issue one or more tranches of the securitized utility tariff bonds not to exceed the Authorized Amount (as defined under “Evergy Missouri West’s Financing Order”). Securitized utility tariff charges collected by or for the benefit of Evergy Missouri West will be allocated among the tranches of securitized utility tariff bonds as set forth in the expected sinking fund schedule and the priority of payments set forth under “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” in this prospectus. However, the issuing entity cannot assure you that the existence of multiple tranches of securitized utility tariff bonds would not cause reductions or delays in payment on your securitized utility tariff bonds. In addition, some matters relating to the securitized utility tariff bonds may require the vote of the holders of all tranches of the securitized utility tariff bonds. Your interests in these votes might conflict with the interests of the beneficial owners of securitized utility tariff bonds of another tranche and therefore these votes could result in an outcome that is materially unfavorable to you.

Evergy Missouri West may in its sole discretion sell securitized utility tariff property or property similar to the securitized utility tariff property, created by a separate financing order to one or more entities other than the issuing entity in connection with the issuance of additional securitized utility tariff bonds or obligations similar to the securitized utility tariff bonds without your prior review or approval.

Any new issuance would be offered pursuant to a separate registration statement and may include terms and provisions that would be unique to that particular issuance. Evergy Missouri West has covenanted in the sale agreement that the satisfaction of the rating agency condition and the execution and delivery of a joinder to the intercreditor agreement are condition precedents to the sale of additional securitized utility tariff property consisting of non-bypassable charges payable by customers comparable to the securitized utility tariff property to another entity. Please read “Security for the Securitized Utility Tariff Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

 

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In the event a customer does not pay in full all amounts owed under any bill, including securitized utility tariff charges, Evergy Missouri West, as servicer, is required to prorate among charge categories in proportion to their percentage of the overall bill, with the first dollars collected attributed to past due balances, if any. However, if a dispute arises with respect to the allocation of such securitized utility tariff charges or other delays occur on account of the administrative burdens of making such allocation, the issuing entity cannot assure you that any new issuance would not cause reductions or delays in payment of your securitized utility tariff bonds.

The credit ratings are no indication of the expected rate of payment of principal on the securitized utility tariff bonds.

The issuing entity expects the securitized utility tariff bonds will receive credit ratings from at least two nationally recognized statistical rating organizations (“NRSRO”). A rating is not a recommendation to buy, sell or hold the securitized utility tariff bonds. The ratings merely analyze the probability that the issuing entity will repay the total principal amount of the securitized utility tariff bonds at the final maturity date (which is later than the scheduled final payment date) and will make timely interest payments. The ratings are not an indication that the rating agencies believe that principal payments are likely to be paid on time according to the expected sinking fund schedule.

Under Rule 17g-5 of the Exchange Act, NRSROs providing the sponsor with the requisite certification will have access to all information posted on a website by the sponsor for the purpose of determining the initial rating and monitoring the rating after the closing date in respect of the securitized utility tariff bonds. As a result, an NRSRO other than a NRSRO hired by the sponsor (a “hired NRSRO”) may issue ratings on the securitized utility tariff bonds (“unsolicited ratings”), which may be lower, and could be significantly lower, than the ratings assigned by the hired NRSROs. The unsolicited ratings may be issued prior to, or after, the closing date in respect of the securitized utility tariff bonds. Issuance of any unsolicited rating will not affect the issuance of the securitized utility tariff bonds. Issuance of an unsolicited rating lower than the ratings assigned by the hired NRSRO on the securitized utility tariff bonds might adversely affect the value of the securitized utility tariff bonds and, for regulated entities, could affect the status of the securitized utility tariff bonds as a legal investment or the capital treatment of the securitized utility tariff bonds. Investors in the securitized utility tariff bonds should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO. None of Evergy Missouri West, the issuing entity, the underwriters or any of their affiliates will have any obligation to inform you of any unsolicited ratings assigned after the date of this prospectus. In addition, if either the issuing entity or Evergy Missouri West fail to make available to a non-hired NRSRO any information provided to any hired rating agency for the purpose of assigning or monitoring the ratings on the securitized utility tariff bonds, a hired NRSRO could withdraw its ratings on the securitized utility tariff bonds, which could adversely affect the market value of your securitized utility tariff bonds and/or limit your ability to resell your securitized utility tariff bonds.

The securitized utility tariff bonds’ credit ratings might affect the market value of your securitized utility tariff bonds.

A downgrading of the credit ratings of the securitized utility tariff bonds might have an adverse effect on the market value of the securitized utility tariff bonds. Credit ratings might change at any time and an NRSRO has the authority to revise or withdraw its rating based solely upon its own judgment. In addition, any downgrade in the credit ratings of the securitized utility tariff bonds may result in the securitized utility tariff bonds becoming ineligible to be held by certain funds or investors, which may require such investors to liquidate their investment in the securitized utility tariff bonds and result in lower prices and a less liquid trading market for the securitized utility tariff bonds.

The absence of a secondary market for the securitized utility tariff bonds might limit your ability to resell your securitized utility tariff bonds.

The underwriters for the securitized utility tariff bonds might assist in resales of the securitized utility tariff bonds, but they are not required to do so. A secondary market for the securitized utility tariff bonds might not develop, and the issuing entity does not expect to list the securitized utility tariff bonds on any securities exchange. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your securitized utility tariff bonds. Please read “Plan of Distribution” in this prospectus.

 

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You might receive principal payments for the securitized utility tariff bonds later than you expect.

The amount and the rate of collection of the securitized utility tariff charges for the securitized utility tariff bonds, together with the related securitized utility tariff charge adjustments, will generally determine whether there is a delay in the scheduled repayments of securitized utility tariff bond principal. A failure to pay principal as anticipated by the scheduled bond repayment schedule will not constitute an event of default under the indenture.

Regulatory provisions affecting certain investors could adversely affect the price and liquidity of the securitized utility tariff bonds.

European Union (“EU”) legislation comprising Regulation (EU) 2017/2402 of 12 December 2017 (as amended, the “EU Securitization Regulation”) together with any guidance published in relation thereto by the European Banking Authority, the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority or the European Commission and any relevant regulatory and/or implementing technical standards adopted by the European Commission in relation thereto or to precedent legislation (together, the “European Securitization Rules”) imposes certain restrictions and obligations with regard to securitisations (as such term is defined for purposes of the EU Securitization Regulation). The European Securitization Rules are in force throughout the EU in respect of securitisations the securities of which were issued (or the securitisation positions of which were created) on or after January 1, 2019.

Pursuant to Article 5 of the European Securitization Rules, EU Institutional Investors, prior to investing in, (or otherwise holding an exposure to) a securitisation (as so defined) other than the originator, sponsor or original lender (each as defined in the EU Securitization Regulation), must, amongst other things, (a) where the originator or original lender is established in a third country (that is, not within the EU or the EEA), verify that the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligor’s creditworthiness, (b) verify that the originator, sponsor or original lender retains on an ongoing basis a material net economic interest which, in any event, shall not be less than 5% in the securitisation, determined in accordance with Article 6 of the EU Securitization Regulation, and discloses that risk retention to such EU Institutional Investors in accordance with Article 7 of the EU Securitization Regulation, and (c) verify that the originator, sponsor or relevant securitisation special purpose entity (“SSPE”) has, where applicable, made available information as required by Article 7 of the EU Securitization Regulation in accordance with the frequency and modalities provided for in that Article (which sets out transparency requirements for originators, sponsors and SSPEs), and (d) carry out a due-diligence assessment which enables the institutional investor to assess the risks involved, considering at least (i) the risk characteristics of the securitisation position and the underlying exposures, and (ii) all the structural features of the securitisation that can materially impact the performance of the securitisation position. “EU Institutional Investors” include: (a) insurance undertakings and reinsurance undertakings as defined in Directive 2009/138/EC, as amended; (b) institutions for occupational retirement provision falling within the scope of Directive (EU) 2016/2341 (subject to certain exceptions), and certain investment managers and authorized entities appointed by such institutions; (c) alternative investment fund managers as defined in Directive 2011/61/EU which manage and/or market alternative investment funds in the EU; (d) certain internally-managed investment companies authorized in accordance with Directive 2009/65/EC, and managing companies as defined in that Directive; (e) credit institutions as defined in Regulation (EU) No 575/2013 (“CRR”) (and certain consolidated affiliates thereof); and (f) investment firms as defined in CRR (and certain consolidated affiliates thereof).

With respect to the United Kingdom (“UK”), relevant UK established or UK regulated persons (as described below) are subject to the restrictions and obligations of the EU Securitization Regulation directly applicable in the UK adopted as part of UK domestic law by operation of the European Union (Withdrawal) Act 2018 as amended by the European Union (Withdrawal) Act 2020 (as amended, the “EUWA”), and as amended by the Securitisation (Amendment) (EU Exit) Regulations 2019 (together with the EUWA, the “EU Exit Regulations”), (the “UK Securitization Regulation”) and as further amended from time to time.

 

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The UK Securitization Regulation, together with (a) all applicable binding secondary legislation, technical standards or implementing technical standards made under the UK Securitization Regulation (in each case, as amended, varied or substituted from time to time), (b) any EU regulatory technical standards or implementing technical standards relating to the EU Securitization Regulation (including such regulatory technical standards or implementing technical standards) that are applicable and binding in the UK pursuant to EU Exit Regulations and subject to any transitional directions from the Financial Conduct Authority (the “FCA”), (c) all relevant guidance, policy statements or directions relating to the application of the UK Securitization Regulation (or any binding technical standards) published by the FCA, the Bank of England, the UK pensions regulator (the “Pensions Regulator”) and/or the Prudential Regulation Authority (the “PRA”) or any other UK regulator (or their successors), (d), any other transitional direction and any transitional relief of the FCA, the Bank of England, the PRA, the Pensions Regulator (or their successors) and (e) any other applicable laws, acts, statutory instruments, rules, guidance or policy statements published or enacted relating to the UK Securitization Regulation, in each case, as may be further amended, supplemented or replaced, from time to time, are referred to in this prospectus as the “UK Securitization Rules”.

Article 5 of the UK Securitization Regulation places certain conditions on investments in a “securitisation” (as defined in the UK Securitization Regulation) by a UK Institutional Investor. “UK Institutional Investors” include: (a) an insurance undertaking as defined in section 417(1) of the Financial Services And Markets Act 2000 (as amended, the “FSMA”); (b) a reinsurance undertaking as defined in section 417(1) of the FSMA; (c) an occupational pension scheme as defined in section 1(1) of the Pension Schemes Act 1993 that has its main administration in the UK, or a fund manager of such a scheme appointed under section 34(2) of the Pensions Act 1995 that, in respect of activity undertaken pursuant to that appointment, is authorized for the purposes of section 31 of the FSMA; (d) an alternative investment fund manager as defined in regulation 4(1) of the Alternative Investment Fund Managers Regulation 2013 that markets or manages alternative investments funds (as defined in regulation 3 of the Alternative Investment Fund Managers Regulation 2013) in the UK; (e) a management company as defined in section 237(2) of the FSMA; (f) an undertaking for collective investment in transferable securities as defined by section 236A of the FSMA, which is an authorized open ended investment company as defined in section 237(3) of the FSMA; and (g) a CRR firm as defined in Regulation (EU) No 575/2013, as it forms part of UK domestic law by virtue of the EU Exit Regulations (and certain consolidated affiliates thereof).

Prior to investing in (or otherwise holding an exposure to) a “securitisation position” (as defined in the UK Securitization Regulation), a UK Institutional Investor, other than the originator, sponsor or original lender (each as defined in the UK Securitization Regulation), must, among other things: (a) verify that, where the originator or original lender is established in a third country (i.e. not within the UK), the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligor’s creditworthiness; (b) verify that, if established in the third country (i.e. not within the UK), the originator, sponsor or original lender retains on an ongoing basis a material net economic interest that, in any event, shall not be less than 5%, determined in accordance with Article 6 of the UK Securitization Regulation, and discloses the risk retention to the affected UK Institutional Investors; (c) verify that, where established in a third country (i.e. not within the UK), the originator, sponsor or relevant securitisation special purpose entity, where applicable, made available information that is substantially the same as that which it would have made available under Article 7 of the UK Securitization Regulation (which sets out certain transparency requirements) if it had been established in the UK and has done so with such frequency and modalities as are substantially the same as those with which it would have made information available if it had been established in the UK; and (d) carry out a due-diligence assessment that enables the UK Institutional Investor to assess the risks involved, considering at least (i) the risk characteristics of the securitisation position and the underlying exposures and (ii) all the structural features of the securitisation that can materially impact the performance of the securitisation position.

The issuing entity and Evergy Missouri West do not believe that the securitized utility tariff bonds fall within the definition of a “securitisation” for purposes of the EU Securitization Regulation or the UK Securitization Regulation as there is no tranching of credit risk associated with exposures under the transactions described in this prospectus.

 

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Therefore, the issuing entity and Evergy Missouri West believe such transactions are not subject to the European Securitization Rules or the UK Securitization Rules. As such, neither the issuing entity nor Evergy Missouri West, nor any other party to the transactions described in this prospectus, intend, or are required under the transaction documents, to retain a material net economic interest in respect of such transactions, or to take, or to refrain from taking, any other action, in a manner prescribed or contemplated by the European Securitization Rules or the UK Securitization Rules. In particular, no such Person undertakes to take, or to refrain from taking, any action for purposes of compliance by any investor (or any other Person) with any requirement of the European Securitization Rules or the UK Securitization Rules to which such investor (or other Person) may be subject at any time.

However, if a competent authority were to take a contrary view and determine that the transactions described in this prospectus do constitute a securitisation for purposes of the EU Securitization Regulation or the UK Securitization Regulation, then any failure by an EU Institutional Investor or a UK Institutional Investor (as applicable) to comply with any applicable European Securitization Rules or UK Securitization Rules (as applicable) with respect to an investment in the securitized utility tariff bonds may result in the imposition of a penalty regulatory capital charge on that investment or of other regulatory sanctions and remedial measures.

Consequently, the securitized utility tariff bonds may not be a suitable investment for EU Institutional Investors or UK Institutional Investors. As a result, the price and liquidity of the securitized utility tariff bonds in the secondary market may be adversely affected.

Prospective investors are responsible for analyzing their own legal and regulatory position and are advised to consult with their own advisors and any relevant regulator or other authority regarding the scope, applicability and compliance requirements of the European Securitization Rules and the UK Securitization Rules, and the suitability of the securitized utility tariff bonds for investment. Neither the issuing entity nor Evergy Missouri West, nor any other party to the transactions described in this prospectus, make any representation as to any such matter, or have any liability to any investor (or any other Person) for any non-compliance by any such Person with the European Securitization Rules, the UK Securitization Rules or any other applicable legal, regulatory or other requirements.

If the investment of collected securitized utility tariff charges and other funds held by the trustee in the collection account results in investment losses or the investments become illiquid, you may receive payment of principal and interest on the securitized utility tariff bonds later than you expect.

Funds held by the trustee in the collection account will be invested in eligible investments at the written direction of the servicer. Eligible investments include money market funds having a rating from Moody’s and S&P of “P-1” and “A-1”, respectively. Although investments in these money market funds have traditionally been viewed as highly liquid with a low probability of principal loss, illiquidity and principal losses have been experienced by investors in certain of these funds as a result of disruptions in the financial markets in recent years. If investment losses or illiquidity is experienced, you might experience a delay in payments of principal and interest and a decrease in the value of your investment in the securitized utility tariff bonds.

 

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REVIEW OF SECURITIZED UTILITY TARIFF PROPERTY

Pursuant to the rules of the SEC, Evergy Missouri West, as sponsor, has performed, as described below, a review of the securitized utility tariff property underlying the securitized utility tariff bonds. As required by these rules, the review was designed and effected to provide reasonable assurance that disclosure regarding the securitized utility tariff property is accurate in all material respects. Evergy Missouri West did not engage a third party in conducting its review.

The securitized utility tariff bonds will be secured under the indenture by the indenture’s trust estate. The principal asset of the indenture’s trust estate is the securitized utility tariff property relating to the securitized utility tariff bonds. The securitized utility tariff property includes the right to impose, bill, charge, collect and receive non-bypassable irrevocable securitized utility tariff charges authorized under the financing order in amounts necessary to pay principal on and interest of the securitized utility tariff bonds and ongoing financing costs in connection with the securitized utility tariff bonds and the right to obtain true-up adjustments of securitized utility tariff charges under the Securitization Law and as provided in the financing order (with respect to adjustments, in the manner and with the effect provided in the servicing agreement) and all revenue, collections, claims, right to payments, payments, money and proceeds arising out of the rights and interests specified in the financing order. Under the Securitization Law and the financing order, the securitized utility tariff charges are payable by all existing or future retail customers receiving electrical service from Evergy Missouri West or its successor or assignees under MPSC-approved rate schedules and located within Evergy Missouri West’s service area as such service area existed on the date of the financing order, except Exempted Customers, even if a retail customer elects to purchase electricity from an alternative electricity supplier following a change in regulation of public utilities in Missouri.

The securitized utility tariff property is not a receivable, and the securitized utility tariff property and other collateral held by the trustee securing the securitized utility tariff bonds do not constitute a pool of receivables. Securitized utility tariff charges that relate to the securitized utility tariff property are irrevocable and not subject to reduction, impairment, postponement, termination or, except for the specified true-up adjustments to (a) correct any under collections or overcollections that may have occurred and otherwise ensure that the SPE receives remittances from securitized utility tariff charges that are required to satisfy the total securitized revenue requirement, including without limitation any overcollections or under collections caused by defaults, during the time since the last true-up; and (b) ensure the billing of securitized utility tariff charges necessary to generate the collection of amounts sufficient to timely provide all payments of scheduled principal and interest (or deposits to sinking funds in respect of principal and interest) and any other amounts due in connection with the securitized utility tariff bonds (including ongoing financing costs and amounts required to be deposited in or allocated to any collection account or subaccount) during the period for which such adjusted securitized utility tariff charges are to be in effect. These adjustments are intended to ensure the recovery of revenues sufficient to retire the principal amount of the securitized utility tariff bonds in accordance with the expected sinking fund schedule, to pay all interest on the securitized utility tariff bonds when due, to pay fees and expenses of servicing the securitized utility tariff bonds and premiums, if any, associated with the securitized utility tariff bonds and to fund any required credit enhancement for the securitized utility tariff bonds. In addition to the annual true-up adjustments, the servicer (a) is required to implement quarterly true-up adjustments if there are securitized utility tariff bonds outstanding following the scheduled final payment date of the latest maturing tranche of the securitized utility tariff bonds, (b) is required to implement semi-annual true-up adjustments if the servicer forecasts that securitized utility tariff charge collections will be insufficient to make scheduled payments of principal, interest, and other financing costs on a timely basis, and (c) may request an interim true-up adjustment at any time for any reason to ensure timely payment of scheduled principal of and interest on the securitized utility tariff bonds and other required amounts and charges owing in connection with the securitized utility tariff bonds on the next payment date.

There is no cap on the level of securitized utility tariff charges that may be imposed on customers as a result of the true-up adjustment process to pay principal of and interest on the securitized utility tariff bonds when due and other required amounts and charges owing in connection with the securitized utility tariff bonds. All revenues and collections resulting from securitized utility tariff charges provided for in the financing order are part of the securitized utility tariff property. The securitized utility tariff property relating to the securitized utility tariff bonds is described in more detail under “The Securitized Utility Tariff Property and the Securitization Law” in this prospectus.

 

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In the financing order, the MPSC, among other things:

 

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orders that the securitized utility tariff charges shall be non-bypassable and recovered from existing and future retail customers receiving electrical service from Evergy Missouri West or its successor or assignees and located in Evergy Missouri West’s service area as such service area existed on the date of the financing order, except for Exempted Customers, and that the securitized utility tariff charges shall be imposed on all such customers in accordance with the methodology approved in the financing order;

 

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orders that the owner of the securitized utility tariff property will be entitled to bill or collect securitized utility tariff charges in an amount sufficient to provide for the timely recovery of the aggregate total securitized revenue requirements (including payment of principal or interest on the securitized utility tariff bonds); and

 

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finds that the transfer of the securitized utility tariff property to the issuing entity by Evergy Missouri West shall be an absolute transfer and true sale of, and not a pledge of or secured transaction relating to, Evergy Missouri West’s right, title, and interest in, to and under the securitized utility tariff property if the sale agreement expressly state that the sale is a sale or other absolute transfer in accordance with Securitization Law.

Please read “The Securitized Utility Tariff Property and the Securitization Law” and “Evergy Missouri West’s Financing Order” in this prospectus for more information.

The characteristics of securitized utility tariff property are unlike the characteristics of assets underlying mortgage and other commercial asset-based financings because securitized utility tariff property is a creature of statute and state regulatory commission proceedings. Because the nature and characteristics of securitized utility tariff property and many elements of securitized utility tariff bond financings are set forth in and constrained by the Securitization Law and the financing order, Evergy Missouri West, as sponsor, does not select the assets to be pledged as collateral in ways common to many traditional asset-based financings. Moreover, the securitized utility tariff bonds do not contain origination or underwriting elements similar to typical mortgage or other loan transactions involved in other forms of asset-backed securities. The Securitization Law and the financing order require the imposition on, and collection of securitized utility tariff charges from, existing and future retail customers of electricity receiving electrical service from Evergy Missouri West or its successor or assignees and located in Evergy Missouri West’s service area as such service area existed on the date of the financing order, except for Exempted Customers. Please read “The Securitized Utility Tariff Property and the Securitization Law—The Financing Order and the Securitized Utility Tariff Property—Exemptions from Securitized Utility Tariff Charges” in this prospectus. Since securitized utility tariff charges are assessed against all such customers and the true-up mechanism adjusts for the impact of customer defaults, the collectability of the securitized utility tariff charges is not ultimately dependent upon the credit quality of particular Evergy Missouri West customers, as would be the case in the absence of the true-up adjustment.

