ML19262C338

Response to TMI Alert,Inc Interrogatories 41-50.Licensee Entered Into Revolving Credit Agreement to Obtain short-term Financing After Incident

ML19262C338
Person / Time
Site:	Three Mile Island
Issue date:	01/22/1980
From:	Glasspiegel H, Graham J METROPOLITAN EDISON CO.
To:	THREE MILE ISLAND ALERT
Shared Package
ML19262C336	List: ML19262C335 ML19262C338
References
NUDOCS 8002110292
Download: ML19262C338 (12)

Text

o UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFOR5 THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

METROPOLITAN EDISON COMPANY ) Docket No. 50-289

) (Restart)

(Three Mile Island Nuclear )

Station, Unit No. 1) )

LICENSEE 'S RESPONSE TO INTERROGATORIES 41-50 (FIRST SET) OF THREE MILE ISLAND ALERT, INC.

INTERROGATORY NO. 41 Has the Licensee prepared , or had prepared, any analysis of its financial position as a result of the March 28, 1979 accident?

INTERROGATORY NO. 42 If so, state:

(a) the name, address and telephone number of the person who prepared the analysis:

(b) the nature and topics of the analysis; (c) identify and provide copies of all such analyses.

RES PONS E The most recent forecast of the financial position of Metropolitan Edison is contained in the testimony of Mr. John G. Graham in the Pennsylvania Rate Proceeding Docket No.

I-79040308. This represents the 1980 Budget for GPU and sub-sidiaries together with a forecast, based upon explicitly stat-ed assumptions, of financial position beyond 1980.

(a) The current and forecasted financial position of Metropolitan Edison was prepared under the direction of:

1946 027 av)os110 afi:L

Mr. John G. Graham GPU Service Corporacion 100 Interpace Parkway Parsippany, N. J. 07054 (201) 263-6130 (b) The analysis, as reflected in Mr. Graham's testimony, details and discusses a four year projection of sources and application of funds together with an an-alysis of the results of operations.

(c) The analysis has been filed in Pennsylvania Docket No. I-79040308 and is identified as Met-Ed/Penelec Statement A-1, Supplement No. 1, Witness: John G.

Graham and Exhibits A-23 through 29 and 35 through 39.

Copies have been provided to Three Mile Island Alert, Inc. since they are a party to the referenced pro-ceeding. A copy of the testimony and exhibits will be placed in Licensee's Discovery Reading Room.

INTERROGATORY NO. 43 Has the Licensee had difficulties in obtaining short-term financing since :Drch 28, 1979?

INTERROGATORY NO. 44 If so, state:

(a) the nature of the difficulties; (b) the name, address and telephone number of each person who has been requested to provide shor t-term finan-cing to Licensee; (c) the results of each request; (d) the present status of any short-term financing plans presently available to Licensee; (e) identify and provide copies of all short-term finan-cing plans developed or implemented, inciuding those that sere unsuccessful.

RES PONSE (a-e) 1946 028

_r_

'mmediately following the March 28 accident, GPU and its three operating companies contacted their banks and requested increases in their existing lines of credit from a March 28 level of $225 million to a level of almost S500 million.

Because the existing lines were infcrmal unsecured lines of credit, the banks could decide to revoke their line of credit at any time. Because of the uncertainty surrounding the acci-dent, particularly with respect to regulatory response, it was soon apparent that the GPU System required a short-term credit arrangement that would provide a better assurance of availability for short-term borrowings. As a result and fol-lowing extensive discussions, the GPU System entered into a re-volving credit agreement. The credit under that agreement is now available according to its terms. The Revolving Credit Agreement limits the amount of short-term borrowings that can take place outside the credit agreement. As of December 31, 1979, there were no borrowings under the lines of credit avail-able outside of the Revolving Credit Agreement.

Copies of the following documents will be placed in Licensee 's Discovery Readir.g Room: (1) the Revolving Credit Agreement, together with subsequent amendnents; (i) a summary of the major terms of the Agreement, (3) a list of names and addresses of the banks participating in the Revolving Credit Agreement; (4) a summary, as of December 31, 1979, of the bor-rowings under the Revolving Credit Agreement; and (5) a list of the names and addresses of the banks providing credit outside the Revolving Credit Agreeuent and a list of each bank's credit line.