The review by Evergy Missouri West of the securitized utility tariff property underlying the securitized utility tariff bonds has involved a number of discrete steps and elements as described in more detail below. First, Evergy Missouri West has analyzed and applied the Securitization Law’s requirements for recovering qualified extraordinary costs and approval of the MPSC for the issuance of the financing order and in its proposal with respect to the characteristics of the securitized utility tariff property to be created pursuant to the financing order. In preparing this proposal, Evergy Missouri West worked with its counsel and its structuring advisor in preparing the application for a financing order. Moreover, Evergy Missouri West worked with its counsel and the underwriters in preparing the legal agreements that provide for the terms of the securitized utility tariff bonds and the security for the securitized utility tariff bonds. Evergy Missouri West has analyzed economic issues and practical issues for the scheduled payment of principal of and interest on the securitized utility tariff bonds, including the impact of economic factors, potential for disruptions due to weather or catastrophic events, including the COVID-19 pandemic, and its own forecasts for customer growth as well as the historic accuracy of its prior forecasts.

In light of the unique nature of the securitized utility tariff property, Evergy Missouri West has taken (or prior to the offering of the securitized utility tariff bonds, will take) the following actions in connection with its review of the securitized utility tariff property and the preparation of the disclosure for inclusion in this prospectus describing the securitized utility tariff property, the securitized utility tariff bonds and the proposed securitization:

 

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reviewed the Securitization Law, other relevant provisions of Missouri statutes and any applicable rules, regulations and orders of the MPSC as they relate to the securitized utility tariff property in connection with the preparation and filing of the application with the MPSC for the approval of the financing order in order to confirm that the application and proposed financing order satisfied applicable statutory and regulatory requirements;

 

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actively participated in the proceeding before the MPSC relating to the approval of the requested financing order;

 

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reviewed the financing order and the process by which it was adopted to confirm that the financing order satisfied the requirements of the Securitization Law;

 

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compared the proposed terms of the securitized utility tariff bonds to the applicable requirements in the Securitization Law, other relevant provisions of Missouri statutes, the financing order and any applicable regulations of the MPSC to confirm that they met such requirements;

 

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prepared and reviewed the agreements to be entered into in connection with the issuance of the securitized utility tariff bonds and compared such agreements to the applicable requirements in the Securitization Law, other relevant provisions of Missouri statutes, the financing order and any applicable regulations of the MPSC to confirm that they met such requirements;

 

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reviewed the disclosure in this prospectus regarding the Securitization Law, other relevant provisions of Missouri statutes, the financing order and the agreements to be entered into in connection with the issuance of the securitized utility tariff bonds, and compared such descriptions to the relevant provisions of the Securitization Law, other relevant provisions of Missouri statutes, the financing order and such agreements to confirm the accuracy of such descriptions;

 

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consulted with legal counsel to assess if there is a basis upon which the bondholders (or the trustee acting on their behalf) could successfully challenge the constitutionality of any legislative action by the State of Missouri (including action by the MPSC or the voters by amendment to the Missouri Constitution) that could repeal or amend the provisions of the Securitization Law in a way that could substantially impair the value of the securitized utility tariff property, or substantially reduce, alter or impair the securitized utility tariff charges;

 

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reviewed the process and procedures in place for it, as servicer, to perform its obligations under the servicing agreement, including billing, collecting, receiving and posting the securitized utility tariff charges to be provided for under the securitized utility tariff property, forecasting securitized utility tariff charges, and preparing and submitting advice letters for true-up adjustments to the securitized utility tariff charges;

 

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reviewed the operation of the true-up adjustment mechanism for adjusting securitized utility tariff charge levels to meet the scheduled payments on the securitized utility tariff bonds and in this context took into account its experience with the MPSC; and

 

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with the assistance of its advisors, prepared financial models in order to set the initial securitized utility tariff charges to be provided for under the securitized utility tariff property at levels sufficient to pay principal of and interest on the securitized utility tariff bonds when due and other required amounts and charges owing in connection with the securitized utility tariff bonds.

In connection with the preparation of such models, Evergy Missouri West:

 

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reviewed (i) the historical electric consumption and customer growth within its service territory and (ii) forecasts of expected energy sales and customer growth; and

 

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analyzed the sensitivity of the weighted average life of the securitized utility tariff bonds in relation to variances in actual energy consumption levels and related charge collections from forecasted levels and in relation to the true-up adjustment in order to assess the probability that the weighted average life of the securitized utility tariff bonds may be extended as a result of such variances, and in the context of the operation of the true-up adjustment for adjustment of securitized utility tariff charges to address undercollections or overcollections in light of scheduled payments on the securitized utility tariff bonds to prevent an event of default.

As a result of this review, Evergy Missouri West has concluded that:

 

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the securitized utility tariff property, the financing order and the agreements to be entered into in connection with the issuance of the securitized utility tariff bonds meet in all material respects the applicable statutory and regulatory requirements;

 

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the disclosure in this prospectus regarding the Securitization Law, the financing order and the agreements to be entered into in connection with the issuance of the securitized utility tariff bonds is as of its date, accurate in all material respects and fails to omit any material information;

 

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the servicer has adequate processes and procedures in place to perform its obligations under the servicing agreement;

 

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securitized utility tariff charge revenues, as adjusted from time to time as provided in the Securitization Law and the financing order, are expected to be sufficient to pay on a timely basis scheduled principal and interest on the securitized utility tariff bonds; and

 

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the design and scope of Evergy Missouri West’s review of the securitized utility tariff property as described above is effective to provide reasonable assurance that the disclosure regarding the securitized utility tariff property in this prospectus is accurate in all material respects.

 

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THE SECURITIZED UTILITY TARIFF PROPERTY AND THE SECURITIZATION LAW

The Securitization Law Generally

The Securitization Law permits electrical corporations to finance qualified extraordinary costs, such as those incurred as a result of Winter Storm Uri, and which are eligible for recovery under the Securitization Law through the issuance of securitized utility tariff bonds pursuant to and supported by an irrevocable financing order issued by the MPSC and permits the MPSC to approve a non-bypassable securitized utility tariff charge on existing and future customers receiving electrical service from the electrical corporation as of the date of the financing order, subject to certain exceptions. Please read “The Financing Order and the Securitized Utility Tariff Property—Exemptions from Securitized Utility Tariff Charges” below and “Evergy Missouri West’s Financing Order” in this prospectus. The Securitization Law authorizes the securitized utility tariff charge to recover: (a) qualified extraordinary costs (also referred to herein as securitized utility tariff costs) and (b) financing costs associated with the securitized utility tariff bonds, including the costs of servicing such securitized utility tariff bonds.

The Securitization Law provides that securitized utility tariff charges are non-bypassable, meaning that they are payable paid by all existing or future retail customers receiving electrical service from the electrical corporation or its successors or assignees under commission-approved rate schedules, except for customers receiving electrical service under special contracts as of August 28, 2021, even if a retail customer elects to purchase electricity from an alternative electricity supplier following a fundamental change in regulation of public utilities in the State of Missouri.

The Financing Order and the Securitized Utility Tariff Property

The Securitization Law contains a number of provisions designed to facilitate the securitization of qualified extraordinary costs, including the following:

The Securitization Law Provides for the Creation of Securitized Utility Tariff Property

The Securitization Law authorizes the MPSC, through issuance of a financing order, to provide for the creation of securitized utility tariff property to secure repayment of securitized utility tariff bonds. Securitized utility tariff property is defined under the Securitization Law to include, without limitation, the right, title, and interest of the electrical corporation or its transferee:

 

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all rights and interests of an electrical corporation or successor or assignee of the electrical corporation under a financing order, including the right to impose, bill, charge, collect, and receive securitized utility tariff charges authorized under the financing order and to obtain periodic adjustments to such charges as provided in the financing order; and

 

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all revenues, collections, claims, rights to payments, payments, money, or proceeds arising from the rights and interests specified in the financing order described in the bullet point immediately above, regardless of whether such revenues, collections, claims, rights to payment, payments, money, or proceeds are imposed, billed, received, collected, or maintained together with or commingled with other revenues, collections, rights to payment, payments, money, or proceeds.

The Securitization Law provides that securitized utility tariff property that is specified in a financing order shall constitute an existing, present intangible property right or interest therein notwithstanding that the imposition and collection of securitized utility tariff charges depends on the electrical corporation performing its servicing functions relating to the collection of securitized utility tariff charges and on future electricity consumption. The Securitization Law provides that securitized utility tariff property shall exist regardless of whether or not the revenues or proceeds arising from the securitized utility tariff property have been billed, have accrued, or have been collected and notwithstanding the fact that the value or amount of the securitized utility tariff property is dependent on the future provision of service to customers and the future consumption of electricity by customers. The Securitization Law further provides that all securitized utility tariff property specified in a financing order shall continue to exist until the securitized utility tariff bonds issued pursuant to a financing order are paid in full and all associated financing costs and other costs of such securitized utility tariff bonds have been recovered in full.

 

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A Financing Order is Irrevocable

The Securitization Law provides that the financing order shall be irrevocable at the time of the transfer of securitized utility tariff property to an assignee or the issuance of securitized utility tariff bonds, whichever is earlier. In addition, under the Securitization Law, the MPSC may not, except as contemplated by the true-up adjustment, amend, modify, or terminate the financing order by any subsequent action or reduce, impair, postpone, terminate, or otherwise adjust securitized utility tariff charges approved in the financing order.

Securitized Utility Tariff Charges May Be Adjusted

The Securitization Law requires the MPSC to include in any financing order, a formula-based true-up mechanism for making, at least annually, expeditious periodic adjustments in the securitized utility tariff charges. The financing order approved the true-up adjustment to implement any true-up adjustment to (a) correct any under collections or overcollections that may have occurred and otherwise ensure that the SPE receives remittances from securitized utility tariff charges that are required to satisfy the total securitized revenue requirement, including without limitation any overcollections or under collections caused by defaults, during the time since the last true-up; and (b) ensure the billing of securitized utility tariff charges necessary to generate the collection of amounts sufficient to timely provide all payments of scheduled principal and interest (or deposits to sinking funds in respect of principal and interest) and any other amounts due in connection with the securitized utility tariff bonds (including ongoing financing costs and amounts required to be deposited in or allocated to any collection account or subaccount) during the period for which such adjusted securitized utility tariff charges are to be in effect. Please read “Evergy Missouri West’s Financing Order—Securitized Utility Tariff Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Securitized Utility Tariff Charge” and “The Servicing Agreement—True-Up Adjustment Submissions” in this prospectus. Under the Securitization Law and the financing order, there is no cap on the level of securitized utility tariff charges that may be imposed on customers as a result of the true-up adjustment process to pay principal of and interest on the securitized utility tariff bonds when due and other ongoing financing costs in connection with the securitized utility tariff bonds.

The Securitization Law Provides for the Creation of Consensual Liens on Securitized Utility Tariff Property

The Securitization Law provides that consensual security interests can be granted in securitized utility tariff property. The Securitization Law provides that a security interest in securitized utility tariff property is created, valid and binding at the later of the time when (a) the MPSC has issued the related financing order, (b) a security agreement is executed and delivered by the debtor granting such security interest, (c) the debtor has rights in the securitized utility tariff property or the power to transfer such securitized utility tariff property, or (d) value is received for the securitized utility tariff property. A security interest will be attached as provided in the foregoing sentence without any physical delivery or collateral or other act. The security interest in the securitized utility tariff property is perfected when it has attached and when a financing statement has been filed with the Missouri Secretary of State in accordance with the Securitization Law.

Under the Securitization Law, if a default occurs under the terms of the securitized utility tariff bonds secured by a security interest in the securitized utility tariff property, the financing parties of the securitized utility tariff bonds (such as the trustee) may exercise the rights and remedies available to a secured party under the code. In addition, in the event of default by the electrical corporation in any required remittance of securitized utility tariff charges, a court, upon application by an interested party, and without limiting any other remedies available to the applying party, will order the sequestration and payment of the revenues arising from the securitized utility tariff property to the financing parties or their assignees. The Securitization Law provides that any such order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the debtor, pledgor, or transferor of the securitized utility tariff property. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Securitized Utility Tariff Property—Foreclosure of the trustee’s lien on the securitized utility tariff property for the securitized utility tariff bonds might not be practical, and acceleration of the securitized utility tariff bonds before maturity might have little practical effect” in this prospectus.

 

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The Securitization Law and the Financing Order Provide that the Transfer of Securitized Utility Tariff Property is a True Sale

The Securitization Law and the financing order provide that an electrical corporation’s transfer of securitized utility tariff property is an absolute transfer of all and true sale of, and not a pledge or secured transaction relating to, the transferor’s right, title, and interest to and under the securitized utility tariff property if the documents governing the transaction expressly state that the transaction is a sale or other absolute transfer other than for federal and state income tax purposes. The Securitization Law provides that the characterization of the sale, assignment, or transfer as an absolute transfer and true sale is not affected or impaired by:

 

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commingling of securitized utility tariff charges with other amounts;

 

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the retention by the seller of either of the following:

 

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a partial or residual interest, including an equity interest, including an equity interest, in the securitized utility tariff property, whether direct or indirect, subordinate or otherwise; or

 

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the right to recover costs associated with taxes, franchise fees, or license fees imposed on the collection of securitized utility tariff charges;

 

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any recourse that the purchaser may have against the seller;

 

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any indemnification rights, obligations, or repurchase rights made or provided by the seller;

 

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the obligation of the seller to collect securitized utility tariff charges on behalf of an assignee;

 

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the transferor acting as servicer of the securitized utility tariff charges;

 

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the treatment of the sale, conveyance, assignment, or transfer for tax, financial reporting, or other purposes;

 

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the granting or providing to bondholders a preferred right to the securitized utility tariff property; or

 

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any application of the true-up adjustment of the securitized utility tariff charges as provided in the Securitization Law.

Please read “Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer” and “How A Bankruptcy May Affect Your Investment” in this prospectus.

A sale or similar outright transfer of an interest in securitized utility tariff property may occur only when all of the following have occurred:

 

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the financing order creating the securitized utility tariff property has become effective;

 

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the documents evidencing the transfer of securitized utility tariff property have been executed by the assignor and delivered to the assignee; and

 

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value is received for the securitized utility tariff property.

After such a transaction, the securitized utility tariff property is not subject to any claims of the transferor or the transferor’s creditors, other than creditors holding a prior security interest in the securitized utility tariff property perfected in accordance with the Securitization Law.

The Securitization Law Requires the Electrical Corporation and its Successors to Service the Securitized Utility Tariff Property

The Securitization Law requires the MPSC to authorize the electrical corporation to enter into a servicing contract with the issuer of the securitized utility tariff bonds (i.e., the issuing entity) in connection with a sale, assignment or pledge of the securitized utility tariff property to such issuing entity. This contract must require the electrical utility to continue to operate its system to provide service to customers within its service territory, to collect amounts in respect of the securitized utility tariff charges for the benefit and account of the issuing entity and to account for and remit these amounts to or for the account of the issuing entity. The Securitization Law further provides to the extent that billing, collection, and other related services with respect to the provision of electric service are provided to a customer by any person or entity other than the electrical corporation in whose service territory the customer is located, that person or entity must collect the securitized utility tariff charges from the customer for the benefit and account of the applicable issuing entity as a condition to the provision of electric service to that customer.

 

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The Securitization Law further provides that any successor to the electrical corporation, whether pursuant to any bankruptcy, reorganization, or other insolvency proceeding, or pursuant to any merger or acquisition, sale or other business combination, or other transfer, by operation of law, must perform and satisfy all obligations of, and have the same rights under a financing order as, the electrical corporation under the financing order in the same manner and to the same extent as the electrical corporation, including collecting and paying to the person entitled to receive the revenues, collections, payments, or proceeds of the securitized utility tariff property. Please read “The Servicing Agreement—Successor Servicer” in this prospectus.

State Pledge

Under the Securitization Law, the State of Missouri and its agencies, including the MPSC, pledge and agree with holders, the owners of the securitized utility tariff property, and other financing parties that the state and its agencies will not: (a) alter the provisions of the Securitization Law, which authorize the MPSC to create an irrevocable contract right or chose in action by the issuance of a financing order, to create securitized utility tariff property, and make the securitized utility tariff charges imposed by a financing order irrevocable, binding, or nonbypassable charges for all existing and future retail customers of Evergy Missouri West except its exempted customers; (b) take or permit any action that impairs or would impair the value of securitized utility tariff property or the security for the bonds or revises the securitized utility tariff costs for which recovery is authorized under the financing order; (c) in any way impair the rights and remedies of the holders, assignees, and other financing parties; or (d) except for changes made pursuant to the true-up adjustment, reduce, alter, or impair securitized utility tariff charges that are to be imposed, billed, charged, collected, and remitted for the benefit of the holders, any assignee, and any other financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the bonds have been paid and performed in full.

The State Pledge does not preclude limitation or alteration if full compensation is made by law for the full protection of the securitized utility tariff charges collected pursuant to a financing order and of the holders and any assignee or financing party entering into a contract with Evergy Missouri West.

Constitutional Matters

To date, no federal or Missouri cases addressing the repeal or amendment of statutory provisions analogous to those contained in the Securitization Law have been decided. There have been cases in which courts applied the Contract Clause of the United States Constitution to strike down legislation regarding similar matters, such as legislation reducing or eliminating taxes, public charges or other sources of revenues servicing other types of securitized utility tariff bonds issued by public instrumentalities or private issuers (or issuing entities), or otherwise substantially impairing or eliminating the security for securitized utility tariff bonds or other indebtedness. Based upon this case law, Hunton expects to deliver a reasoned opinion (the “Hunton Opinion”) prior to the closing of the offering of the securitized utility tariff bonds. Subject to Hunton’s research and analysis on the subject, as well as the assumptions stated therein, the Hunton Opinion will state to the effect that a reviewing court of competent jurisdiction, in a properly prepared and presented case, would conclude that the State Pledge constitutes a contractual relationship between the bondholders and the State of Missouri, and that, absent a demonstration by the State of Missouri that any legislative action that becomes law that alters, impairs or reduces the value of the securitized utility tariff property or the securitized utility tariff charges (such action being referred to as a “legislative action”) so as to impair (a) the terms of the indenture or the securitized utility tariff bonds or (b) the rights and remedies of the bondholders (or the trustee acting on their behalf) (each such act, an “impairment”), is necessary to further a significant and legitimate public purpose, and upon a finding by the court that an evident and more moderate course would serve the State’s purposes equally well, the bondholders could successfully challenge under the Federal Contract Clause the constitutionality of any legislative action that causes an impairment prior to the time that the securitized utility tariff bonds are fully paid and discharged. The relevant case law also indicates that the State’s justification would be subjected to a higher degree of scrutiny, and that the State would bear a more substantial burden, if the legislative action impairs a contract to which the State is a party (which the depositor believes to be the case here), as contrasted to a contract solely between private parties. Based upon this case law, Dentons expects to deliver an opinion (the “Dentons Opinion”) substantially to the same effect under the Contract Clause of the Missouri Constitution. It may be possible for the Missouri legislature to repeal or amend the Securitization Law or for the

 

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MPSC to amend or revoke the financing order notwithstanding the State Pledge, if the legislature or the MPSC acts in order to serve a significant and legitimate public purpose, such as protecting the public health and safety or responding to a national or regional catastrophe affecting Evergy Missouri West, or if the legislature otherwise acts in the valid exercise of the State’s police power. The issuing entity will file a copy of the Hunton Opinion and the Dentons Opinion as exhibits to an amendment to the registration statement of which this prospectus is a part, or to one of the issuing entity’s periodic filings with the SEC.

In addition, any legislative action of the Missouri legislature adversely affecting the securitized utility tariff property or the ability to collect securitized utility tariff charges may be considered a “taking” under the United States Constitution. Each of Hunton and Dentons has advised the issuing entity that they are not aware of any federal court cases addressing the applicability of the Takings Clause of the United States Constitution in a situation analogous to that which would be involved in an amendment or repeal of the Securitization Law. Hunton expects to render a reasoned opinion, prior to the closing of the offering of the securitized utility tariff bonds, to the effect that under existing case law, assuming a Takings Clause analysis were applied under the United States Constitution, there are sufficient legal grounds for a court to require the State of Missouri to pay just compensation to the bondholders if the State’s repeal or amendment of the Securitization Law or taking of any other action in contravention of the State Pledge, (a) constituted a permanent appropriation of a substantial property interest of the bondholders in the securitized utility tariff property or denied all economically productive use of the securitized utility tariff property; (b) destroyed the securitized utility tariff property other than in response to emergency conditions; or (c) substantially reduced, altered or impaired the value of the securitized utility tariff property so as to unduly interfere with the reasonable expectations of the bondholders arising from their investments in the securitized utility tariff bonds. In addition, Dentons expects to deliver an opinion substantially to the same effect under the Takings Clause of the Missouri Constitution. In examining whether action of the Missouri legislature amounts to a taking, both U.S. federal and Missouri state courts will consider the character of the governmental action and whether such action substantially advances the legitimate governmental interests of the State of Missouri, the economic impact of the governmental action on the bondholders and the extent to which the governmental action interferes with distinct investment-backed expectations. There is no assurance, however, that, even if a court were to award just compensation, it would be sufficient for you to recover fully your investment in the securitized utility tariff bonds.

In connection with the foregoing, each of Hunton and Dentons will advise the issuing entity that issues relating to the Contract and Takings Clauses of the United States and Missouri Constitutions are decided on a case-by-case basis and that courts’ determinations, in most cases, are strongly influenced by the facts and circumstances of the particular case, and both firms will further advise the issuing entity that there are no reported controlling judicial precedents that are directly on point. The Hunton and Dentons Opinions described above will be subject to the qualifications included in them.

The degree of impairment necessary to meet the standards for relief under a Takings Clause analysis or Contract Clause analysis could be substantially in excess of what a bondholder would consider material.

For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions” in this prospectus.

Exemptions from Securitized Utility Tariff Charges

Under the Securitization Law, customers receiving electrical service from Evergy Missouri West under special contracts as of August 28, 2021 are exempted from payment of fixed recovery charges. There is currently one customer who will be exempt from the securitized utility tariff charges See “Evergy Missouri West’s Financing Order” in this prospectus.

 

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EVERGY MISSOURI WEST’S FINANCING ORDER

Evergy Missouri West’s Financing Order

On March 11, 2022, Evergy Missouri West submitted a petition for a financing order to the MPSC, seeking authority to recover approximately $357 million of qualified extraordinary costs incurred by Evergy Missouri West during the February 2021 cold whether event know as Winter Storm Uri. On October 7, 2022, the MPSC issued its financing order which authorizes Evergy Missouri West to issue a series securitized utility tariff bonds to recover approximately $308 million of extraordinary costs, plus upfront financing costs (the “Authorized Amount”). The MPSC issued the Amended Report and Order on November 17, 2022, which became effective November 27, 2022.

The financing order, pursuant to the provisions of the Securitization Law, is irrevocable and, except as contemplated by the periodic true-up adjustments, the MPSC may not amend, modify, or terminate the financing order by any subsequent action or reduce, impair, postpone, terminate or otherwise adjust securitized utility tariff charges approved in the financing order.

The issuing entity has filed the financing order with the SEC as an exhibit to the registration statement of which this prospectus forms a part. The depositor summarized portions of the financing order below.

Securitized Utility Tariff Charges

The Financing Order Requires the Imposition and Collection of Securitized Utility Tariff Charges

Pursuant to the financing order, except for Exempted Customers, the securitized utility tariff charge will be assessed to all customers at an equal cent per kWh charge that is adjusted for line losses determined for each voltage level class. Such securitized utility tariff charges will be in amounts sufficient to retire the principal amount of the securitized utility tariff bonds in accordance with the expected sinking fund schedule, to pay all interest on the securitized utility tariff bonds when due, and to pay all ongoing financing costs relating to the securitized utility tariff bonds (“ongoing financing costs”). Under the financing order, there is no limit on the amount of the securitized utility tariff charge.

The Financing Order Provides that Securitized Utility Tariff Charges are Non-bypassable

As required by the Securitization Law, the financing order provides that the securitized utility tariff charges are “non-bypassable” and must be paid by all existing and future customers receiving electrical service from Evergy Missouri West or its successor or assignees and located within Evergy Missouri West’s service area as it existed on the date of the financing order under MPSC-approved rate schedules, except for customers receiving electrical service under special contracts as of August 28, 2021, even if a retail customer elects to purchase electricity from an alternative electricity supplier following a change in regulation of public utilities in State of Missouri. In addition, under the financing order, any existing or future customer may not avoid securitized utility tariff charges by switching to another electrical corporation, electric cooperative, or municipally owned utility on or after the financing order was issued.

The financing order specifies that it is binding on any successor to Evergy Missouri West that provides transmission and distribution service directly to retail customers in Evergy Missouri West’s service area as it existed on the date of the financing order pursuant to the Securitization Law, including collecting and paying to the bondholders revenues arising with respect to the securitized utility tariff property.

In the servicing agreement, Evergy Missouri West will covenant to assert in an appropriate forum that any municipality, or any other person or entity, that acquires any portion of Evergy Missouri West’s electric distribution facilities must be treated as a successor to Evergy Missouri West under the Securitization Law and the financing order, subject to approval by the MPSC, and that its retail customers remain responsible for payment of securitized utility tariff charges. Please read “The Servicing Agreement—Servicing Standards and Covenants” in this prospectus.

The Financing Order Approves the Methodology used to Calculate the Securitized Utility Tariff Charges

The financing order approves the methodology by which the securitized utility tariff charges will be calculated and adjusted from time to time by the servicer pursuant to the issuance advice letter and true-up advice letters submitted to the MPSC as described below.

 

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Pursuant to the financing order, except for Exempted Customers, the securitized utility tariff charges will be a levelized charge assessed to all customers adjusted for line losses determined for each voltage level class. Evergy Missouri West has four line loss adjustment factors depending on the voltage level class that are determined in accordance with Evergy Missouri West’s fuel adjust clause rider. The securitized utility tariff charge rates across all voltage level classes are expected to be substantially level with the current difference between the highest securitized utility tariff charge rate and the lowest securitized utility tariff charge rate being approximately 3.1%.

The table below shows the current line loss adjustment factor for each voltage level class.

 

Voltage Level		Securitized Utility Tariff Charge Line Loss Adjustment Factor				2021 Actual Billed kWh Breakdown(1)				Customer Classes Included
Secondary			1.0426				87	%		Residential, Commercial, Industrial, Other
Primary			1.0268				8	%		Commercial, Industrial
Substation			1.0133				4	%		Commercial, Industrial
Transmission			1.0100				1	%		Commercial, Industrial

 

(1)	Excluding Exempted Customers.

The Securitization Law and the financing order provide that the securitized utility tariff charges shall not be imposed on customers receiving electrical service under special contracts on August 28, 2021.

In accordance with the financing order, after the initial implementation of the securitized utility tariff charge, Evergy Missouri West will revise the securitized utility tariff charge rates at least annually to collect the required securitized utility tariff charge revenue based on the then- current sales forecast. Please read “Evergy Missouri West’s Financing Order—Securitized Utility Tariff Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Securitized Utility Tariff Charge” in this prospectus.

The Financing Order Requires the Servicer to Periodically “True-Up” the Securitized Utility Tariff Charge

The financing order requires that the servicer make periodic expenditure adjustments, at least annually, to the securitized utility tariff charges to ensure the recovery of revenues sufficient to provide for the timely payment of the periodic payment requirement. In addition to the annual true-up adjustment, the servicer is authorized under the financing order to make semi-annual true-up adjustments (or quarterly beginning 12 months prior to the final scheduled payment date of the last tranche of the securitized utility tariff bonds) and interim true-up adjustments at any time (i) if the servicer forecasts that securitized utility tariff charge collections will be insufficient to make all scheduled payments of principal, interest, and other amounts on a timely basis during the current or next succeeding payment period, or (ii) to replenish any draw upon the capital subaccount.

In addition, the financing order permits, and the servicing agreement requires that beginning 12 months prior to the latest maturing tranche of the securitized utility tariff bonds, the servicer must submit quarterly true-up adjustments. Mandatory annual true-up adjustments, semi-annual true-up adjustments, if necessary, interim true-up adjustments, if necessary, and mandatory quarterly true-up adjustments as described above are referred to as “standard true-up adjustments.” Each such standard true-up adjustment shall utilize the methodology described above under the heading “—The Financing Order Approves the Methodology used to Calculate the Securitized Utility Tariff Charges” to determine the securitized utility tariff charges requested on the next adjustment date.

Standard annual true-up adjustment letters, standard semi-annual true-up letters, and standard interim true-up adjustment letters must be submitted not less than 30 days before the billing cycle of the month in which the revised securitized utility tariff charge will be in effect. Each true-up adjustment filing will set forth the servicer’s calculation of the true-up adjustment to the securitized utility tariff charges. Within 30 days after receiving a true-up adjustment filing, the MPSC will either approve the request or inform Evergy Missouri West of any mathematical or clerical errors in its calculation. If the MSPC informs Evergy Missouri West of mathematical or clerical errors in its calculation, Evergy Missouri West will correct its error and refile its request, to which the same time frames described above will apply.

 

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The Initial Securitized Utility Tariff Charges

The initial securitized utility tariff charges will be determined and approved by the MPSC as part of the issuance advice letter process described below. Please read “Evergy Missouri West’s Financing Order—Issuance Advice Letter” in this prospectus. The initial securitized utility tariff charge for the securitized utility tariff bonds offered hereby is expected to represent approximately     % of the total electric bill, as of                 , received by a                  kWh residential customer of Evergy Missouri West.

The securitized utility tariff charges will become effective on the date specified in the issuance advice letter, and will be subject to periodic true-up as described above.

Partial Payments of the Securitized Utility Tariff Charges will be Pro-rated

The financing order requires that, if any customer does not pay the full amount it has been billed, the amount collected will first be apportioned ratably between the securitized utility tariff charges and other fees (excluding late fees), and second, any remaining portion of the payment must be allocated to late fees.

Issuance Advice Letter

Not later than one business day after the pricing date of the securitized utility tariff bonds, Evergy Missouri West is required to submit with the MPSC an issuance advice letter, which will:

 

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specify the total amount of securitized utility tariff costs and financing costs;

 

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the amount of quantifiable net present value savings;

 

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confirmation of compliance with issuance standards;

 

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the actual terms and structure of the securitized utility tariff bonds being issued;

 

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the initial securitized utility tariff charge for retail customers; and

 

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identify the issuing entity.

The financing order provides that Evergy Missouri West may proceed with the issuance of the securitized utility tariff bonds unless, before noon on the fourth business day after the MPSC receives the issuance advice letter, the MPSC issues a disapproval letter directing that the securitized utility tariff bonds shall not be issued and the basis for that disapproval.

Servicing Agreement

In the financing order, the MPSC authorized Evergy Missouri West, as the servicer, to enter into the servicing agreement described under “The Servicing Agreement” in this prospectus. The servicing agreement provides that Evergy Missouri West may not resign from its obligations and duties as servicer thereunder, except if (a) Evergy Missouri West determines that the performance of its duties under the servicing agreement is no longer permissible under applicable law or (b) satisfaction of the following: (i) the rating agency condition shall have been satisfied and (ii) the MPSC shall have approved such resignation. No resignation by Evergy Missouri West as servicer will become effective until a successor servicer has assumed Evergy Missouri West’s servicing obligations and duties under the servicing agreement. Please read “The Servicing Agreement—Matters Regarding the Servicer” in this prospectus.

Securitized utility tariff charges will be collected by Evergy Missouri West from customers as part of its normal collection activities. Securitized utility tariff charges will be deposited by Evergy Missouri West into the collection account under the terms of the indenture, the series supplement and the servicing agreement. Estimated securitized utility tariff charge collections will be remitted to the trustee on each business day. The estimated daily remittances made by Evergy Missouri West will use the then-current Weighted Average Days Sales Outstanding and an estimated system-wide write-off percentage. No less often than semi-annually, estimated securitized utility tariff charge collections will be reconciled with actual securitized utility tariff charge collections, based on Weighted Average Days Sales Outstanding and actual system-wide write-off percentage. Please read “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

 

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THE DEPOSITOR, SELLER, INITIAL SERVICER AND SPONSOR

General

Evergy Missouri West will be the depositor, seller and initial servicer of the securitized utility tariff property securing the securitized utility tariff bonds, and will be the sponsor of the securitization in which securitized utility tariff bonds covered by this prospectus are issued.

Evergy Missouri West, a Delaware corporation incorporated in 1986 and headquartered in Kansas City, Missouri, is an integrated, regulated electrical corporation engaged in the generation, transmission, distribution and sale of electricity in western Missouri, including the suburban Kansas City metropolitan area, the city of St. Joseph and surrounding counties. Evegry Missouri West is regulated by the MPSC and the FERC.

Evergy Missouri West is a wholly-owned subsidiary of Evergy. Evergy Missouri West provides electric service to approximately 340,000 customers throughout a 13,262 square-mile service area in western Missouri.

During the year ended December 31, 2021, Evergy Missouri West sold or delivered electricity to an average of 336,643 customers and, for the twelve months ended December 31, 2021, its total billed electric operating revenue was derived as follows: 53% Residential; 36% Commercial; 10% Industrial and 1% Other. The securitized utility tariff bonds do not constitute a debt, liability or other legal obligation of Evergy Missouri West or Evergy Missouri.

Evergy Missouri West Retail Customer Base and Electric Energy Consumption

Under the Securitization Law, qualifying special contract rate(s) are exempt from paying the securitized utility tariff charges and the costs associated with these groups is allocated to the remaining customer classes.

The following tables show the electricity delivered to retail customers, electric delivery revenues and number of retail customers for each customer class and each of the four preceding years and year to date ended September 30, 2022. There can be no assurances that the retail electricity sales, retail electric revenues and number of retail customers or the composition of any of the foregoing will remain at or near the levels reflected in the following tables.

Electricity Delivered to Retail Customers, Electric Delivery Revenues and Retail Customers Retail

Electric Usage (As Measured by Billed GWh Sales) by Customer Class

and Percentage Composition⁽¹⁾

 

Customer Class		2017				2018				2019				2020				2021				Year to Date September 30, 2022
Residential			3,362				3,802				3,635				3,523				3,650				2,963
Commercial			3,230				3,348				3,289				3,078				3,256				2,587
Industrial(2)			1,293				1,268				1,239				1,152				1,196				861
Other			31				20				19				20				21				15
Total			7,916				8,438				8,182				7,773				8,123				6,426

 

(1)	Amounts may not add up to rounding.

(2)	Excludes sales from Exempted Customers.

 

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Revenue by Customer Class ⁽¹⁾

(dollars in thousands)

 

Customer Class		2017				2018				2019				2020				2021				Year to Date Ended September 30, 2022
Residential			378,332				424,712				404,913				401,019				409,231				353,489
Commercial			287,667				295,268				288,293				265,454				278,137				237,621
Industrial(2)			86,816				85,878				83,557				74,703				76,719				64,217
Other			7,577				7,806				7,861				8,114				8,122				6,169
Total			760,392				813,664				784,624				749,290				772,209				661,496

 

(1)	Amounts may not add up to rounding.

(2)	Excludes sales from Exempted Customers.

Number of Average Metered Retail Electric Customers ⁽¹⁾

 

Customer Class		2017				2018				2019				2020				2021				Year to Date September 30, 2022
Residential			283,563				286,742				288,713				291,923				295,895				298,740
Commercial			39,353				39,328				39,220				39,499				40,224				40,695
Industrial(2)			248				236				224				222				222				235
Other			306				322				307				302				302				301
Total			323,470				326,628				328,464				331,946				336,643				339,971

 

(1)	Amounts may not add up to rounding.

(2)	Excludes sales from Exempted Customers.

Forecasting Electricity Consumption

Evergy Missouri West develops retail electricity sales forecasts each year for financial planning and integrated resource planning, which the latter is filed annually with the MPSC. These updates reflect retail load migration along with other minor changes, and to account for the lingering impacts of the COVID-19 pandemic.

Evergy Missouri West develops statistical adjusted end-use (SAR) econometric models to forecast electricity sales for the residential, commercial, and industrial market segments. These forecasts will be used to calculate the securitized utility tariff charges for any given period, in order to determine the revenue required to meet the principal and interest and other ongoing financing costs for the securitized utility tariff bonds.

For the residential sector, electricity consumption is modeled as a function of population, housing, price, appliance end-use and heating and cooling degree days. The commercial sector is modeled as a function of residential customer growth, price, appliance end-use, gross metro product (GMP) non-manufacturing, and heating and cooling degree days for Evergy Missouri West’s service territory. Electricity usage for the industrial sector is modeled as a function of price, GMP – manufacturing, employment – manufacturing, and cooling degree days. Forecasted weather-related drivers assume normal weather conditions. A rolling thirty-year average for such weather drivers as heating and cooling degree-days are employed in developing the sales forecast.

Evergy Missouri West’s electricity demand forecast models have been in use in their current form for more than five years and have undergone extensive review by the MPSC. Each year Evergy Missouri West updates these models with the most recent recorded data, and conducts testing to ensure that model statistics indicate that drivers are relevant and significant.

The table below shows electricity forecasts and variances from the forecast for the five years 2017-2021 and year to date ended September 30, 2022 and excludes electricity sales from Exempted Customers.

Evergy Missouri West updated its sales forecast model in 2020 to account for the impacts of the COVID-19 pandemic. Adjustments for COVID-19 are expected to decrease in 2023 and may impact the collection of securitized utility tariff charges.

 

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Annual Forecast Variance For Ultimate Electric Delivery (GWh)
		2017				2018				2019				2020				2021				Year to Date September 30, 2022
Forecast (1)			8,074				8,103				8,227				8,042				8,056				6,229
Actual			7,916				8,438				8,182				7,773				8,123				6,426
Variance			(158	)			335				(45	)			(269	)			67				197

 

(1)	Annual Electric Delivery Forecast (GWh).

Variances among the customer classes, which are used to allocate payment responsibility for the securitized utility tariff bonds, may differ from the variances shown above, as the classifications relate to distribution voltage only.

Billing and Collections

In 2021, Evergy Missouri West received approximately 75% of total bill payments electronically, through means such as electronic funds transfer, electronic data interchange, pay by phone, and web-based payments. Approximately 23.2% of bill payments were received via U.S. Mail and the remaining 1.3% were received through Authorized Payment Agencies (walk-in payments). Regardless of payment type, if a customer currently has delinquent debt, the delinquent balance is paid first followed by any current outstanding debt for the billing period. Payment allocation rules are the same for all customers, where delinquent debt is satisfied first, followed by current debt. An account’s debt is broken into delinquent vs. current debt. Delinquent debt is debt aged greater than the due date of the bill. Current debt is debt aged less than the due date of the bill.

Residential customer accounts are considered past due 21 days from the bill date and non-residential customer accounts are considered past due 21 days from the bill date. For all customers, Evergy Missouri West mails a 10-day disconnection notice. In addition, Evergy Missouri West makes a reasonable attempt to contact an adult person residing at the customer’s residence at least 24 hours prior to termination of service.

For residential and non-residential customers, a closing bill including all unpaid amounts is generally issued within three to ten days of service termination. For all customers, if amounts remain outstanding after 23 days, a letter of non-payment will be sent to the customer. A second reminder letter will be sent 28 days after the first letter. Unpaid residential and non-residential accounts will be referred to third-party collection agencies approximately 90 days after the closing bill and listed with major credit bureaus by the agencies approximately 3 months thereafter. Active collections on unpaid accounts will continue up to the statutory limit of 3 years. Under current policies, unpaid closed account balances are written off approximately 90 days after the final bill is delinquent.

Generally, service may be disconnected if payment is not received after all notifications have been provided. Please read “—COVID-19 Customer Protections” below for current measure restricting Evergy Missouri West’s ability to disconnect customers for non-payment. The MPSC adopted certain additional regulations relating to disconnection that would make permanent certain of the provisions of the temporary protections enacted in connection with the COVID-19 pandemic, which may extend the time it takes to complete the process of disconnecting customers for nonpayment.

Before restoring service that has been shut-off for non-payment, Evergy Missouri West has the right to require the payment of the past due amount, a reconnection fee, and a deposit, if applicable.

 

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Credit Policy

Under Missouri law and MPSC regulatory guidelines, Evergy Missouri West is obligated to provide service to electricity customers in its service territory regardless of their creditworthiness.

Certain accounts are secured with deposits or guarantees to reduce losses. Since the vast majority of customers pay their bills within the allotted time, it is not necessary to require deposits from all customers. Specific criteria have been developed for establishing credit. These criteria are based on multiple factors, including prior service, payment history, or external credit score.

Non-residential customers may establish credit by depositing cash equal to twice the highest monthly electric charge or furnishing a satisfactory guarantor, or other credit support such as a surety bond, a certificate of deposit or an irrevocable letter of credit.

Evergy Missouri West may change its credit and collections policies from time to time.

COVID-19 Customer Protections

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, resulting in significant disruptions to manufacturing, supply chain, markets, and travel world-wide. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the COVID-19 outbreak a public health emergency of international concern and on March 12, 2020, announced the outbreak was a pandemic. In response, Evergy Missouri West temporarily implemented policies that were intended to ease the financial burden of the pandemic on customers, including temporarily extending payment options and offering incentives for customer payments on overdue balances as well as the elimination of late payment fees and disconnections for non-payments. Disconnections for non-payments temporarily resumed in July of 2020 and were suspended again in response to a billing system conversion in the fall of 2020. Disconnections fully resumed in May of 2021. As of December 2022, Evergy Missouri West has not yet reinstated late payment charges or deposits for residential customers.