INTERROGATORY NO. 45 What are the present plans of Licensee or its parent, GPU, with respect to long-term financing?

RES PONSE The present plans for the GPU System 1980 long-term finan-cings are as follows:

Metropolitan Edison Met-Ed will have coverage through January 1980 to irisue approximately S6 million of mortgage bonds. We have not an-ticipated the sale of these bonds because we have been unable to find a market for these securities.

To preserve a capacity to market these securid es in the future , however, we have had discussions with the Revciving

• gf6 029

Credit agent banks of having the banks in the Revolving Credit Agreement purchase $6 million of bonds. The price would be the same as under the credit agreement and these bonds would offset some of the $125 million now available. In other words, the total available from the banks would still be S125 million.

The advantage to the banks would be additional security during this difficult time. The advantage to Met-Ed would be (1) an ability to fund out these bonds to another purchaser at a future time and (2) a greater likelihood of continued bank sup-port.

Another area of possible additional financing is by refunding maturing Met-Ed bonds. In 1980, $12 million of Met-Ed bonds will come due with S7 million on February 1st and

$5 million on December 1st. With respect to the $7 nillion, we engaged our investment banking firm to attempt to place a new issue of bonds to refinance the maturing bonds but they were unable to do so pending completion of the proceedings ongoing now in Penasylvania. We have held discussions with our agent banks about an arrangement similar to that for the proposed issue of $6 million of bonds, i.e., for the banks to purchase these S7 million which could then be refunded at a later time.

We anticipate the sale of $5 million of bonds in December to refinance the SS million maturing issue.

Pennsylvania Electric Penelec has ample interest coverage throughout 1980 to issue mortgage bonds but does not need any external capital until the fourth quarter of 1930. Our current forecast calls for a S30 million mortgage bond to be issued in December 1983 (Penelec bas interest coverage to issue more than $30 million if needed). Penelec does not have a significant dollar cmount of securities maturing during 1980.

Jersey Central Power & Light and GPU Corporation Our forecast does not include any long-term financing for Jersey Central or GPU Corporation during 1980.

INTERROGATORY NJ. 46 Please provide copies of all analyses prepared by or for Licensee concerning the availability of long-term finan-cing for Licensee.

_,_ 1946 030

RES PONSE Reference is made to the response to Interrogatories Nos.

41 and 42 as to analyses of financial position. These include studies of interest and preferred stock coverage and, there-fore, define the ability of the operating companies and of GPU to issue long-term financing.

INTERROGATORY NO. 47 Has Licensee or its parent, GPU, had prepared any studies or analyses regarding the potential impact if Licensee were to be unable to meet its debts and file for bankruptcy?

INTERROGATORY NO. 48 If so, state:

(a) the names, addresses and telephone number of each person who prepared these studies; (b) the names, addresses and telephone number of each person who has custody of these studies; (c) identify and provide all such records, notices, reports, and memoranda dealing with these studies.

RES PONSE NO. 47 While no formal studies or analyses of the potential im-pact if Licensee were to be unable to meet its debts and file for bankruptcy has been performed, Licensee has had continuous discussions within its organization and with its advisors on this subject.

NO. 48 (a) 1. James B. Liberman, Esq.

Berlack, Israels & Liberman 26 Broadway New York, New York 10004 (212) 248-6900 1946 031

2. Mr. Aaron Levy (202) 523-5691 Mr. Grant Guthrie (202) 523-5156 Division of Corporate Regulation Securities and Exchange Commission 1100 L Street, N.W.

Washington, D.C. 20005

3. Mr. John G. Graham, Vice President & Treasurer GPU Service Corporation 100 Interpace Parkway Parsippany, New Jersey 07054 (201) 263-6130

4. Harvey R. Miller, Esq.

767 Fifth Avenue New York, New York 10022 (212) 758-7800

5. Mr. L. Sandford Reis Reis & Chandler 14 Wall Street - Suite 2910 New York, New York 10005 (212) 964-3936 (b) Mr. John G. Graham, Vice President & Treasurer GPU Service Corporation 100 Interpace Parkway Parsippany, New Jersey 07054 (201) 263-6130 (c) Copies of the testimony of Mr. Aaron Levy bJfore the New Jersey Board of Public Utilities under Docket No.