Loss Experience

The following table sets forth information relating to Evergy Missouri West’s annual net write-offs as a percentage of billed revenue for its electric retail customers for the five years ending December 31, 2017 through 2021 and year to date ended September 30, 2022:

 

Net Write-Offs as a Percentage of Billed Revenues (dollars in thousands)
		2017				2018				2019				2020				2021				Year to Date September 30, 2022
Billed Electric Revenues			760,392				813,664				784,624				749,290				772,209				661,496
Net Write-Offs			2,711				3,745				5,694				3,234				2,613				2,131
Percentage of Billed Revenue			0.3565	%			0.4603	%			0.7257	%			0.4316	%			0.3384	%			0.3221	%

Average Days Sales Outstanding

The following table sets forth information relating to the average number of days retail customer electricity bills remained outstanding from the bill date for the five years ending December 31, 2017 through 2021 and year to date ended September 30, 2022:

 

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Average Days Sales Outstanding
		2017				2018				2019				2020				2021				Year to Date September 30, 2022
Average Days Sales Outstanding			22.54				25.17				22.27				23.50				23.48				20.20

Delinquencies

The following table sets forth information relating to the delinquencies as a percentage of total annual billed revenues for all classes of electric customers as of December 31st for the years 2017 to 2021 and for the year to date ended September 30, 2022. Balances are delinquent when the following month’s bill is rendered. Customers on payments plans who are current on their plan installments are not considered delinquent.

 

Delinquencies as a Percentage of Total Billed Electric Revenues
		2017				2018				2019				2020				2021				Year to Date September 30, 2022
31-60 days			0.71	%			0.69	%			0.62	%			0.66	%			0.63	%			0.68	%
61-90 days			0.20	%			0.27	%			0.24	%			0.28	%			0.30	%			0.24	%
91+ days			0.19	%			0.35	%			0.34	%			0.43	%			0.63	%			0.45	%
Total			1.10	%			1.32	%			1.20	%			1.37	%			1.56	%			1.36	%

Municipalization

Missouri law may authorize certain local municipalities to seek to acquire portions of Evergy Missouri West’s electric distribution facilities through the power of eminent domain for use as part of municipally-owned utility systems and serve customers with those facilities. Additionally, local municipalities may extend their own facilities to take over service of customers located within their jurisdictional areas which overlap with Evergy Missouri West’s service territory. These circumstances involve what is referred to in the tariffs as “Municipal DL,” where the affected customers are no longer interconnected with Evergy Missouri West’s electric facilities.

The Securitization Law and the financing order provide that the securitized utility tariff charges must be paid by all existing and future customers, except Exempted Customers, within Evergy Missouri West’s service territory as it existed on the date of the financing order.

The Securitization Law also specifies that any successor to an electrical corporation shall perform and satisfy all obligations of the electrical corporation pursuant to the Securitization Law, including collecting and paying to the bondholders revenues arising with respect to the securitized utility tariff property. In the servicing agreement, Evergy Missouri West will covenant to assert in an appropriate forum that any municipality that acquires any portion of Evergy Missouri West’s electric distribution facilities must be treated as a successor to Evergy Missouri West under the Securitization Law and the financing order, subject to approval by the MPSC, and that retail customers in such municipalities remain responsible for payment of securitized utility tariff charges.

Successors

Missouri law also provides the merger, sale or control of Evergy Missouri West, either directly or indirectly, by any person or corporation must be approved by the MPSC. The Securitization Law specifies that any successor to an electrical corporation shall perform and satisfy all obligations of, and have the same rights under a financing order as, the electrical corporation under the financing order in the manner and to the same extent as the electrical corporation, including collecting and paying to the bondholders revenues, collections, payments or proceeds arising with respect to the securitized utility tariff property. Further, the financing order states that it is binding on Evergy Missouri West and any successor that provides transmission or distribution electric service directly to customers of Evergy Missouri West. In the servicing agreement, Evergy Missouri West has covenanted to assert in an appropriate forum that any person or corporation that merges with, acquires or controls Evergy Missouri West directly or indirectly must be treated as a successor to Evergy Missouri West under the Securitization Law and the financing order, subject to approval by the MPSC, and that customers remain responsible for payment of securitized utility tariff charges.

 

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Future Securitizations

Evergy Missouri West, in its sole discretion, may sell securitized utility tariff property or property similar to securitized utility tariff property, created by one or more separate financing orders in connection with the issuance of additional securitized utility tariff bonds or obligations similar to the securitized utility tariff bonds without your prior review or approval.

Any new issuance would be offered pursuant to a separate registration statement and may include terms and provisions that would be unique to that particular issuance. Evergy Missouri West has covenanted in the sale agreement that the satisfaction of the rating agency condition and the execution and delivery of a joinder to the intercreditor agreement are condition precedents to the sale of additional securitized utility tariff property or similar property consisting of non-bypassable charges payable by customers comparable to the securitized utility tariff property to another entity. Please read “Security for the Securitized Utility Tariff Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

Where to Find Information About Evergy Missouri West

Evergy Missouri West routinely provides links to Evergy Missouri West’s principal regulatory proceedings before the FERC at http://investors.evergy.com, under the “FERC Filings” tab, so that such filings are available to investors upon filing with the relevant agency. The information contained on such website (other than the materials specifically incorporated by reference herein) is not part of this registration statement or any report that Evergy Missouri West files with, or furnishes to, the SEC. Evergy Missouri West and the issuing entity are providing the address to this website solely for the information of investors and does not intend the address to be an active link.

 

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EVERGY MISSOURI WEST STORM FUNDING I, LLC, THE ISSUING ENTITY

The issuing entity is a special purpose limited liability company formed under the Delaware Limited Liability Company Act pursuant to a limited liability company agreement executed by the issuing entity’s sole member, Evergy Missouri West, and the filing of a certificate of formation with the Secretary of the State of Delaware. The issuing entity was formed on November 21, 2022.

The issuing entity has been organized as a special purpose subsidiary of Evergy Missouri West for the limited purpose of holding securitized utility tariff property and issuing the securitized utility tariff bonds secured by securitized utility tariff property and other collateral pledged to secure the securitized utility tariff bonds.

The issuing entity’s limited liability company agreement restricts it from engaging in activities other than those described in this section. The issuing entity does not have any employees, but it will pay its member for out-of-pocket expenses incurred by the member in connection with its services to the issuing entity in accordance with the issuing entity’s limited liability company agreement. The issuing entity has summarized selected provisions of its limited liability company agreement below, a copy of which has been filed as an exhibit to the registration statement of which this prospectus is a part. On the date of issuance of the securitized utility tariff bonds, the capital subaccount securing the securitized utility tariff bonds will be funded at a level equal to 0.50% of the principal amount of such securitized utility tariff bonds issued or such other amount as may allow the securitized utility tariff bonds to achieve the desired security rating and treat the securitized utility tariff bonds as debt under applicable guidance issued by the Internal Revenue Service, which the issuing entity also refers to as the “IRS.”

At the time of the issuance of the securitized utility tariff bonds, the issuing entity’s assets available to secure the securitized utility tariff bonds will consist primarily of the securitized utility tariff property and the other collateral held under the indenture and the series supplement for the securitized utility tariff bonds.

Restricted Purpose

The issuing entity has been created for the sole purpose of:

 

•

acquiring, owning, holding, disposing of, administering, servicing or entering into agreements regarding the receipt and servicing of the securitized utility tariff property, and any securitized utility tariff property created by the financing order or an additional financing order, and the other collateral;

 

•

issuing the securitized utility tariff bonds;

 

•

making payment on the securitized utility tariff bonds;

 

•

distributing amounts released to the issuing entity;

 

•

managing, selling, assigning, pledging, collecting amounts due on, or otherwise dealing with the securitized utility tariff property and the other securitized utility tariff bond collateral and related assets;

 

•

negotiating, executing, assuming and performing the issuing entity’s obligations under the basic documents;

 

•

performing other activities that are necessary, suitable or convenient to accomplish these purposes.

The issuing entity’s limited liability company agreement does not permit the issuing entity to engage in any activities not directly related to these purposes, including issuing securities (other than the securitized utility tariff bonds), borrowing money or making loans to other persons. The list of permitted activities set forth in the issuing entity’s limited liability company agreement may not be altered, amended or repealed without the affirmative vote of a majority of the issuing entity’s managers, which vote must include the affirmative vote of the issuing entity’s independent manager. The issuing entity’s limited liability company agreement and the indenture will prohibit it from issuing any securitized utility tariff bonds (as such term is defined in the Securitization Law), other than the securitized utility tariff bonds that the issuing entity will offer pursuant to this prospectus. Please read “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” and “—Allocations as Between Series of Securitized Utility Tariff Bonds” in this prospectus.

 

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The Issuing Entity’s Relationship with Evergy Missouri West

On the issue date for the securitized utility tariff bonds, Evergy Missouri West will sell securitized utility tariff property to the issuing entity pursuant to a sale agreement between the issuing entity and Evergy Missouri West. Evergy Missouri West will service the securitized utility tariff property pursuant to a servicing agreement between the issuing entity and Evergy Missouri West and will provide administrative services to the issuing entity pursuant to an administration agreement between the issuing entity and Evergy Missouri West.

The Issuing Entity’s Management

Pursuant to the issuing entity’s limited liability company agreement, the issuing entity’s business will be managed by three or more managers, at least one of whom will be an independent manager, in each case appointed from time to time by Evergy Missouri West or, in the event that Evergy Missouri West transfers its interest in the issuing entity, by the issuing entity’s owner or owners. Following the initial issuance of securitized utility tariff bonds, the issuing entity will have at least one independent manager, who among other things, must be a natural person who, for the five-year period prior to his or her appointment as an independent manager has not been and during the continuation of his or her service as independent manager is not:

 

•

an employee, director, stockholder, manager, partner, agent, consultant, attorney, accountant, advisor or officer or an employee, director, manager, stockholder, partner, agent, consultant, attorney, accountant, advisor or officer of the issuing entity, Evergy Missouri West or any of their respective affiliates, other than his or her service as independent manager;

 

•

a creditor or supplier, or a creditor, service provider or supplier of the issuing entity, Evergy Missouri West or any their respective affiliates, except that an independent manager may be an employee of a supplier of corporate related services to the issuing entity or any of our affiliates; or

 

•

any member of the immediate family of a person described in either of the above bullets.

Evergy Missouri West, as the issuing entity’s sole member, appointed the independent manager prior to the issuance of the securitized utility tariff bonds. None of the issuing entity’s managers or officers has been involved in any legal proceedings which are specified in Item 401(f) of the SEC’s Regulation S-K. None of the issuing entity’s managers or officers beneficially own any equity interest in the issuing entity.

The following is a list of our managers as of the date of this prospectus:

 

Name		Age		Title		Background
Geoffrey T. Ley		48		Manager and President		Geoffrey T. Ley was appointed Vice President, Corporate Planning and Treasurer of Evergy, Inc and Evergy Missouri West in December 2022. Since joining Evergy in June 2021, Mr. Ley served as Vice President, Financial Planning and Analysis. Mr. Ley previously served as Vice President and Chief Financial Officer at Hunt Refining Company from 2019-2021. Prior to joining Hunt Refining, Mr. Ley was Vice President and Treasurer for Hunt Utility Services LLC (2014-2019), the management company for InfraREIT, Inc. Before joining Hunt Utility Services, Mr. Ley held various treasury and corporate planning roles in 2007-2014 with Energy Future Holdings Corp. and its predecessor, TXU Corp.
Jason O. Humphrey		36		Manager, Treasury and Secretary		Jason O. Humphrey was appointed Assistant Treasurer of Evergy, Inc and Evergy Missouri West, Inc effective November 2020. Prior to that, Mr. Humphrey had served as Senior Director, Finance and Director, Integration Success since Evergy was formed in 2018. Prior to June of 2018 Jason was a member of Westar and served in various Generation and Corporate Roles since joining in 2008.

 

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Manager Fees and Limitation on Liabilities

The issuing entity has not and will not compensate its managers, other than the independent manager, for their services on behalf of the issuing entity. The issuing entity will pay the annual fees of the independent manager from its revenues and will reimburse them for reasonable expenses. These expenses include the reasonable compensation, expenses and disbursements of the agents, representatives, experts and counsel that the independent managers may employ in connection with the exercise and performance of his or her rights and duties under the issuing entity’s limited liability company agreement.

The issuing entity’s limited liability company agreement provides that to the extent permitted by law, the managers will not be personally liable for any of the issuing entity’s debts, obligations or liabilities. The issuing entity’s limited liability company agreement further provides that, except as described below, to the fullest extent permitted by law, the issuing entity will indemnify the managers against any liability incurred in connection with their services as managers for us if they acted in good faith and in a manner which they reasonably believed to be in or not opposed to the issuing entity’s best interests. With respect to a criminal action, the managers will be indemnified unless they had reasonable cause to believe their conduct was unlawful. The issuing entity will not indemnify the manager for any judgment, penalty, fine or other expense directly caused by their fraud, gross negligence or willful misconduct. In addition, unless ordered by a court, the issuing entity will not indemnify the managers if a final adjudication establishes that their acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action. The issuing entity will pay any indemnification amounts owed to the managers out of funds in the collection accounts, subject to the priority of payments described under “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” in this prospectus.

The Issuing Entity is a Separate and Distinct Legal Entity from Evergy Missouri West

Under the issuing entity’s limited liability company agreement, the issuing entity may not file a voluntary bankruptcy petition for relief under the Bankruptcy Code or any other state, local, federal, foreign or other law relating to bankruptcy, without the affirmative vote of a majority of the issuing entity’s managers, which vote must include the affirmative vote of the issuing entity’s independent manager. Evergy Missouri West has agreed that it will not cause the issuing entity to file a voluntary petition for relief under the Bankruptcy Code. The issuing entity’s limited liability company agreement requires the issuing entity, except for financial reporting purposes (to the extent required by generally accepted accounting principles) and for federal income tax purposes, and, to the extent consistent with applicable state law, state income and franchise tax purposes, to maintain its existence separate from Evergy Missouri West including:

 

•

taking all necessary steps to continue its identity as a separate legal entity;

 

•

making it apparent to third persons that the issuing entity is an entity with assets and liabilities distinct from those of Evergy Missouri West, other affiliates of Evergy Missouri West, the managers or any other person; and

 

•

making it apparent to third persons that, except for federal and certain other tax purposes, the issuing entity is not a division of Evergy Missouri West or any of its affiliated entities or any other person.

Administration Agreement

Evergy Missouri West will, pursuant to an administration agreement between Evergy Missouri West and the issuing entity, provide administrative services to the issuing entity, including, among others, services relating to required filings with the SEC with respect to the securitized utility tariff bonds, any financial statements or tax returns the issuing entity might be required to file under applicable law, qualifications to do business, and minutes of the issuing entity’s managers’ meetings. The issuing entity will pay Evergy Missouri West a fixed fee of $50,000 per annum, plus reimbursable third-party costs.

 

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DESCRIPTION OF THE SECURITIZED UTILITY TARIFF BONDS

General

The depositor has summarized below selected provisions of the indenture and the securitized utility tariff bonds. A form of the indenture and series supplement are filed as exhibits to the registration statement of which this prospectus forms a part. Please read “Where You Can Find More Information” in this prospectus.

The securitized utility tariff bonds are not a debt or a general obligation of the State of Missouri or any of its political subdivisions, agencies, or instrumentalities, including the MPSC, nor are they special obligations or indebtedness of the State of Missouri or any agency or political subdivision. The securitized utility tariff bonds do not, directly, indirectly, or contingently, obligate the State of Missouri or any agency, political subdivision, or instrumentality of the state to levy any tax or make any appropriation for payment of the securitized utility tariff bonds, other than in their capacity as consumers of electricity. Neither Evergy Missouri West nor any of its affiliates will guarantee or insure the securitized utility tariff bonds. The securitized utility tariff bonds do not constitute a pledge of the full faith and credit nor the taxing power of the State of Missouri or of any of its political subdivisions. The issuance of the securitized utility tariff bonds under the Securitization Law will not directly, indirectly or contingently obligate the State of Missouri or any of its political subdivisions to levy or to pledge any form of taxation for the securitized utility tariff bonds or to make any appropriation for their payment, other than in their capacity as consumers of electricity.

The issuing entity will issue the securitized utility tariff bonds and secure their payment under an indenture that the issuing entity will enter into with The Bank of New York Mellon Trust Company, National Association, as trustee, referred to in this prospectus as the “trustee.” The issuing entity will issue the securitized utility tariff bonds in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof, except that the issuing entity may issue one securitized utility tariff bond in each tranche in a smaller denomination. The initial principal balance, scheduled final payment date, final maturity date and interest rate for each tranche of the securitized utility tariff bonds are stated in the table below:

Expected Outstanding Principal Balance Per Tranche

 

Tranche		Expected Weighted Average Life (Years)		Principal Amount Offered		Scheduled Final Payment Date		Final Maturity Date		Interest Rate

The scheduled final payment date for each tranche of the securitized utility tariff bonds is the date when the outstanding principal balance of that tranche will be reduced to zero if the issuing entity makes payments according to the expected sinking fund schedule for that tranche. The final maturity date for each tranche of securitized utility tariff bonds is the date when the issuing entity is required to pay the entire remaining unpaid principal balance, if any, of all outstanding securitized utility tariff bonds of that tranche. The failure to pay principal of any tranche of securitized utility tariff bonds by the final maturity date for that tranche is an event of default, but the failure to pay principal of any tranche of securitized utility tariff bonds by the respective scheduled final payment date will not be an event of default. Please read “—Interest Payments” and “—Principal Payments” and “—Events of Default; Rights Upon Event of Default” in this prospectus.

Payment and Record Dates and Payment Sources

Beginning                 , the issuing entity will make payments of principal and interest on the securitized utility tariff bonds semi-annually on                 and                  of each year, or, if that day is not a business day, the following business day (each, a “payment date”). So long as the securitized utility tariff bonds are in book-entry form, on each payment date, the issuing entity will make interest and principal payments to the persons who are the holders of record

 

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as of the business day immediately prior to that payment date, which is referred to herein as the “record date.” If the issuing entity issues certificated securitized utility tariff bonds to beneficial owners of the securitized utility tariff bonds, the record date will be the last business day of the calendar month immediately preceding the payment date. On each payment date, the issuing entity will pay amounts on outstanding securitized utility tariff bonds from amounts available in the collection account and the related subaccounts held by the trustee in the priority set forth under “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” in this prospectus. These available amounts, which will include amounts collected by the servicer for the issuing entity with respect to the securitized utility tariff charges, are described in greater detail under “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” and “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

Interest Payments

Interest on each tranche of securitized utility tariff bonds will accrue from and including the issue date to but excluding the first payment date, and thereafter from and including the previous payment date to but excluding the applicable payment date until the securitized utility tariff bonds have been paid in full, at the interest rate indicated on the cover of this prospectus and in the table above. Each of those periods is referred to as an “interest accrual period.” The issuing entity will calculate interest on tranches of the securitized utility tariff bonds on the basis of a 360-day year of twelve 30-day months.

On each payment date, the issuing entity will pay interest on each tranche of the securitized utility tariff bonds equal to the following amounts:

 

•

if there has been a payment default, any interest payable but unpaid on any prior payment date, together with interest on such unpaid interest, if any; and

 

•

accrued interest on the principal balance of each tranche of the securitized utility tariff bonds as of the close of business on the preceding payment date (or with respect to the initial payment date, the date of the original issuance of the securitized utility tariff bonds) after giving effect to all payments of principal made on the preceding payment date, if any.

The issuing entity will pay interest on the securitized utility tariff bonds before the issuing entity pays principal on the securitized utility tariff bonds. Interest payments will be made from collections of securitized utility tariff charges, including amounts available in the excess funds subaccount and, if necessary, the amounts available in the capital subaccount.

If there is a shortfall in the amounts available in the collection account to make interest payments on the securitized utility tariff bonds, the trustee will distribute interest pro rata to each tranche of securitized utility tariff bonds based on the amount of interest payable on each such outstanding tranche. Please read “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” in this prospectus.

Principal Payments

On each payment date, the issuing entity will pay principal of the securitized utility tariff bonds to the bondholders equal to the sum, without duplication, of:

 

•

the unpaid principal amount of any securitized utility tariff bond whose final maturity date is on that payment date, plus

 

•

the unpaid principal amount of any securitized utility tariff bond upon acceleration following an event of default relating to the securitized utility tariff bonds, plus

 

•

any overdue payments of principal, plus

 

•

any unpaid and previously scheduled payments of principal, plus

 

•

the principal scheduled to be paid on any securitized utility tariff bond on that payment date,

 

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but only to the extent funds are available in the collection account after payment of certain of the issuing entity’s fees and expenses and after payment of interest as described above under “—Interest Payments” in this prospectus. If the trustee receives insufficient collections of securitized utility tariff charges for any payment date, and amounts in the collection account (and the applicable subaccounts of the collection account) are not sufficient to make up the shortfall, principal of any tranche of securitized utility tariff bonds may be payable later than expected. Please read “Risk Factors—Other Risks Associated with an Investment in the Securitized Utility Tariff Bonds” in this prospectus. To the extent funds are so available, the issuing entity will make scheduled payments of principal of the securitized utility tariff bonds in the following order:

 

(1)

to the holders of the tranche                  securitized utility tariff bonds, until the principal balance of that tranche has been reduced to zero,

 

(2)

to the holders of the tranche                  securitized utility tariff bonds, until the principal balance of that tranche has been reduced to zero, and

 

(3)

to the holders of the tranche                  securitized utility tariff bonds, until the principal balance of that tranche has been reduced to zero.

However, on any payment date, unless an event of default has occurred and is continuing and the securitized utility tariff bonds have been declared due and payable, the trustee will make principal payments on the securitized utility tariff bonds only until the outstanding principal balances of those securitized utility tariff bonds have been reduced to the principal balances specified in the applicable expected sinking fund schedule for that payment date. Accordingly, principal of the securitized utility tariff bonds may be paid later, but not sooner, than reflected in the expected sinking fund schedule, except in the case of an acceleration. The entire unpaid principal balance of each tranche of the securitized utility tariff bonds will be due and payable on the final maturity date for that tranche. The failure to make a scheduled payment of principal on the securitized utility tariff bonds because there are not sufficient funds in the collection account does not constitute a default or an event of default under the indenture, except for the failure to pay in full the unpaid balance of any tranche upon the final maturity date for such tranche.

Unless the securitized utility tariff bonds have been accelerated following an event of default, any excess funds remaining in the collection account after payment of principal, interest, applicable fees and expenses and payments to the applicable subaccounts of the collection account will be retained in the excess funds subaccount until applied on a subsequent payment date.

If an event of default (other than a breach by the State of Missouri of the State Pledge) has occurred and is continuing, then the trustee or the holders of not less than a majority in principal amount of the securitized utility tariff bonds then outstanding may declare the securitized utility tariff bonds to be immediately due and payable, in which event the entire unpaid principal amount of the securitized utility tariff bonds will become due and payable. Please read “—Events of Default; Rights Upon Event of Default” in this prospectus. However, the nature of the issuing entity’s business will result in payment of principal upon an acceleration of the securitized utility tariff bonds being made as funds become available.

Please read “Risk Factors—Risks Associated With the Unusual Nature of the Securitized Utility Tariff Property—Foreclosure of the trustee’s lien on the securitized utility tariff property for the securitized utility tariff bonds might not be practical, and acceleration of the securitized utility tariff bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the securitized utility tariff bonds because the source of funds for payment is limited” in this prospectus.

If there is a shortfall in the amounts available to make principal payments on the securitized utility tariff bonds that are due and payable, including upon an acceleration following an event of default, the trustee will distribute principal from the collection account pro rata to each tranche of securitized utility tariff bonds based on the principal amount then due and payable on the payment date; and if there is a shortfall in the remaining amounts available to make principal payments on the securitized utility tariff bonds that are scheduled to be paid, the trustee will distribute principal from the collection account pro rata to each tranche of securitized utility tariff bonds based on the principal amount then scheduled to be paid on the payment date.

 

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The expected sinking fund schedule below sets forth the corresponding principal payment that is scheduled to be made on each payment date for each tranche of the securitized utility tariff bonds from the issuance date to the scheduled final payment date. Similarly, the expected sinking fund schedule below sets forth the principal balance that is scheduled to remain outstanding on each payment date for each tranche of the securitized utility tariff bonds from the issuance date to the scheduled final payment date.

 

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EXPECTED SINKING FUND SCHEDULE

 

Semi-Annual Payment Date

Tranche Principal

Tranche Principal

Tranche Principal

Tranche Principal

Tranche Principal

$

$

$

$

$

Total Payments

The issuing entity cannot assure you that the principal balance of any tranche of the securitized utility tariff bonds will be reduced at the rate indicated in the table above. The actual reduction in tranche principal balances may occur more slowly. The actual reduction in tranche principal balances will not occur more quickly than indicated in the above table, except in the case of acceleration due to an event of default under the indenture. The securitized utility tariff bonds will not be in default if principal is not paid as specified in the schedule above unless the principal of any tranche is not paid in full on or before the final maturity date of that tranche.

 

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EXPECTED AMORTIZATION TABLE

 

Semi-Annual Payment Date

Tranche Principal

Tranche Principal

Tranche Principal

Tranche Principal

Tranche Principal

Closing Date

$

$

$

$

$

On each payment date, the trustee will make principal payments to the extent the principal balance of each tranche of the securitized utility tariff bonds exceeds the amount indicated for that payment date in the table above and to the extent of funds available in the collection account after payment of certain of the issuing entity’s fees and expenses and after payment of interest.

Distribution Following Acceleration

Upon an acceleration of the maturity of the securitized utility tariff bonds, the total outstanding principal balance of and interest accrued on the securitized utility tariff bonds will be payable, without regard to tranche. Although principal will be due and payable upon acceleration, the nature of the issuing entity’s business will result in principal being paid as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Securitized Utility Tariff Property—Foreclosure of the trustee’s lien on the securitized utility tariff property for the securitized utility tariff bonds might not be practical, and acceleration of the securitized utility tariff bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the securitized utility tariff bonds because the source of funds for payment is limited” in this prospectus.

Optional Redemption

The issuing entity may not voluntarily redeem any tranche of the securitized utility tariff bonds.

 

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Payments on the Securitized Utility Tariff Bonds

The trustee will pay on each payment date to the holders of each tranche of securitized utility tariff bonds, to the extent of available funds in the collection account, all payments of principal and interest then due. The trustee will make each payment other than the final payment with respect to any securitized utility tariff bonds to the holders of record of the securitized utility tariff bonds of the applicable tranche on the record date for that payment date. The trustee will make the final payment for each tranche of securitized utility tariff bonds, however, only upon presentation and surrender of the securitized utility tariff bonds of that tranche at the office or agency of the trustee specified in the notice given by the trustee of the final payment. The trustee will mail notice of the final payment to the bondholders no later than five days prior to the final payment date, specifying the date set for the final payment and the amount of the payment.

The failure to pay accrued interest on any payment date (even if the failure is caused by a shortfall in securitized utility tariff charges received) will result in an event of default for the securitized utility tariff bonds unless such failure is cured within five business days. Please read “—Events of Default; Rights Upon Event of Default” in this prospectus. Any interest not paid when due (plus interest on the defaulted interest at the applicable interest rate to the extent lawful) will be payable to the bondholders on a special record date. The special record date will be at least fifteen business days prior to the date on which the trustee is to make such special payment (a “special payment date”). The issuing entity will fix any special record date and special payment date. At least 10 days before any special record date, the trustee will mail to each affected bondholder a notice that states the special record date, the special payment date and the amount of defaulted interest (plus interest on the defaulted interest) to be paid.

The entire unpaid principal amount of the securitized utility tariff bonds will be due and payable:

 

•

on the final maturity date; or

 

•

if an event of default under the indenture occurs and is continuing and the trustee or the holders of a majority in principal amount of the securitized utility tariff bonds have declared the securitized utility tariff bonds to be immediately due and payable.

However, the nature of the issuing entity’s business will result in payment of principal upon an acceleration of the securitized utility tariff bonds being made as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Securitized Utility Tariff Property—Foreclosure of the trustee’s lien on the securitized utility tariff property for the securitized utility tariff bonds might not be practical, and acceleration of the securitized utility tariff bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the securitized utility tariff bonds because the source of funds for payment is limited” in this prospectus.

At the time, if any, the issuing entity issues the securitized utility tariff bonds in the form of definitive securitized utility tariff bonds and not to DTC or its nominee, the trustee will make payments with respect to that tranche on a payment date or a special payment date by wire transfer to each holder of a definitive securitized utility tariff bond of the tranche of record on the applicable record date to an account maintained by the payee.

If any special payment date or other date specified for any payments to bondholders is not a business day, the trustee will make payments scheduled to be made on that special payment date or other date on the next succeeding business day and no interest will accrue upon the payment during the intervening period.

Fees and Expenses

As set forth in the table below, the issuing entity is obligated to pay fees to the servicer, the trustee, its independent managers and Evergy Missouri West as administrator. The following table illustrates this arrangement.

 

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Recipient		Source of Payment		Fees and Expenses Payable
Servicer		Securitized utility tariff charge collections and investment earnings		$             (0.05% of the initial aggregate principal amount of the securitized utility tariff bonds) per annum (so long as servicer is Evergy Missouri West or an affiliate), plus out of pocket expenses
Trustee		Securitized utility tariff charge collections and investment earnings		$             per annum plus expenses
Independent Manager		Securitized utility tariff charge collections and investment earnings		$             per annum plus expenses
Administration Fee		Securitized utility tariff charge collections and investment earnings		$            50,000 per annum plus expenses

The annual servicing fee for the securitized utility tariff bonds payable to any other servicer not affiliated with Evergy Missouri West must be approved by the MPSC. The MPSC will not approve the appointment of a successor servicer unless the rating agency condition for the securitized utility tariff bonds is satisfied.

Securitized Utility Tariff Bonds Will Be Issued in Book-Entry Form

The securitized utility tariff bonds will be available to investors only in the form of book-entry securitized utility tariff bonds. You may hold your securitized utility tariff bonds through DTC in the United States, Clearstream Banking, Luxembourg, S.A., referred to as Clearstream, or Euroclear in Europe. You may hold your securitized utility tariff bonds directly with one of these systems if you are a participant in the system or indirectly through organizations that are participants.

The Role of DTC, Clearstream and Euroclear

Cede & Co., as nominee for DTC, will hold the global securitized utility tariff bond or securitized utility tariff bonds representing the securitized utility tariff bonds. Clearstream and Euroclear will hold omnibus positions on behalf of the Clearstream customers and Euroclear participants, respectively, through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries. These depositaries will, in turn, hold these positions in customers’ securities accounts in the depositaries’ names on the books of DTC.

The Function of DTC

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“direct participants”) deposit with DTC. DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between direct participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies.

DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a direct participants, either directly or indirectly (“indirect participants”). The DTC Rules applicable to its Participants are on file with the SEC. More information about DTC can be found at www.dtcc.com and www.dtc.org.

 

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The Function of Clearstream

Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream customers through electronic book-entry changes in accounts of Clearstream customers, thereby eliminating the need for physical movement of securities. Transactions may be settled by Clearstream in any of various currencies, including United States dollars. Clearstream provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream also deals with domestic securities markets in various countries through established depositary and custodial relationships. Clearstream is registered as a bank in Luxembourg and therefore is subject to regulation by the Luxembourg Commission de Surveillance du Secteur Financier, which supervises Luxembourg banks. Clearstream’s customers are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations, among others, and may include the underwriters of the securitized utility tariff bonds. Clearstream’s U.S. customers are limited to securities brokers and dealers and banks. Clearstream has customers located in various countries. Indirect access to Clearstream is also available to other institutions that clear through or maintain a custodial relationship with an account holder of Clearstream. Clearstream has established an electronic bridge with Euroclear to facilitate settlement of trades between Clearstream and Euroclear.

The Function of Euroclear

The Euroclear System was created in 1968 in Brussels. Euroclear holds securities and book-entry interests in securities for Euroclear participants and facilitates the clearance and settlement of securities transactions between Euroclear participants, and between Euroclear participants and participants of certain other securities intermediaries through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of securities and any risk from lack of simultaneous transfers of securities and cash. Such transactions may be settled in any of various currencies, including United States dollars. The Euroclear System includes various other services, including, among other things, safekeeping, administration, clearance and settlement, securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described below. The Euroclear System is operated by Euroclear Bank SA/NV. Euroclear participants include central banks and other banks, securities brokers and dealers and other professional financial intermediaries and may include the underwriters of the securitized utility tariff bonds. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

Terms and Conditions of Euroclear

Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian law (collectively, the “Terms and Conditions”). These Terms and Conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System and receipts of payments with respect to securities in the Euroclear System. All securities in Euroclear are held on a fungible basis without attribution of specific securities to specific securities clearance accounts. Euroclear acts under the Terms and Conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.

The Rules for Transfers Among DTC, Clearstream or Euroclear Participants

Transfers between DTC participants will occur in accordance with DTC rules. Transfers between Clearstream customers or Euroclear participants will occur in the ordinary way in accordance with their applicable rules and operating procedures and will be settled using procedures applicable to conventional securities held in registered form.

 

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Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream customers or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its depositary; however, those cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines, which will be based on European time. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving securitized utility tariff bonds in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream customers and Euroclear participants may not deliver instructions directly to Clearstream’s and Euroclear’s depositaries.

Because of time-zone differences, credits of securities in Clearstream or Euroclear as a result of a transaction with a participant will be made during the subsequent securities settlement processing, dated the business day following the DTC settlement date, and those credits or any transactions in those securities settled during that processing will be reported to the relevant Clearstream customer or Euroclear participant on that business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.

DTC Will Be the Holder of the Securitized Utility Tariff Bonds

Bondholders that are not participants or indirect participants but desire to purchase, sell or otherwise transfer ownership of, or other interest in, securitized utility tariff bonds may do so only through direct participants and indirect participants. In addition, bondholders will receive all payments of principal of and interest on the securitized utility tariff bonds from the trustee through the participants, who in turn will receive them from DTC. Under a book-entry format, bondholders may experience some delay in their receipt of payments because payments will be forwarded by the trustee to Cede & Co., as nominee for DTC. DTC will forward those payments to its participants, who thereafter will forward them to indirect participants or bondholders. It is anticipated that the only “bondholder” will be Cede & Co., as nominee of DTC. The trustee will not recognize bondholders as bondholders, as that term is used in the indenture, and bondholders will be permitted to exercise the rights of bondholders only indirectly through the participants, who in turn will exercise the rights of bondholders through DTC.

Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers of book-entry certificates among participants on whose behalf it acts with respect to the securitized utility tariff bonds and is required to receive and transmit payments of principal and interest on the securitized utility tariff bonds. Direct participants and indirect participants with whom bondholders have accounts with respect to the securitized utility tariff bonds similarly are required to make book-entry transfers and receive and transmit those payments on behalf of their respective bondholders. Accordingly, although bondholders will not possess securitized utility tariff bonds, bondholders will receive payments and will be able to transfer their interests.

Because DTC can act only on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of a bondholder to pledge securitized utility tariff bonds to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of those securitized utility tariff bonds, may be limited due to the lack of a physical certificate for those securitized utility tariff bonds.

DTC has advised the issuing entity that it will take any action permitted to be taken by a bondholder under the indenture only at the direction of one or more participants to whose account with DTC the securitized utility tariff bonds are credited. Additionally, DTC has advised the issuing entity that it will take those actions with respect to specified percentages of the collateral amount only at the direction of and on behalf of participants whose holdings include interests that satisfy those specified percentages. DTC may take conflicting actions with respect to other interests to the extent that those actions are taken on behalf of participants whose holdings include those interests.

Except as required by law, none of any underwriter, the servicer, Evergy Missouri West, the trustee, the issuing entity or any other party will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the certificates held by Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any records relating to such beneficial interests.

 

65

How Securitized Utility Tariff Bond Payments Will Be Credited by Clearstream and Euroclear

Payments with respect to securitized utility tariff bonds held through Clearstream or Euroclear will be credited to the cash accounts of Clearstream customers or Euroclear participants in accordance with the applicable system’s rules and operating procedures, to the extent received by its depositary. Those payments will be subject to tax reporting in accordance with relevant United States tax laws and regulations. Please read “Material U.S. Federal Income Tax Consequences” in this prospectus. Clearstream or the Euroclear operator, as the case may be, will take any other action permitted to be taken by a bondholder under the indenture on behalf of a Clearstream customer or Euroclear participant only in accordance with its applicable rules and operating procedures and subject to its depositary’s ability to effect those actions on its behalf through DTC.

Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the securitized utility tariff bonds among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform those procedures, and those procedures may be discontinued at any time.

Definitive Securitized Utility Tariff Bonds

The issuing entity will issue securitized utility tariff bonds in registered, certificated form to bondholders, or their nominees, rather than to DTC, only under the circumstances provided in the indenture, which will include: (1) the issuing entity advising the trustee in writing that DTC is no longer willing or able to properly discharge its responsibilities as nominee and depositary with respect to the book-entry securitized utility tariff bonds and that the issuing entity is unable to locate a recovery successor, (2) the issuing entity electing to terminate the book-entry system through DTC, with written notice to the trustee, or (3) after the occurrence of an event of default under the indenture, holders of securitized utility tariff bonds aggregating not less than a majority of the aggregate outstanding principal amount of the securitized utility tariff bonds maintained as book-entry securitized utility tariff bonds advising the issuing entity, the trustee, and DTC in writing that the continuation of a book-entry system through DTC (or a successor) is no longer in the best interests of those bondholders. Upon issuance of definitive securitized utility tariff bonds, the securitized utility tariff bonds evidenced by such definitive securitized utility tariff bonds will be transferable directly (and not exclusively on a book-entry basis) and registered holders will deal directly with the trustee with respect to transfers, notices and payments.

Upon surrender by DTC of the definitive securities representing the securitized utility tariff bonds and instructions for registration, the issuing entity will sign and the trustee will authenticate and deliver the securitized utility tariff bonds in the form of definitive securitized utility tariff bonds, and thereafter the trustee will recognize the registered holders of the definitive securitized utility tariff bonds as bondholders under the indenture.

The trustee will make payment of principal of and interest on the securitized utility tariff bonds directly to bondholders in accordance with the procedures set forth herein and in the indenture. The trustee will make interest payments and principal payments to bondholders in whose names the definitive securitized utility tariff bonds were registered at the close of business on the related record date. The trustee will make payments by wire transfer to the bondholder as described in the indenture or in such other manner as may be provided in the series supplement. The trustee will make the final payment on any securitized utility tariff bond (whether definitive securitized utility tariff bonds or notes registered in the name of Cede & Co.), however, only upon presentation and surrender of the securitized utility tariff bond on the final payment date at the office or agency that is specified in the notice of final payment to bondholders. The trustee will provide the notice to registered bondholders not later than the fifth day prior to the final payment date.

Definitive bonds will be transferable and exchangeable at the offices of the transfer agent and registrar, which initially will be the trustee. There will be no service charge for any registration of transfer or exchange, but the transfer agent and registrar may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith.

 

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Access of Bondholders

Upon written request of any bondholder or group of bondholders of securitized utility tariff bonds evidencing not less than 10 percent of the aggregate outstanding principal amount of the securitized utility tariff bonds, the trustee will afford the bondholder or bondholders making such request a copy of a current list of bondholders for purposes of communicating with other bondholders with respect to their rights under the indenture.

The indenture does not provide for any annual or other meetings of bondholders.

Reports to Bondholders

On or prior to each payment date, special payment date or any other date specified in the indenture for payments with respect to any tranche of securitized utility tariff bonds, the servicer will deliver to the trustee, and the trustee will make available on its website (currently located at https://gctinvestorreporting.bnymellon.com), a statement prepared by the servicer with respect to the payment to be made on the payment date, special payment date or other date, as the case may be, setting forth the following information:

 

•

the amount of the payment to bondholders allocable to (1) principal and (2) interest,

 

•

the aggregate outstanding principal balance of the securitized utility tariff bonds, before and after giving effect to payments allocated to principal reported immediately above,

 

•

the difference, if any, between the amount specified immediately above and the principal amount scheduled to be outstanding on that date according to the related expected sinking fund schedule,

 

•

any other transfers and payments to be made on such payment date, including amounts paid to the trustee and the servicer, and

 

•

the amounts on deposit in the capital subaccount and the excess funds subaccount, after giving effect to the foregoing payments.

Unless and until securitized utility tariff bonds are no longer issued in book-entry form, the reports will be provided to the depository for the securitized utility tariff bonds, or its nominee, as sole beneficial owner of the securitized utility tariff bonds. The reports will be available to bondholders upon written request to the trustee or the servicer. Such reports will not constitute financial statements prepared in accordance with generally accepted accounting principles. The financial information provided to bondholders will not be examined and reported upon by an independent public accountant. In addition, an independent public accountant will not provide an opinion on the financial information.

Within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of the securitized utility tariff bonds, the trustee, so long as it is acting as paying agent and transfer agent and registrar for the securitized utility tariff bonds, will, upon written request by the issuing entity or any bondholder, mail to persons who at any time during the calendar year were bondholders and received any payment on the securitized utility tariff bonds, a statement containing certain information for the purposes of the bondholder’s preparation of United States federal and state income tax returns.

SEC Filings; Website Disclosure

The issuing entity will, to the extent permitted by and consistent with the issuing entity’s legal obligations under applicable law, cause to be posted on a website associated with Evergy Missouri West periodic reports containing to the extent such information is reasonably available to it:

 

•

the final prospectus for the securitized utility tariff bonds;

 

•

a statement of securitized utility tariff charge remittances made to the trustee;

 

•

a statement reporting the balances in the collection account and in each subaccount of the collection account as of the end of each quarter or the most recent date available;

 

•

a statement showing the balance of outstanding securitized utility tariff bonds that reflects the actual periodic payments made on the securitized utility tariff bonds during the applicable period;

 

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•

the servicer’s certificate delivered for the securitized utility tariff bonds pursuant to the servicing agreement;

 

•

the monthly servicer’s certificate delivered for the securitized utility tariff bonds pursuant to the servicing agreement;

 

•

the reconciliation certificate as required to be submitted pursuant to the servicing agreement;

 

•

the text (or a link to the website where a reader can find the text) of each true-up submission in respect of the outstanding securitized utility tariff bonds and the results of each such true-up submission;

 

•

any change in the long-term or short-term credit ratings of the servicer assigned by the rating agencies;

 

•

material legislative or regulatory developments directly relevant to the securitized utility tariff bonds; and

 

•

any reports and other information that the issuing entity is required to file with the SEC under the Exchange Act.

Information contained on such website (other than the materials specifically incorporated by reference herein) is not part of this registration statement or any report that Evergy Missouri West files with, or furnishes to, the SEC. Evergy Missouri West and the issuing entity are providing the address to this website solely for the information of investors and does not intend to address to be an active link.