795-427, and the testimony of Mr. John G. Graham be-fore the PaPUC, will be placed in Licensee's Discovery Reading Room. A study by Mr. Miller is in the process of being prepared for submission as tes-timony before the PaPUC. This will be supplied when completed.

INTERROGATORY NO. 49 Since the March 28, 1979 accident, has the Licensee been unable to pay those debts which it normally paid out of current revenues prior to the March 28, 1979 accident?

1946 032 INTERROGATORY NO. 50 If so, state:

(a) each instance of indebtedness Licensee has been unable to pay out of current revenues; (b) how the Licensee has obtained funds necessary to meet these debts; (c) refinancings that Licensee has done since the March 28, 1979 accident.

RES PONSE (a-c)

Because GPU and its subsidiaries are involvei in a capital intensive industry, GPU has never been able to meer its needs for funds through internal cash generation either before or after the March 28 accident. GPU is no different from any other major electric utility in that as long as a company is involved in a substantial construction program, there is a need to secure financing from external capital sources. Since the accident the GPU System has continued to require external funds but it is not possible to " trace" dollars in terms of their source and application, that is, for any specific application of funds (e.g., construction) it is not possible to state what the corresponding cource of funds was (e.g. internal genera-tion or external financing).

The GPU System has obtained external funds since the acci-dent through the sale of First Mortgage Bonds and short-term borrowings in the following amounts:

First Mortgage Bonds Jersey Central Power & Light

- $50 million issued in June, 1979

- S47.5 million issued in October, 1979 Pennsylvania Electric

- $50 million issued in June, 1979 1946 033 Short-Term Debt Borrowings

($ Millions)

Short-Term Debt Outstanding Increase in March 31, 1979 December 31, 1979 Borrowings Jersey Central $53 $45 S(8)

Met-Ed 30 68 38 Penelec - - -

GPU Corp. 16 58 4_2 Total $99 $171 $72 The only maturing debt that has been refinanced was $25 million of Jersey Central First Mortgage Bond'. s This refunding was part of the S47.5 million bond issue in June, 1979.

Dated: January 22, 1980 1946 034 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

METROPOLITAN EDISON COMPANY )

Docket Nc. 50-289 Restart)

(Three Mile Island Nuclear Station, Unit No. 1) )

AFFIDAVIT OF JOHN G. GRAHAM State of New Jersey )

.i  : SS County of M" .M $ )

JOHN G. GRAHAM , ceing duly sworn according to law, deposes and says that he is Treasurer of General Public Utilities Corporation; that the information contained in Licensee 's Responses ':.o Interrogatory Nos. 41, 42, 43, 44, 45, 46, 47, 48, 49, and 50 are true and correct to the best of his knowledge and belief.

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V John G Graham

-.. v Treasurer Sworn to and subscribed before me this N 4 day of January, 1980.

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Notary Public , _ _ . _

~~

My Commission Expires .

1946 035

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

METROPOLITAN EDISON COMPANY ) Docket No. 50-239

) (Restart)

(Three Mile Island Nuclear )

Station, Unit No. 1) )

Certificate of Service I hereby certify that copies of " Licensee's Response to Interrogatories 41-50 (First Set) Of Three Mile Island Alert, Inc." together with Licensee's accompanying transmittal letter, dated January 22, 1980, were served upon those persons listed on the attached Service List, by U.S. mail, first class, post-age prepaid, this 22nd day of January, 1980.

M Harry . Glasspieg'ehf Dated: January 22, 1980.

1946 036

UNITED STATES OF .33. ERICA NUCI.I.E PIGU~ ATORY CCMMISSICN

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)

MITROPOLITAN EDISON COMPANY ) Docket No. 50-289

) (Restart)

(Three Mile Island Nuclear )

Station, Unit No. 1) )

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