Conditions of Issuance of Additional Securitized Utility Tariff Bonds

Evergy Missouri West has covenanted under the sale agreement that the execution of a joinder to the intercreditor agreement and satisfaction of the rating agency condition are conditions precedent to the sale of property by Evergy Missouri West consisting of non-bypassable charges payable by customers comparable to the securitized utility tariff property sold by Evergy Missouri West pursuant to the sale agreement. Please read “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated”, “Security for the Securitized Utility Tariff Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

The Issuing Entity and the Trustee May Modify the Indenture

Modifications of the Indenture that do not Require Consent of Bondholders

From time to time, and without the consent of the bondholders (but with prior notice to the rating agencies and when authorized by an issuing entity order), the issuing entity and the trustee may enter into one or more agreements supplemental to the indenture for various purposes described in the indenture, including:

 

•

to correct or amplify the description of any property including, without limitation, the collateral subject to the indenture, or to better convey, assure and confirm to the trustee the property subject to the indenture, or to add additional property;

 

•

to evidence the succession of another person to us in accordance with the terms of the indenture and the assumption by any such successor of the covenants in the indenture and in the securitized utility tariff bonds;

 

•

to add to the covenants for the benefit of the bondholders and the trustee, or surrender any right or power conferred to the issuing entity with the indenture;

 

•

to convey, transfer, assign, mortgage or pledge any property to or with the trustee;

 

•

to cure any ambiguity or mistake or correct or supplement any provision in the indenture or in any supplemental indenture which may be inconsistent with any other provision in the indenture or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under the indenture or in any supplemental indenture; provided, however, that (i) such action will not, as evidenced by an opinion of counsel, adversely affect in any material respect the interests of the bondholders and (ii) the rating agency condition shall have been satisfied with respect thereto;

 

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•

to evidence and provide for the acceptance of the appointment under the indenture of a successor trustee with respect to the securitized utility tariff bonds and to add or change any of the provisions of the indenture as shall be necessary to facilitate the administration of the trusts thereunder by more than one trustee;

 

•

to modify, eliminate or add to the provisions of the indenture to such extent as shall be necessary to effect qualification under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), or under any similar or successor federal statute hereafter enacted;

 

•

to qualify the securitized utility tariff bonds for registration with a clearing agency;

 

•

to satisfy any rating agency requirements;

 

•

to make any amendment to the indenture or the securitized utility tariff bonds relating to the transfer and legending of the securitized utility tariff bonds to comply with applicable securities laws; and

 

•

to conform the text of the indenture or the securitized utility tariff bonds to any provision of the registration statement filed by the issuing entity with the SEC with respect to the issuance of the securitized utility tariff bonds to the extent that such provision was intended to be a verbatim recitation of a provision of the indenture or the securitized utility tariff bonds.

The issuing entity may also, without the consent of the bondholders, enter into one or more other agreements supplemental to the indenture so long as (i) the supplemental agreement does not, as evidenced by an opinion of counsel experienced in structured finance transactions, adversely affect the interests of any holders of securitized utility tariff bonds then outstanding in any material respect and (ii) the rating agency condition shall have been satisfied with respect thereto.

Modifications of the Indenture that Require the Approval of Bondholders

The issuing entity may, with the consent of bondholders holding not less than a majority of the aggregate outstanding principal amount of the securitized utility tariff bonds (and with prior notice to the rating agencies), enter into one or more indentures supplemental to the indenture for the purpose of, among other things, adding any provisions to or changing in any manner or eliminating any of the provisions of the indenture. In determining whether a majority of holders have consented, securitized utility tariff bonds owned by the issuing entity, Evergy Missouri West or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any securitized utility tariff bonds it actually knows to be so owned. No supplement, however, may, without the consent of each bondholder of each tranche affected thereby, take certain actions enumerated in the indenture, including:

 

•

change the date of payment of any installment of principal of or premium, if any, or interest on any securitized utility tariff bond of such tranche, or reduce in any manner the principal amount thereof, the interest rate thereon or the premium, if any, with respect thereto;

 

•

change the provisions of the indenture and any applicable supplemental indenture relating to the application of collections on, or the proceeds of the sale of, the collateral to payment of principal of or premium, if any, or interest on the securitized utility tariff bonds or tranche, or change the coin or currency in which any securitized utility tariff bond or any interest thereon is payable;

 

•

reduce the percentage of the aggregate amount of the outstanding securitized utility tariff bonds, or of a tranche thereof, the consent of the bondholders of which is required for any supplemental indenture, or the consent of the bondholders of which is required for any waiver of compliance with those provisions of the indenture specified therein or of defaults specified therein and their consequences provided for in the indenture or modify certain aspects of the definition of the term “outstanding”;

 

•

reduce the percentage of the outstanding amount of the securitized utility tariff bonds or tranche the holders of which are required to consent to direct the trustee to sell or liquidate the collateral;

 

•

modify any of the provisions of the indenture in a manner so as to affect the amount of any payment of interest, principal or premium, if any, payable on any securitized utility tariff bond of such tranche on any payment date or change the expected sinking fund schedules or final maturity dates of any securitized utility tariff bonds of such tranche;

 

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decrease the required capital amount;

 

•

permit the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to any of the collateral for the securitized utility tariff bonds or tranche or, except as otherwise permitted or contemplated in the indenture, terminate the lien of the indenture on any property at any time subject thereto or deprive the holder of any securitized utility tariff bond of the security provided by the lien of the indenture;

 

•

cause any material adverse federal income tax consequence to the seller, the issuing entity, the manager, the trustee or the beneficial owners of the securitized utility tariff bonds; or

 

•

impair the right to institute suit for the enforcement of those provisions of the indenture specified therein regarding payment or application of funds.

Promptly following the execution of any supplement to the indenture requiring the approval of the bondholders, the issuing entity will furnish either a copy of such supplement or written notice of the substance of the supplement to each bondholder, and a copy of such supplement to each rating agency.

Notification of the Rating Agencies, the Trustee and the Bondholders of Any Modification

If the issuing entity, Evergy Missouri West or the servicer or any other party to the applicable agreement:

 

•

proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any other amendment, modification, waiver, supplement, termination or surrender of, the terms of the sale agreement, the administration agreement or the servicing agreement; or

 

•

waives timely performance or observance by Evergy Missouri West or the servicer under the sale agreement, the administration agreement or the servicing agreement;

in each case in a way which would materially and adversely affect the interests of bondholders, the issuing entity must first notify the rating agencies of the proposed amendment and satisfy the rating agency condition. Upon satisfaction of the rating agency condition, the issuing entity must thereafter notify the trustee in writing, and the trustee will be required to notify the bondholders of the proposed amendment and whether the rating agency condition has been satisfied with respect thereto. The trustee will consent to this proposed amendment, modification, supplement or waiver only with the written consent of the holders of a majority of the outstanding principal amount of the securitized utility tariff bonds of the tranches materially and adversely affected thereby. In determining whether a majority of holders have consented, securitized utility tariff bonds owned by the issuing entity, Evergy Missouri West or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any securitized utility tariff bonds it actually knows to be so owned.

Modifications to the Sale Agreement, the Administration Agreement and the Servicing Agreement

With the prior written consent of the trustee, the sale agreement, the administration agreement and the servicing agreement may be amended, so long as the rating agency condition is satisfied in connection therewith, at any time and from time to time, without the consent of the bondholders. However, any such amendment may not adversely affect the interest of any bondholder in any material respect without the consent of the holders of a majority of the outstanding principal amount of the securitized utility tariff bonds. In determining whether a majority of holders have consented, securitized utility tariff bonds owned by the issuing entity, Evergy Missouri West or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any securitized utility tariff bonds it actually knows to be so owned.

 

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In addition, the sale agreement, the administration agreement and the servicing agreement may be amended with ten business days’ prior written notice given to the rating agencies, with the prior written consent of the trustee (other than with respect to the sale agreement and the administration agreement, and which consent shall be given in reliance on an opinion of counsel and an officer’s certificate stating that such amendment is permitted or authorized under and adopted in accordance with the provisions of the applicable agreement and that all conditions precedent have been satisfied, upon which the trustee may conclusively rely), but without the consent of the bondholders, (i) to cure any ambiguity, to correct or supplement any provisions in the applicable agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in such agreement or of modifying in any manner the rights of the bondholders; provided, however, that such action shall not, as evidenced by an officer’s certificate delivered to the issuing entity and the trustee, adversely affect in any material respect the interests of any bondholder or (ii) to conform the provisions of the applicable agreement to the description of such agreement in this prospectus. Promptly after the execution of any such amendment or consent, the issuing entity shall furnish copies of such amendment or consent to each of the rating agencies.

Enforcement of the Sale Agreement, the Administration Agreement, the Servicing Agreement and the Intercreditor Agreement

The indenture provides that the issuing entity will take all lawful actions to enforce the issuing entity’s rights under the sale agreement, the administration agreement and the servicing agreement; provided, that such action shall not adversely affect the interests of bondholders in any material respect. The indenture also provides that the issuing entity will take all lawful actions to compel or secure the performance and observance by Evergy Missouri West, the administrator and the servicer of their respective obligations to the issuing entity under or in connection with the sale agreement, the administration agreement, the servicing agreement and any intercreditor agreement. So long as no event of default occurs and is continuing, the issuing entity may exercise any and all rights, remedies, powers and privileges lawfully available to the issuing entity under or in connection with the sale agreement, the administration agreement, the servicing agreement and any intercreditor agreement. However, if the issuing entity or the servicer propose to amend, modify, waive, supplement, terminate or surrender in any material respect, or agree to any material amendment, modification, supplement, termination, waiver or surrender of, the process for adjusting the securitized utility tariff charges, the issuing entity must notify the trustee in writing and the trustee must notify the bondholders of this proposal. The intercreditor agreement provides that Evergy Missouri West will allocate and remit funds from the collection account (i) in the case of collections relating to the collateral pledged to secure the securitized utility tariff bonds to the securitization collection account at the times and in the manner specified in the basic documents; and (ii) in the case of collections relating to the receivables, to the receivables account at the times and in the manner specified in the basic documents; provided, that if a remittance of collections by a customer is less than the aggregate amount due and payable by each customer. In addition, the trustee may consent to this proposal only with the written consent of the holders of a majority of the principal amount of the outstanding securitized utility tariff bonds of the tranches materially and adversely affected thereby and only if the rating agency condition is satisfied. In determining whether a majority of holders have consented, securitized utility tariff bonds owned by the issuing entity, Evergy Missouri West or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any securitized utility tariff bonds it actually knows to be so owned.

If an event of default occurs and is continuing, the trustee may, and, at the written direction of the holders of a majority of the outstanding amount of all affected tranches of securitized utility tariff bonds, will, exercise all of the issuing entity’s rights, remedies, powers, privileges and claims against Evergy Missouri West, the seller, the administrator and servicer, under or in connection with the sale agreement, administration agreement and servicing agreement, and any right of the issuing entity to take this action shall be suspended.

The Issuing Entity’s Covenants

The issuing entity may not consolidate with or merge into any other entity, unless:

 

•

the entity formed by or surviving the consolidation or merger is organized under the laws of the United States or any state;

 

•

the entity expressly assumes, by a supplemental indenture, the performance or observance of all of the issuing entity’s agreements and covenants under the indenture and the series supplement;

 

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the entity expressly assumes all of the issuing entity’s obligations and succeeds to all of the issuing entity’s rights under the sale agreement, servicing agreement and any other basic document to which the issuing entity is a party;

 

•

no default, event of default or servicer default under the indenture has occurred and is continuing immediately after the merger or consolidation;

 

•

the rating agency condition will have been satisfied with respect to the merger or consolidation;

 

•

the issuing entity has delivered to Evergy Missouri West, the trustee and the rating agencies an opinion or opinions of outside tax counsel (as selected by the issuing entity, in form and substance reasonably satisfactory to Evergy Missouri West, and which may be based on a ruling from the IRS) to the effect that the consolidation or merger will not result in a material adverse federal or state income tax consequence to the issuing entity, Evergy Missouri West, the trustee or the then-existing bondholders;

 

•

any action as is necessary to maintain the lien and the first priority perfected security interest in the collateral created by the indenture and the series supplement has been taken, as evidenced by an opinion of counsel of external counsel; and

 

•

the issuing entity has delivered to the trustee an officer’s certificate and an opinion of counsel of external counsel, each stating that all conditions precedent in the indenture provided for relating to the transaction have been complied with.

The issuing entity may not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the collateral to any person or entity, unless:

 

•

the person or entity acquiring the properties and assets:

 

•

is a United States citizen or an entity organized under the laws of the United States or any state;

 

•

expressly assumes, by a supplemental indenture, the performance or observance of all of the issuing entity’s agreements and covenants under the indenture and the series supplement;

 

•

expressly agrees by the supplemental indenture that all right, title and interest so conveyed or transferred will be subject and subordinate to the rights of bondholders;

 

•

unless otherwise specified in the supplemental indenture referred to above, expressly agrees to indemnify, defend and hold the issuing entity and the trustee harmless against and from any loss, liability or expense arising under or related to the indenture, the series supplement and the securitized utility tariff bonds (including the enforcement cost of such indemnity);

 

•

expressly agrees by means of the supplemental indenture that the person (or if a group of persons, then one specified person) will make all filings with the SEC (and any other appropriate person) required by the Exchange Act in connection with the securitized utility tariff bonds; and

 

•

if such sale, conveyance, exchange, transfer or disposal relates to the issuing entity’s rights and obligations under the sale agreement or the servicing agreement, such person or entity assumes all obligations and succeeds to all of the issuing entity’s rights under the sale agreement and the servicing agreement, as applicable;

 

•

no default, event of default or servicer default under the indenture has occurred and is continuing immediately after the transactions;

 

•

the rating agency condition has been satisfied with respect to such transaction;

 

•

it has delivered to Evergy Missouri West, the trustee and the rating agencies an opinion or opinions of outside tax counsel (as selected by the issuing entity, in form and substance reasonably satisfactory to Evergy Missouri West, and which may be based on a ruling from the IRS) to the effect that the disposition will not result in a material adverse federal or state income tax consequence to the issuing entity, Evergy Missouri West, the trustee or the then-existing bondholders;

 

•

any action as is necessary to maintain the lien and the first priority perfected security interest in the collateral created by the indenture and the series supplement has been taken as evidenced by an opinion of counsel of external counsel; and

 

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•

the issuing entity has delivered to the trustee an officer’s certificate and an opinion of counsel of external counsel, each stating that the conveyance or transfer complies with the indenture and the series supplement and all conditions precedent therein provided for relating to the transaction have been complied with.

The issuing entity will not, among other things, for so long as any securitized utility tariff bonds are outstanding:

 

•

except as expressly permitted by the indenture, sell, transfer, exchange or otherwise dispose of any of its assets unless directed to do so by the trustee;

 

•

claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the securitized utility tariff bonds (other than amounts properly withheld from such payments under the Internal Revenue Code or other tax laws) or assert any claim against any present or former bondholder by reason of the payment of the taxes levied or assessed upon any part of the collateral;

 

•

terminate its existence, or dissolve or liquidate in whole or in part, except as permitted above;

 

•

permit the validity or effectiveness of the indenture or the series supplement to be impaired;

 

•

permit the lien of the indenture and the series supplement to be amended, hypothecated, subordinated, terminated or discharged or permit any person to be released from any covenants or obligations with respect to the securitized utility tariff bonds except as may be expressly permitted by the indenture;

 

•

permit any lien, charge, claim, security interest, mortgage, pledge, equity or other encumbrance, other than the lien and security interest granted under the indenture or the series supplement, to be created on or extend to or otherwise arise upon or burden the collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due);

 

•

permit the lien granted under the indenture or the series supplement not to constitute a valid first priority perfected security interest in the related collateral;

 

•

elect to be classified as an association taxable as a corporation for federal tax purposes, file any tax return, make any election or take any other action inconsistent with the issuing entity’s treatment, for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the issuing entity’s sole member;

 

•

change its name, identity or structure or the location of the issuing entity’s chief executive office, unless at least ten (10) business days prior to the effective date of any such change, the issuing entity delivers to the trustee (with copies to each rating agency) such documents, instruments or agreements, executed by the issuing entity, as are necessary to reflect such change and to continue the perfection of the security interest of the indenture or the series supplement;

 

•

take any action which is subject to the rating agency condition if such action would result in a downgrade, suspension or withdrawal of the then-current ratings assigned to the securitized utility tariff bonds; or

 

•

issue any securitized utility tariff bonds (other than the securitized utility tariff bonds offered hereby).

The issuing entity may not engage in any business other than financing, purchasing, owning and managing securitized utility tariff property and the other collateral and the issuance of the securitized utility tariff bonds in the manner contemplated by the financing order and the basic documents.

The issuing entity will not issue, incur, assume, guarantee or otherwise become liable for any indebtedness except for the securitized utility tariff bonds. Also, the issuing entity will not, except as contemplated by the securitized utility tariff bonds and the basic documents, make any loan or advance or credit to, or guarantee, endorse or otherwise become contingently liable in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other person. The issuing entity will not, make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

 

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The issuing entity will not make any payments, distributions, dividends or redemptions to any holder of the issuing entity’s equity interests in respect of that interest except in accordance with the indenture.

The issuing entity will cause the servicer to deliver to the trustee the annual accountant’s certificates, compliance certificates, reports regarding distributions and statements to bondholders required by the servicing agreement.

Events of Default; Rights Upon Event of Default

An “event of default” with respect to the securitized utility tariff bonds is defined in the indenture as any one of the following events:

 

•

a default for five business days in the payment of any interest on any securitized utility tariff bond (whether such failure to pay interest is caused by a shortfall in securitized utility tariff charges received or otherwise);

 

•

a default in the payment of the then unpaid principal of any securitized utility tariff bond of any tranche on the final maturity date for that tranche;

 

•

a default in the observance or performance of any of the issuing entity’s covenants or agreements made in the indenture (other than defaults described above) and the continuation of any default for a period of 30 days after the earlier of (i) the date that written notice of the default is given to the issuing entity by the trustee or to the issuing entity and the trustee by the holders of at least 25% in principal amount of the securitized utility tariff bonds then-outstanding or (ii) the date that the issuing entity had actual knowledge of the default;

 

•

any representation or warranty made by the issuing entity in the indenture or in any certificate delivered pursuant to the indenture or in connection with the indenture having been incorrect in any material respect as of the time made, and such breach not having been cured within 30 days after the earlier of (i) the date that notice of the breach is given to the issuing entity by the trustee or to the issuing entity and the trustee by the holders of at least 25% in principal amount of the securitized utility tariff bonds then-outstanding or (ii) the date that the issuing entity had actual knowledge of the default;

 

•

certain events of bankruptcy, insolvency, receivership or liquidation of the issuing entity; or

 

•

a breach by the State of Missouri or any of its agencies (including the MPSC), officers or employers that violates or is not in accordance with the State Pledge.

If an event of default (other than as specified in the sixth bullet point above) should occur and be continuing with respect to the securitized utility tariff bonds, the trustee or holders of not less than a majority in principal amount of the securitized utility tariff bonds then-outstanding may declare the unpaid principal of the securitized utility tariff bonds and all accrued and unpaid interest thereon to be immediately due and payable. However, the nature of the issuing entity’s business will result in payment of principal upon an acceleration of the securitized utility tariff bonds being made as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Securitized Utility Tariff Property— Foreclosure of the trustee’s lien on the securitized utility tariff property for the securitized utility tariff bonds might not be practical, and acceleration of the securitized utility tariff bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the securitized utility tariff bonds because the source of funds for payment is limited” in this prospectus. The holders of a majority in principal amount of the securitized utility tariff bonds may rescind that declaration under certain circumstances set forth in the indenture. Additionally, the trustee may exercise all of the issuing entity’s rights, remedies, powers, privileges and claims against the seller or the servicer under or in connection with the sale agreement, the servicing agreement and the administration agreement (at the direction of a majority of bondholders of the outstanding amount of the securitized utility tariff bonds). If an event of default as specified in the sixth bullet above has occurred, the servicer will be obligated to institute (and the trustee, for the benefit of the bondholders, will be entitled and empowered to institute) any suits, actions or proceedings at law, in equity or otherwise, to enforce the State Pledge and to collect any monetary damages as a result of a breach thereof, and each of the servicer and the trustee may prosecute any suit, action or proceeding to final judgment or decree. The costs of

 

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any such action will be payable from securitized utility tariff charge collections as an operating expense in accordance with the priorities described in “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” in this prospectus. The servicer will have no obligations to undertake such action if it is not being reimbursed on a current basis for its costs and expenses in taking such actions, and shall not be required to advance its own funds to satisfy its obligations hereunder. The costs of any such action would be payable by the seller pursuant to the sale agreement. Except for an event of default specified in the first two bullet points above, the trustee will not be deemed to have knowledge of any event of default or a breach of representation or warranty unless a responsible officer of the trustee has actual knowledge of the default or the trustee has received written notice of the default in accordance with the indenture.

If the securitized utility tariff bonds have been declared to be due and payable following an event of default, the trustee may elect to have the issuing entity maintain possession of all or a portion of such securitized utility tariff property and continue to apply securitized utility tariff charge collections as if there had been no declaration of acceleration. There is likely to be a limited market, if any, for the securitized utility tariff property following a foreclosure, in light of the event of default, the unique nature of the securitized utility tariff property as an asset and other factors discussed in this prospectus. In addition, the trustee is prohibited from selling the securitized utility tariff property following an event of default, other than a default in the payment of any principal or a default for five business days or more in the payment of any interest on any securitized utility tariff bond, which requires the direction of holders of a majority in principal amount of the securitized utility tariff bonds, unless:

 

•

the holders of all the outstanding securitized utility tariff bonds consent to the sale;

 

•

the proceeds of the sale are sufficient to pay in full the principal of and the accrued interest on the outstanding securitized utility tariff bonds; or

 

•

the trustee determines that the proceeds of the collateral would not be sufficient on an ongoing basis to make all payments on the securitized utility tariff bonds as those payments would have become due if the securitized utility tariff bonds had not been declared due and payable, and the trustee obtains the written consent of the holders of 66 2/3% of the aggregate outstanding amount of the securitized utility tariff bonds.

Subject to the provisions of the indenture relating to the duties of the trustee (please read “The Trustee” in this prospectus), if an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the securitized utility tariff bonds at the request or direction of any of the holders of securitized utility tariff bonds if the trustee reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities which might be incurred by it in complying with the request. Subject to the provisions for indemnification and certain limitations contained in the indenture (please read “The Trustee” in this prospectus):

 

•

the holders of not less than a majority in principal amount of the outstanding securitized utility tariff bonds of an affected tranche will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee; and

 

•

the holders of not less than a majority in principal amount of the securitized utility tariff bonds may, in certain cases, waive any default with respect thereto, except a default in the payment of principal or interest or a default in respect of a covenant or provision of the indenture that cannot be modified without the consent of all of the holders of the outstanding securitized utility tariff bonds of all tranches affected thereby.

No holder of any securitized utility tariff bond will have the right to institute any proceeding, to avail itself of any remedies provided in the Securitization Law or of the right to foreclose on the collateral, or otherwise to enforce the lien and security interest on the collateral or to seek the appointment of a receiver or trustee, or for any other remedy under the indenture, unless:

 

•

the holder previously has given to the trustee written notice of a continuing event of default;

 

•

the holders of not less than a majority in principal amount of the outstanding securitized utility tariff bonds have made written request of the trustee to institute the proceeding in its own name as trustee;

 

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•

the holder or holders have offered the trustee satisfactory indemnity;

 

•

the trustee has for 60 days failed to institute the proceeding; and

 

•

no direction inconsistent with the written request has been given to the trustee during the 60-day period by the holders of a majority in principal amount of the outstanding securitized utility tariff bonds.

In addition, the trustee and the servicer will covenant and each bondholder will be deemed to covenant that it will not, prior to the date which is one year and one day after the termination of the indenture, institute against the issuing entity or against the issuing entity’s managers or the issuing entity’s member or members any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law, subject to the right of the MPSC or a court of competent jurisdiction to order sequestration and payment of revenues arising with respect to the securitized utility tariff property.

Neither any manager nor the trustee in its individual capacity, nor any holder of any ownership interest in the issuing entity, nor any of their respective owners, beneficiaries, agents, officers, directors, employees, successors or assigns will, in the absence of an express agreement to the contrary, be personally liable for the payment of the principal of or interest on the securitized utility tariff bonds or for the issuing entity’s agreements contained in the indenture.

Actions by Bondholders

Subject to certain exceptions, the holders of not less than a majority of the aggregate outstanding amount of the securitized utility tariff bonds of the affected tranche or tranches will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, of exercising any trust or power conferred on the trustee under the indenture; provided, that:

 

•

the direction is not in conflict with any rule of law or with the indenture and would not involve the trustee in personal liability or expense;

 

•

subject to the other conditions described above under “—Events of Default; Rights Upon Event of Default” in this prospectus, the consent of 100% of the bondholders is required to direct the trustee to sell the collateral (other than an event of default for failure to pay interest or principal at maturity);

 

•

if the trustee elects to retain the collateral in accordance with the indenture, then any direction to the trustee by less than 100% of the bondholders will be of no force and effect; and

 

•

the trustee may take any other action deemed proper by the trustee which is not inconsistent with the direction.

In circumstances under which the trustee is required to seek instructions from the holders of the securitized utility tariff bonds of any tranche with respect to any action or vote, the trustee will take the action or vote for or against any proposal in proportion to the principal amount of the corresponding tranche, as applicable, of securitized utility tariff bonds taking the corresponding position. Notwithstanding the foregoing, the indenture allows each bondholder to institute suit for the nonpayment of (1) the interest, if any, on its securitized utility tariff bonds which remains unpaid as of the applicable due date and (2) the unpaid principal, if any, of its securitized utility tariff bonds on the final maturity date therefor.

Annual Report of Trustee

If required by the Trust Indenture Act, the trustee will be required to mail each year to all bondholders a brief report. The report must state, among other things:

 

•

the trustee’s eligibility and qualification to continue as the trustee under the indenture;

 

•

any amounts advanced by it under the indenture;

 

•

the amount, interest rate and maturity date of specific indebtedness owing by the issuing entity to the trustee in the trustee’s individual capacity;

 

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the property and funds physically held by the trustee;

 

•

any additional issue of the securitized utility tariff bonds not previously reported; and

 

•

any action taken by it that materially affects the securitized utility tariff bonds and that has not been previously reported.

Annual Compliance Statement

The issuing entity will file annually with the trustee and the rating agencies a written statement as to whether it has fulfilled its obligations under the indenture.

Satisfaction and Discharge of Indenture

The indenture will cease to be of further effect with respect to the securitized utility tariff bonds and the trustee, on the issuing entity’s written demand and at its expense, will execute instruments acknowledging satisfaction and discharge of the indenture with respect to the securitized utility tariff bonds, when:

 

•

either (a) all securitized utility tariff bonds which have already been authenticated or delivered, with certain exceptions set forth in the indenture, have been delivered to the trustee for cancellation or (b) either (i) the scheduled final payment date has occurred with respect to all securitized utility tariff bonds not previously delivered to the trustee for cancellation or (ii) the issuing entity has irrevocably deposited in trust with the trustee cash and/or U.S. government obligations in an aggregate amount sufficient to pay principal, interest and premiums, if any, on the securitized utility tariff bonds and all other sums payable by the issuing entity with respect to the securitized utility tariff bonds when scheduled to be paid and to discharge the entire indebtedness on such securitized utility tariff bonds when due;

 

•

the issuing entity has paid all other sums payable by it under the indenture with respect to the securitized utility tariff bonds; and

 

•

the issuing entity has delivered to the trustee an officer’s certificate, an opinion of external counsel, and if required by the Trust Indenture Act or the trustee, a certificate from a firm of independent registered public accountants, each stating that there has been compliance with the conditions precedent in the indenture relating to the satisfaction and discharge of the indenture.

The Issuing Entity’s Legal and Covenant Defeasance Options

The issuing entity may, at any time, terminate all of its obligations under the indenture, referred to herein as the “legal defeasance option,” or terminate its obligations to comply with some of the covenants in the indenture, including some of the covenants described under “—The Issuing Entity’s Covenants” above and referred to herein as the issuing entity’s “covenant defeasance option.”

The issuing entity may exercise the legal defeasance option of the securitized utility tariff bonds notwithstanding its prior exercise of the covenant defeasance option. If the issuing entity exercises the legal defeasance option, the securitized utility tariff bonds will be entitled to payment only from the funds or other obligations set aside under the indenture for payment thereof on the scheduled final payment date or redemption date therefor as described below. The securitized utility tariff bonds will not be subject to payment through redemption or acceleration prior to the scheduled final payment date or redemption date, as applicable. If the issuing entity exercises the legal defeasance option, the final payment of the securitized utility tariff bonds may not be accelerated because of an event of default. If the issuing entity exercises the covenant defeasance option, the final payment of the securitized utility tariff bonds may not be accelerated because of an event of default relating to a default in the observance or performance of any of the issuing entity’s covenants or agreements made in the indenture.

The indenture provides that the issuing entity may exercise its legal defeasance option or its covenant defeasance option of securitized utility tariff bonds only if:

 

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•

the issuing entity irrevocably deposits or causes to be irrevocably deposited in trust with the trustee cash and/or U.S. government obligations in an aggregate amount sufficient to pay principal, interest and premium, if any, on the securitized utility tariff bonds other sums payable by the issuing entity under the indenture with respect to the securitized utility tariff bonds when scheduled to be paid and to discharge the entire indebtedness on the securitized utility tariff bonds when due;

 

•

the issuing entity delivers to the trustee a certificate from a nationally recognized firm of independent registered public accountants expressing its opinion that the payments of principal and interest on the U.S. government obligations when due and without reinvestment plus any deposited cash will provide cash at times and in sufficient amounts to pay in respect of the securitized utility tariff bonds:

 

•

principal in accordance with the expected sinking fund schedule therefor;

 

•

interest when due; and

 

•

all other sums payable by the issuing entity under the indenture with respect to the securitized utility tariff bonds,

 

•

in the case of the legal defeasance option, 95 days pass after the deposit is made and during the 95-day period no default relating to events of the issuing entity’s bankruptcy, insolvency, receivership or liquidation occurs and is continuing at the end of the period;

 

•

no default has occurred and is continuing on the day of this deposit and after giving effect thereto;

 

•

in the case of the legal defeasance option, the issuing entity delivers to the trustee an opinion of external counsel stating that: the issuing entity has received from, or there has been published by, the IRS a ruling, or since the date of execution of the indenture, there has been a change in the applicable federal income tax law, and in either case confirming that the holders of the securitized utility tariff bonds will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the legal defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the legal defeasance had not occurred;

 

•

in the case of the covenant defeasance option, the issuing entity delivers to the trustee an opinion of external counsel to the effect that the holders of the securitized utility tariff bonds will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the covenant defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred;

 

•

the issuing entity delivers to the trustee a certificate of one of its officers and an opinion of external counsel, each stating that all conditions precedent to the legal defeasance option or the covenant defeasance option, as applicable, have been complied with as required by the indenture;

 

•

the issuing entity delivers to the trustee an opinion of external counsel to the effect that (a) in a case under the Bankruptcy Code in which Evergy Missouri West (or any of its affiliates, other than the issuing entity) is the debtor, the court would hold that the deposited cash or U.S. government obligations would not be in the bankruptcy estate of Evergy Missouri West (or any of its affiliates, other than the issuing entity, that deposited the cash or U.S. government obligations); and (b) in the event Evergy Missouri West (or any of its affiliates, other than the issuing entity, that deposited the cash or U.S. government obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of Evergy Missouri West (or any of its affiliates, other than the issuing entity, that deposited the cash or U.S. government obligations) and the issuing entity so as to order substantive consolidation under the Bankruptcy Code of the issuing entity’s assets and liabilities with the assets and liabilities of Evergy Missouri West or such other affiliate; and

 

•

the rating agency condition has been satisfied with respect to the exercise of any legal defeasance option or covenant defeasance option.

 

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No Recourse to Others

No recourse may be taken directly or indirectly, by the holders with respect to the issuing entity’s obligations on the securitized utility tariff bonds, under the indenture or any supplement thereto or any certificate or other writing delivered in connection therewith, against (1) any owner of a beneficial interest in the issuing entity (including Evergy Missouri West) or (2) any shareholder, partner, owner, beneficiary, agent, officer, director or employee of the trustee, the managers or any owner of a beneficial interest in the issuing entity (including Evergy Missouri West) in its individual capacity, or of any successor or assign or any of them in their respective individual or corporate capacities, except as any such person may have expressly agreed in writing. Each holder by accepting a securitized utility tariff bond specifically confirms the nonrecourse nature of these obligations, and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the securitized utility tariff bonds.

Notwithstanding any provision of the indenture or the series supplement to the contrary, bondholders shall look only to the collateral with respect to any amounts due to the bondholders under the indenture and the securitized utility tariff bonds, and, in the event such collateral is insufficient to pay in full the amounts owed on the securitized utility tariff bonds, shall have no recourse against the issuing entity in respect of such insufficiency.

 

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THE TRUSTEE

The Bank of New York Mellon Trust Company, National Association, a national banking association, will act as the trustee, the paying agent and the registrar for the securitized utility tariff bonds. The Bank of New York Mellon Trust Company, National Association has acted as trustee on numerous electrical corporation sponsored bond transactions. The indenture and series supplement will be administered from The Bank of New York Mellon Trust Company, National Association, Corporate Trust Department located at 2 N. LaSalle Street, Suite 700, Chicago, IL 60602 Attn: ABS Corporate Trust Administration.

The trustee (or any other eligible institution in any capacity under the indenture) may resign at any time upon not less than 30 days’ prior written notice to the issuing entity. The holders of a majority in principal amount of the outstanding amount of the securitized utility tariff bonds under the indenture may remove the trustee (or any other eligible institution in any capacity under the indenture) upon not less than 30 days’ prior written notice by so notifying the trustee (or such other eligible institution) and may appoint a successor trustee (or successor eligible institution in the applicable capacity). The issuing entity will remove the trustee if the trustee: (i) ceases to be eligible under the Trust Indenture Act; (ii) ceases to satisfy certain credit standards set forth in the indenture and the series supplement; (iii) becomes a debtor in a bankruptcy proceeding or is adjudicated insolvent or a receiver or other public officer takes charge of the trustee or its property; (iv) becomes incapable of acting; or (v) fails to provide to the issuing entity certain information pertaining to the trustee that it reasonably requests that is necessary for it to satisfy its reporting obligations under the securities laws. The issuing entity will remove any person who maintains the collection account or any other account established under the Indenture and fails to constitute an eligible institution with 30 days’ prior notice. If the trustee resigns or is removed or a vacancy exists in the office of trustee for any reason, the issuing entity will be obligated promptly to appoint a successor trustee eligible under the indenture, and notice of such appointment is required to be promptly given to each rating agency by the successor trustee. If any person (other than the trustee) acting in any capacity under the indenture as an eligible institution is removed, fails to constitute an eligible institution or if a vacancy exists in any such capacity for any reason, the issuing entity will promptly appoint a successor to such capacity that constitutes an eligible institution. No resignation or removal of the trustee (or any other person acting as an eligible institution) will become effective until acceptance of the appointment by a successor trustee (or a successor eligible institution). The issuing entity is responsible for payment of the expenses associated with any such removal or resignation.

The trustee will at all times satisfy the requirements of the Trust Indenture Act and Rule 3a-7 of the Investment Company Act of 1940 and have a combined capital and surplus of at least $50,000,000 and a long- term debt rating of BBB– (or the equivalent thereof) or better by all of the rating agencies rating the securitized utility tariff bonds and from which a rating is available. If the trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association will without any further action be the successor trustee.

The trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, that its conduct does not constitute willful misconduct, negligence or bad faith. The issuing entity has agreed to indemnify the trustee and its officers, directors, employees and agents against any and all cost, damage, loss, liability or expense (including attorney’s fees and expenses) incurred by it in connection with the administration of the trust and the performance of its duties under the indenture; provided, that the issuing entity is not required to pay any expense or indemnify against any loss, liability or expense incurred by the trustee through the trustee’s own willful misconduct, negligence or bad faith. Please read “Security for the Securitized Utility Tariff Bonds—How Funds in the Collection Account will be Allocated” in this prospectus.

In the ordinary course of business, The Bank of New York Mellon, an affiliate of the trustee, is named as a defendant in legal actions. In connection with its role as trustee of certain residential mortgage-backed securitizations, or RMBS transactions, The Bank of New York Mellon has been named as a defendant in a number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, The Bank of New York Mellon denies liability and intends to defend the litigations vigorously.

 

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The issuing entity, Evergy Missouri West and their respective affiliates may from time to time enter into normal banking and trustee relationships with The Bank of New York Mellon Trust Company, National Association and its affiliates. The Bank of New York Mellon Trust Company, National Association also acts as the trustee under an indenture under which Evergy Missouri West’s parent, Evergy, has issued and may issue debt securities in the future. Evergy Missouri West maintains bank deposits with The Bank of New York Mellon and may borrow money from the bank from time to time.

No relationships currently exist or existed during the past two years between Evergy Missouri West, the issuing entity and each of their respective affiliates, on the one hand, and The Bank of New York Mellon Trust Company, National Association and its affiliates, on the other hand, that would be outside the ordinary course of business or on terms other than would be obtained in an arm’s length transaction with an unrelated third party.

 

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SECURITY FOR THE SECURITIZED UTILITY TARIFF BONDS

General

The securitized utility tariff bonds issued under the indenture will be non-recourse obligations and are payable solely from and secured solely by a pledge of and lien on the securitized utility tariff property and the other collateral as provided in the indenture. If and to the extent the securitized utility tariff property and the other assets of the trust estate are insufficient to pay all amounts owing with respect to the securitized utility tariff bonds, then the bondholders will generally have no claim in respect of such insufficiency against the issuing entity or any other person. By the acceptance of the securitized utility tariff bonds, the bondholders waive any such claim.

Pledge of Collateral

To secure the payment of principal of and interest on the securitized utility tariff bonds, the issuing entity will grant to the trustee a security interest in all of the issuing entity’s right, title and interest (whether now owned or hereafter acquired or arising) in and to the following property:

 

•

the securitized utility tariff property and all related securitized utility tariff charges;

 

•

the issuing entity’s rights under the true-up mechanism;

 

•

the issuing entity’s rights under a sale agreement pursuant to which it will acquire the securitized utility tariff property;

 

•

the issuing entity’s rights under the servicing agreement and any subservicing, agency, or collection agreements executed in connection with the servicing agreement;

 

•

the issuing entity’s rights under the administration agreement and intercreditor agreement;

 

•

the collection account for the securitized utility tariff bonds and all subaccounts of the collection account, and all amounts of cash instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto;

 

•

all of the issuing entity’s other property related to the securitized utility tariff bonds, other than any amounts released to Evergy Missouri West by the trustee on any payment date relating to its return on capital of its capital contribution;

 

•

all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing; and

 

•

all proceeds in respect of any or all of the foregoing.

The security interest does not extend to:

 

•

amounts released to Evergy Missouri West by the trustee on any payment date relating to its return on capital of its capital contribution;

 

•

amounts deposited in the capital subaccount or any other subaccount that have been released to the issuing entity or as it directs following retirement of securitized utility tariff bonds; and

 

•

amounts deposited with the issuing entity on the issuance date required for payment of costs of issuance with respect to the securitized utility tariff bonds (together with any interest earnings thereon).

The depositor refers to the foregoing assets in which the issuing entity, as assignee of the seller, will grant the trustee a security interest as the “collateral.”

 

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Security Interest in the Collateral

The Securitization Law provides that consensual security interests can be granted in securitized utility tariff property. The Securitization Law provides that a valid and enforceable security interest in securitized utility tariff property is created at the later of the time when (a) the MPSC has issued the financing order authorizing securitized utility tariff charges included in the securitized utility tariff property, (b) a security agreement is executed and delivered by the debtor granting such security interest, (c) the debtor has rights in the securitized utility tariff property or the power to transfer such securitized utility tariff property, or (d) value is received for the securitized utility tariff property. The security interest in the securitized utility tariff property is perfected when it has attached and when a financing statement has been filed with the Missouri Secretary of State, with a copy filed with the MPSC, in accordance with the Securitization Law.

Right of Foreclosure

The Securitization Law provides that if an event of default occurs under the securitized utility tariff bonds that are secured by a security interest in the securitized utility tariff property, the financing parties or their representatives, as secured parties, may foreclose or otherwise enforce the lien and security interest in the securitized utility tariff property securing the securitized utility tariff bonds as if they were secured parties under Article 9 of the UCC. In addition, if Evergy Missouri West defaults on any required remittance of securitized utility tariff charges, a court, upon application by an interested party, under the Securitization Law may order the sequestration and payment of securitized utility tariff charge collections to pledgees and transferees of securitized utility tariff property.

Description of Indenture Accounts

Collection Account

Pursuant to the indenture, the issuing entity will establish a segregated trust account in the name of the trustee with an eligible institution, for the securitized utility tariff bonds called the “collection account.” The collection account will be under the sole dominion and exclusive control of the trustee. The trustee will hold the collection account for the issuing entity’s benefit as well as for the benefit of the bondholders. The collection account for the securitized utility tariff bonds will consist of three subaccounts: a “general subaccount,” an “excess funds subaccount,” and a “capital subaccount,” which need not be separate bank accounts. For administrative purposes, the subaccounts may be established by the trustee as separate accounts which will be recognized individually as subaccounts and collectively as the collection account. All amounts in the collection account not allocated to any other subaccount will be allocated to the general subaccount. Unless the context indicates otherwise, references in this prospectus to the collection account include the collection account and each of the subaccounts contained therein.

The following institutions are eligible institutions for the establishment of the collection account:

 

•

the corporate trust department of the trustee, so long as any of the securities of the trustee have (i) either a short-term credit rating from Moody’s of at least “P-1” or a long-term unsecured debt rating from Moody’s of at least “A2” and (ii) a credit rating from S&P of at least “A”; or

 

•

a depository institution organized under the laws of the United States of America or any state (or any domestic branch of a foreign bank) (i) that has either (A) a long-term issuer rating of “AA-” or higher by S&P and “A2” or higher by Moody’s, or (B) a short-term issuer rating of “A-1” or higher by S&P and “P-1” or higher by Moody’s, or any other long-term, short-term or certificate of deposit rating acceptable to the rating agencies, and (ii) whose deposits are insured by the Federal Deposit Insurance Corporation.

Eligible Investments for Funds in the Collection Account

Funds in the collection account may be invested only in such investments as meet the criteria described below and which mature on or before the business day preceding the next payment date:

 

•

direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

 

•

demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of or bankers’ acceptances issued by, any depository institution (including the trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any state thereof and subject to the supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated as least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s, or such lower rating as will not result in the downgrading or withdrawal of the securitized utility tariff bonds;

 

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•

commercial paper (including commercial paper of the trustee, acting in its commercial capacity, and other than commercial paper issued by Evergy Missouri West or any of its affiliates) having, at the time of investment or contractual commitment to invest, a rating of at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s or such lower rating as will not result in the downgrading or withdrawal of the ratings of the securitized utility tariff bonds;

 

•

investments in money market funds which have a rating in the highest investment category granted thereby (including funds for which the trustee or any of its affiliates is investment manager or advisor) from Moody’s and S&P;

 

•

repurchase obligations with respect to any security that is a direct obligations of, or fully guaranteed by, the United States of America or certain of its agencies or instrumentalities, entered into with eligible institutions; or

 

•

repurchase obligations with respect to any security or whole loan entered into with an eligible institution or with a registered broker-dealer acting as principal and that meets certain ratings criteria.

The trustee will have access to the collection account for the purpose of making deposits in and withdrawals from the collection account in accordance with the indenture. The servicer will select the eligible investments in which funds will be invested, unless otherwise directed by the issuing entity.

The servicer will remit securitized utility tariff charge payments to the collection account in the manner described under “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

General Subaccount

The general subaccount will hold all funds held in the collection account that are not held in the other two subaccounts. The servicer will remit all securitized utility tariff charge payments to the general subaccount. On each payment date, the trustee will draw on amounts in the general subaccount to pay the issuing entity’s expenses and to pay interest and make scheduled payments on the securitized utility tariff bonds, and to make other payments and transfers in accordance with the terms of the indenture. Funds in the general subaccount will be invested in the eligible investments described above.

Excess Funds Subaccount

The trustee, at the written direction of the servicer, will allocate to the excess funds subaccount securitized utility tariff charge collections available with respect to any payment date in excess of amounts necessary to make the payments specified on such payment date. The excess funds subaccount will also hold all investment earnings on the collection account (other than investment earnings on the capital subaccount) in excess of such amounts.

Capital Subaccount

In connection with the issuance of the securitized utility tariff bonds, the seller, in its capacity as the issuing entity’s sole owner, will contribute capital to the issuing entity in an amount equal to the “required capital level,” which will be not less than 0.50% of the principal amount of the securitized utility tariff bonds issued. This amount will be funded by the seller and not from the proceeds of the sale of the securitized utility tariff bonds, and will be deposited into the capital subaccount on the issuance date. In the event that amounts on deposit in the general subaccount and the excess funds subaccount are insufficient to make scheduled payments of principal and interest on the securitized utility tariff bonds and payments of fees and expenses contemplated by the first nine bullets under “—How Funds in the Collection Account will be Allocated” in this prospectus, the trustee will draw on amounts in the capital subaccount to make such payments up to the lesser of the amount of such insufficiency and the amounts on deposit in the capital subaccount. In the event of any such withdrawal, collected securitized utility tariff charges available on any subsequent payment date that are not necessary to pay scheduled payments of principal and interest on the securitized utility tariff bonds and payments of fees and expenses will be used to replenish any amounts drawn from the capital subaccount. If the securitized utility tariff bonds have been retired as of any payment date, the amounts on deposit in the capital subaccount will be released to the issuing entity, free of the lien of the indenture.

 

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How Funds in the Collection Account will be Allocated

On each payment date for the securitized utility tariff bonds (or any other date as directed by the servicer with respect to ongoing financing costs in clause (4) below payable prior to the next payment date), the trustee will with respect to the securitized utility tariff bonds, pay or allocate, solely at the written direction of the servicer, all amounts on deposit in the collection account (including investment earnings thereon) to pay the following amounts in the following priority:

 

(1)

amounts owed by the issuing entity to the trustee, the trustee’s fees and expenses and any outstanding indemnity amounts owed to the trustee in an amount not to exceed $                 per annum (the “Trustee Cap”); provided, however, that the Trustee Cap shall be disregarded and inapplicable upon the acceleration of the securitized utility tariff bonds following the occurrence of an event of default;

 

(2)

the servicing fee and any unpaid servicing fees from prior payment dates to the servicer as described under “The Servicing Agreement—Servicing Compensation” in this prospectus;

 

(3)

the administration fee and an allocable share of the fees owed to the issuing entity’s independent manager;

 

(4)

all of the issuing entity’s other ordinary periodic ongoing financing costs relating to the securitized utility tariff bonds, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the administrator under the administration agreement and of the servicer under the servicing agreement;

 

(5)

interest then due on the securitized utility tariff bonds, including any past-due interest;

 

(6)

principal then due and payable on the securitized utility tariff bonds as a result of an event of default or on the final maturity date for the securitized utility tariff bonds;

 

(7)

scheduled principal payments of securitized utility tariff bonds according to its expected sinking fund schedule, together with any overdue scheduled principal payments, paid pro rata among the securitized utility tariff bonds if there is a deficiency;

 

(8)

any remaining unpaid fees, expenses and indemnity amounts owed to the trustee;

 

(9)

any other unpaid ongoing financing costs relating to the securitized utility tariff bonds and any remaining amounts owed pursuant to the basic documents;

 

(10)

replenishment of any amounts drawn from the capital subaccount;

 

(11)

provided that no event of default has occurred and is continuing, release to Evergy Missouri West an amount representing a return on capital of its capital contribution calculated at the weighted average cost of capital authorized from time to time by the MPSC in Evergy Missouri West’s rate proceedings plus applicable taxes;

 

(12)

the remainder, if any, to the excess funds subaccount for distribution on subsequent payment dates; and

 

(13)

after principal of and premium, if any, and interest on all securitized utility tariff bonds and all of the other foregoing amounts have been paid in full, the balance (including all amounts then held in the applicable capital subaccount and the applicable excess funds subaccount), if any, shall be paid to Evergy Missouri West free and clear from the lien of the indenture and the series supplement and credited to customers through normal ratemaking processes.

If on any payment date funds on deposit in the general subaccount are insufficient to make the payments contemplated by clauses (1) through (9) above, the trustee will first, draw from amounts on deposit in the excess funds subaccount, and second, draw from amounts on deposit in the capital subaccount, up to the amount of the shortfall, in order to make those payments in full. If the trustee uses amounts on deposit in the capital subaccount to pay those

 

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amounts or make those transfers, as the case may be, subsequent adjustments to the securitized utility tariff charges will take into account, among other things, the need to replenish those amounts. In addition, if on any payment date funds on deposit in the general subaccount are insufficient to make the transfer described in clause (10) above, the trustee will draw from amounts on deposit in the excess funds subaccount to make such transfer.    Please read “Risk Factors—Other Risks Associated with an Investment in the Securitized Utility Tariff Bonds— Evergy Missouri West’s indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the securitized utility tariff bonds” in this prospectus.

If, on any payment date, available collections of the securitized utility tariff charges, together with available amounts in the subaccounts, are not sufficient to pay interest due on all outstanding securitized utility tariff bonds on that payment date, amounts available will be allocated pro rata based on the amount of interest payable. If, on any payment date, remaining collections of the securitized utility tariff charges, together with available amounts in the subaccounts, are not sufficient to pay principal due and payable on all outstanding securitized utility tariff bonds on that payment date, amounts available will be allocated pro rata based on the principal amount then due and payable. If, on any payment date, remaining collections of the securitized utility tariff charges, together with available amounts in the subaccounts, are not sufficient to pay principal scheduled to be paid on all outstanding securitized utility tariff bonds, amounts available will be allocated pro rata based on the principal amounts then scheduled to be paid on the payment date.

Intercreditor Agreement

Evergy Missouri West currently has an accounts receivable program under which it sells substantially all its accounts receivable (other than the securitized utility tariff charges, which are entitlements of the issuing entity and not the servicer, and which are excluded from this arrangement). Evergy Missouri West will enter into an intercreditor agreement with the parties to Evergy Missouri West accounts receivable program which will state that, (i) the securitized utility tariff charges are excluded from the assets sold under the accounts receivable sales program and (ii) replacement of the servicer will require the agreement of the trustees and the administrative agent under the accounts receivable sales program. In the sale agreement, Evergy Missouri West has covenanted that it will not enter into any future sale of charges owing by electric customers to issuing entities for the purpose of issuing additional securitized utility tariff bonds without entering into a joinder to the intercreditor agreement. Please read “The Sale Agreement—Covenants of the Seller” in this prospectus.

If the trustees are unable to agree on a replacement servicer, no trustee would be able to replace Evergy Missouri West or any successor as servicer; the parties must cooperate to appoint a replacement servicer within ten business days of the date of notice that the servicer shall be replaced. Please read “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

 

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WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE SECURITIZED UTILITY TARIFF BONDS

The rate of principal payments, the amount of each interest payment and the actual final payment date of each tranche of the securitized utility tariff bonds and the weighted average life thereof will depend primarily on the timing of receipt of collected securitized utility tariff charges by the trustee and the statutory true-up mechanism. The aggregate amount of collected securitized utility tariff charges and the rate of principal amortization on the securitized utility tariff bonds will depend, in part, on actual energy usage and energy demands, and the rate of delinquencies and write-offs. The securitized utility tariff charges are required to be adjusted from time to time based in part on the actual rate of collected securitized utility tariff charges. However, the issuing entity can give no assurance that the servicer will be able to forecast accurately actual electricity usage and the rate of delinquencies and write-offs or implement adjustments to the securitized utility tariff charges that will cause collected securitized utility tariff charges to be received at any particular rate. Please read “Risk Factors— Servicing Forecasting Risks—Inaccurate consumption or collection forecasting might reduce scheduled payments on the securitized utility tariff bonds” and “Evergy Missouri West’s Financing Order—Securitized Utility Tariff Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Securitized Utility Tariff Charge” in this prospectus.

The securitized utility tariff bonds may be retired later than expected. Except in the event of an acceleration of the final payment date of the securitized utility tariff bonds after an event of default, however, the securitized utility tariff bonds will not be paid at a rate faster than that contemplated in the expected sinking fund schedule for each tranche of the securitized utility tariff bonds even if the receipt of collected securitized utility tariff charges is accelerated. Instead, receipts in excess of the amounts necessary to amortize the securitized utility tariff bonds in accordance with the applicable expected sinking fund schedules, to pay interest and related fees and expenses and to fund subaccounts of the collection account will be allocated to the excess funds subaccount. Amounts on deposit in the excess funds subaccount will be taken into consideration in calculating the next true-up adjustment. Acceleration of the final maturity date after an event of default in accordance with the terms thereof will result in payment of principal earlier than the related scheduled final payment dates. A payment on a date that is earlier than forecast might result in a shorter weighted average life, and a payment on a date that is later than forecast might result in a longer weighted average life. In addition, if a larger portion of the delayed payments on the securitized utility tariff bonds is received in later years, the securitized utility tariff bonds may have a longer weighted average life.

Weighted Average Life Sensitivity

Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of the security has been repaid to the investor. The rate of principal payments on each tranche of securitized utility tariff bonds, the aggregate amount of each interest payment on each tranche of securitized utility tariff bonds and the actual final payment date of each tranche of securitized utility tariff bonds will depend on the timing of the servicer’s receipt of securitized utility tariff charges from customers. Changes in the expected weighted average lives of the tranches of the securitized utility tariff bonds in relation to variances in actual energy consumption levels (retail electric sales) from forecast levels are shown below.

 

Weighted Average Life Sensitivity

-5% ( Standard Deviations from Mean)

-15% ( Standard Deviations from Mean)

Tranche

Expected Weighted Average Life (Years)

WAL (yrs)

Change (days)*

WAL (yrs)

Change (days)*

 

*	Number is rounded to whole days

 

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Assumptions

For the purposes of preparing the above chart, the following assumptions, among others, have been made: (i) in relation to the initial forecast, the forecast error stays constant over the life of the securitized utility tariff bonds and is equal to an overestimate of electricity consumption of 5% (            standard deviations from mean) or 15% (            standard deviations from mean), (ii) the servicer makes timely and accurate submissions to true-up the securitized utility tariff charges annually, (iii) customer write-off rates are held constant at     % and     % for residential and non-residential, (iv) Evergy Missouri West remits all securitized utility tariff charges on average      days and      days after such charges are billed to residential and non-residential customers, respectively, (v) ongoing financing costs are equal to projections, (vi) there is no acceleration of the final maturity date of the securitized utility tariff bonds, (vii) a permanent loss of all customers has not occurred, and (viii) the issuance date of the securitized utility tariff bonds is             , 2023. There can be no assurance that the weighted average lives of the securitized utility tariff bonds will be as shown.

 

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THE SALE AGREEMENT

The following summary describes particular material terms and provisions of the sale agreement pursuant to which the issuing entity will purchase securitized utility tariff property from the seller. The depositor has filed the form of the sale agreement as an exhibit to the registration statement of which this prospectus forms a part.

Sale and Assignment of the Securitized Utility Tariff Property

On the issuance date, pursuant to a sale agreement, the seller will sell, transfer and assign securitized utility tariff property to the issuing entity, without recourse, except as provided in such sale agreement. The securitized utility tariff property acquired on that date represents all irrevocable right, title and interest in and to non-bypassable rates and other charges established by the financing order to be collected from existing and future retail customers in Evergy Missouri West’s service territory in amounts sufficient to repay bond principal, interest and related financing costs and all rights to obtain adjustments to such securitized utility tariff charges in accordance with the Securitization Law and the financing order. The issuing entity will apply the net proceeds that the issuing entity receives from the sale of the securitized utility tariff bonds to the purchase of the securitized utility tariff property acquired on that date.

In accordance with the Securitization Law, the transfer by Evergy Missouri West to the issuing entity of securitized utility tariff property will be deemed perfected as against third persons upon the filing of a financing statement with the office of the secretary of state.

Conditions to the Sale of Securitized Utility Tariff Property

The issuing entity’s obligation to purchase and the seller’s obligation to sell securitized utility tariff property on the issuance date will be subject to the satisfaction of each of the following conditions:

 

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on or prior to the issuance date, the seller must duly execute and deliver the sale agreement to the issuing entity;

 

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on or prior to the issuance date, the seller must have received the financing order from the MPSC authorizing the creation of the securitized utility tariff property;

 

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on or prior to the issuance date, the seller must have filed the issuance advice letter with the MPSC and such letter must be effective;

 

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as of the issuance date, the seller may not be insolvent and may not be made insolvent by the sale of securitized utility tariff property to the issuing entity, and the seller may not be aware of any pending insolvency with respect to itself;

 

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as of the issuance date, the representations and warranties of the seller in the sale agreement must be true and correct (except to the extent they relate to an earlier date), the seller may not have breached any of its covenants in the sale agreement, and the servicer may not be in default under the servicing agreement;

 

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as of the issuance date, the issuing entity must have sufficient funds available to pay the purchase price for securitized utility tariff property to be conveyed and all conditions to the issuance of the securitized utility tariff bonds intended to provide the funds to purchase that securitized utility tariff property set forth in the indenture must have been satisfied or waived;

 

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on or prior to the issuance date, the seller must have taken all action required to transfer ownership of securitized utility tariff property to be conveyed to the issuing entity on the issuance date, free and clear of all liens other than liens created by the issuing entity pursuant to the basic documents and to perfect such transfer including, without limitation, filing any statements or filings under the Securitization Law or the UCC; and the issuing entity or the servicer, on the issuing entity’s behalf, must have taken any action required for the issuing entity to grant the trustee a lien and first priority perfected security interest in the collateral and maintain that security interest as of the issuance date;

 

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the seller must receive and deliver to the issuing entity and the trustee an opinion or opinions of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to the issuing entity and the underwriters),

 

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to the effect that: (i) the issuing entity will not be subject to United States federal income tax as an entity separate from the issuing entity’s sole owner and that the securitized utility tariff bonds will be treated as debt of the issuing entity’s sole owner for U.S. federal income tax purposes and (ii) for U.S. federal income tax purposes, the issuance of the securitized utility tariff bonds will not result in gross income to the seller;

 

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on and as of the issuance date, the issuing entity’s limited liability company agreement, the servicing agreement, the sale agreement, the indenture, the Securitization Law, the financing order and any tariff authorizing the collection of securitized utility tariff charges must be in full force and effect; and

 

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the seller must deliver to the issuing entity and to the trustee an officers’ certificate confirming the satisfaction of each of these conditions.

Seller Representations and Warranties

In the sale agreement, the seller will represent and warrant to the issuing entity, as of the issuance date, to the effect, among other things, that:

 

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no portion of the securitized utility tariff property has been sold, transferred, assigned or pledged or otherwise conveyed by the seller to any person other than the issuing entity and immediately prior to the sale of the securitized utility tariff property, the seller owns the securitized utility tariff property free and clear of all liens and rights of any other person, and no offsets, defenses or counterclaims exist or have been asserted with respect to the securitized utility tariff property;

 

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on the issuance date, immediately upon the sale under the sale agreement, the securitized utility tariff property transferred on the issuance date will be validly transferred and sold to the issuing entity, the issuing entity will own the securitized utility tariff property free and clear of all liens (except for liens created in your favor by the Securitization Law and the basic documents) and all filings and action to be made or taken by the seller (including filings with the Secretary of State of Missouri under the Securitization Law) necessary in any jurisdiction to give the issuing entity a perfected ownership interest (subject to any lien created by the issuing entity or by the Securitization Law in your favor under the basic documents or the Securitization Law) in the securitized utility tariff property will have been made or taken;

 

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subject to the clause below regarding assumptions used in calculating the securitized utility tariff charges as of the issuance date, all written information, as amended or supplemented from time to time, provided by the seller to the issuing entity with respect to the securitized utility tariff property (including the expected sinking fund schedule, the financing order and the issuance advice letter relating to the securitized utility tariff property) is true and correct in all material respects;

 

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under the laws of the State of Missouri (including the Securitization Law) and the United States in effect on the issuance date:

 

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the financing order and issuance advice letter pursuant to which the rights and interests of the seller in the securitized utility tariff property have been created, including the right to impose, collect and receive the securitized utility tariff charges and, the interest in and to the securitized utility tariff property, has become final and non-appealable and is in full force and effect, and the seller has validly and irrevocably consented to the terms of the financing order;

 

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the securitized utility tariff bonds are entitled to the protection provided in specific sections of the Securitization Law, subject to the limitations specified therein (please read “The Securitized Utility Tariff Property and the Securitization Law” in this prospectus);

 

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the process by which the financing order was approved and the financing order, issuance advice letter and tariff comply with all applicable laws and regulations;

 

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no other approval, authorization, consent, order or other action of, or filing with any governmental authority is required on the part of the seller in connection with the creation of the securitized utility tariff property, except those that have been obtained or made;

 

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the issuance advice letter and the tariff have been filed in accordance with the financing order and an officer of the seller has provided the certification to the MPSC required by the issuance advice letter; and

 

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the State of Missouri has pledged that it will not take any action that impairs the value of the securitized utility tariff property or the security for the securitized utility tariff bonds or, except as provided with respect to the true-up mechanism, reduce, alter or impair the securitized utility tariff charges until any and all principal, interest and financing costs have been paid and performed in full.

 

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based on information available to the seller on the issuance date, the assumptions used in calculating the securitized utility tariff charges as of the issuance date are reasonable and are made in good faith; however, notwithstanding the foregoing, Evergy Missouri West makes no representation or warranty, express or implied, that amounts actually collected arising from those securitized utility tariff charges will in fact be sufficient to meet the payment obligations on the related securitized utility tariff bonds or that the assumptions used in calculating such securitized utility tariff charges will in fact be realized;

 

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upon the effectiveness of the financing order, the issuance advice letter and the tariff with respect to the transferred securitized utility tariff property and the transfer of such securitized utility tariff property to us:

 

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the right and interest of the seller under the financing order in and to the securitized utility tariff charges established by provisions of the Securitization Law and the financing order, including all rights to obtain true-up adjustments, become securitized utility tariff property;

 

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the securitized utility tariff property constitutes an existing present intangible property right vested in us;

 

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the securitized utility tariff property includes (i) the right and interest under the financing order, including the right to impose, bill charge, collect and receive securitized utility tariff charges, including the right to obtain adjustments of such charges as authorized in the financing order and (ii) all revenues, collections, claims, rights to payments, payments, money or proceeds of or arising from the rights and interests specified in the financing order;

 

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the owner of the securitized utility tariff property is legally entitled to bill securitized utility tariff charges and collect payments in respect of the securitized utility tariff charges in the aggregate sufficient to pay the interest on and principal of the related securitized utility tariff bonds in accordance with the indenture, to pay the fees and expenses of servicing the securitized utility tariff bonds, and to replenish the capital subaccount to the required capital level until the securitized utility tariff bonds are paid in full; and

 

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the securitized utility tariff property is not subject to any lien other than the lien created by the basic documents or pursuant to the Securitization Law;

 

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the seller is a corporation duly organized and in good standing under the laws of the State of Delaware, with the requisite corporate power and authority to own its properties and conduct its business as currently owned or conducted;

 

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the seller has the requisite corporate power and authority to obtain the financing order and to own the rights and interests under the financing order relating to the securitized utility tariff bonds, to sell and transfer those rights and interests to the issuing entity, whereupon (subject to the effectiveness of the related issuance advice letter) such rights and interests will become securitized utility tariff property;

 

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the seller is duly qualified to do business in Missouri and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be reasonably likely to have a material adverse effect on the seller’s business, operations, assets, revenues or properties).

 

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