ML20082H079
| ML20082H079 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 08/15/1991 |
| From: | Feigenbaum T PUBLIC SERVICE CO. OF NEW HAMPSHIRE |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NYN-91126, NUDOCS 9108230031 | |
| Download: ML20082H079 (14) | |
Text
.e New Hampshire Y
khh.
led C. Felgenbovm Pamident oi.J Chief Esecut;<e Officer NYN 91126 August 15, 1991 United States Nucleat Regulatory Commission Washington, D.C.
20555 Attention:
Document Control Desk
Reference:
Facility Operating License No. NPF 86, Docket No. 50 443
Subject:
EUA Power Gentlemen:
In compliance with our undertaking to keep the Commisslon informed with respect to the bankruptcy proceeding relating to EUA Power Corporation ('EUA Power *), one of the licensces named in the above license, we enclose herewith a copy of the Quarterly Report on Form 10 0, dated August 13, 1991, for the period ended June 30,1991, which was filed by EUA Power with the Securities and-Exchange Commission. On page 6 of this Report, under the heading "Scabrook Joint Ownership Agreement",' EUA Power alludes to the fact that it has advised the llankruptcy Court that, beginning September 1,1991, it will not be able to meet its monthly payments to the Scabrook Project and that it has not determined what part, if any, of its August payment will be made. We have been orally -
advised by EUA Power that it wlll-be making a partial-payment in August -and that an >
arrangement has been worked out with other Scabrook joint Owners, subject to llankruptcy Court approval, to assure adequate funding of its share of Project costs thereafter.
We will continue to keep you advised of any developments as they occur.
Very truly yours, NEW llAMPSillRE YANKEE, as agent for the Scabrook' Joint Owners ily:
[
.Ted C, FeigerVaum, President Enclosure TCF:Jilll/ tad -
-9108230031 910815-.
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[.i PDR ADOCK 05000443 p ; k/l) h8//
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PDR yQQg-New Hampshire Yankee Division of Public Service Compony of New Hampshire W
I p P.O. Box 300
- Seabrook, t IH 03874y Telephone (603) 474 9521 -
United States Nuclear Commission August 1$,1991 Attentiore Document Control Desk Page two cc:
Mr. Thomas T. Martin Regional Administrator United States Nuclear Regulatory Commission Region 1 475 Allendale Road King of Prussia, PA 19406 Mr. Gordon E. Edison, St. Project Manager Project Directorate 13 Division of Reactor Projects U.S. Nuclear Regulatory Commission Washington, DC 20555 Mr. Noel Dudley NRC Senior Resident inspector P.O. Ilox 1149 Seabrook, NH 03874 i
mammt m mm umisie-n
a FORM 10-0 RECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark one)
(X) QUARTERLY REPORT PUR$UANT TO SECTION 13 OR 15(d) OF THE SECITRITIES EXC11ANGE ACT OF 19;4 For the quarterly period etxied June 30,1991 OR
() TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITES EXCHANGE ACT OF 1934 to For de transition period from commis;jon Fife Number.33-10978.
^
EUA POWER CORPORATION (Exact anmc of trgistract as epocified in its charter)
New 11ampe.hiro 02-03968l1 (State or odu:rjarisdicdoo of (T.R.S. Employer incorporadon or organkstion)
IdeadBcadon No.)
Forty Stark Street, P.O. Box 326 Manc_bester, New 11s'apshiro 03105 (Address ofptincipsi esacutive otticch (Zip Code) 4 Registiant's telephone number incloding ares code
.(617) 357-9590 Indicate by check mark whether the registrant (1) has filed all reports required to to filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the precedin5 12 months (or for such shorter period that the registract was required to file such reports),' mod G) has been rubject to'soch filing requirements for the past 90 days.
YES X
No
' Itecate the number of shares o=*45* of each of the issuer's classes of common stock, as of tho Intest practical date, Class
_Outstandian at July 31.1991 '
Commaa Shares, S.01 par value 10,000 shares
____________.______.j
^
PART I - FINANCIAL, INIORMATION Lttr;L14 DrinnelsjKratements EA!rfERN UTILITIES ASSOCIATES CONSOLIDATED CONDENSED IIALANCE Sl!EET (In huutute)
(Unaudited)
June 30, December 31, 1991 1990
~
AcJiETS Utility Plant in Service 974,335 985,138 Less: Accumulated Provision for Deptkiaticm al Amortir.ation 244,M5 ^
241,128 Net Utility Plant in denice 729,090 744,010 Construction Work in Prr$rera 19,960 6,809 Net Utility Plant
_ 749,(i50 750,319 Current Assets:
Cash and Temporary Cash invm.tmenta 12,093 15,176 Notes Recc.ivable 9,872 4,431 Accounts Receivable, Net 68,941 70,529 Materials and Supplies 13,877 18,17$
other Cunent Aw.ts 18,076 16,529 '
Total Cutrent Acats 122,R59 124,840 Defened Debits:
Extraorduary Property Loi.ws 3,67 0 4,509 Other Defenrd Debits and Non-Current Ait. cts 218,953 214,$72 Total Derened Debita and lion-Current Anets
~~ ~~2h,ta3' 219,061 Total Amts 1.095,132 1,094,740 L!A11]LITTIO AND QN'ITAI.17AT10N
~
"~~
' ~ " "
Capitaliation:
Comum Shares, $5 Par Value 82,983 81,764 Other Paid-In Capital (Noto C) 152,508 236,232 Common Shar: Experv.e (2,307)
(2,290)
Retained Earnings (since June 30,1991 quasi-reorpniation in which a &ficit of $30 034,506 was eliminated, Note C) 0 (78,313)
~
~
Total Comuxm Equity 2;3,lM 315,706
~
Ncm-Redeemable Prefenal Stock 15,850 15,850 Redeemable Prefenn! Stock 34,530 34,530 -
feeg-Term Debt (less Curant Maturities) 441,810 443,595 Taal Capitallation 725,374 809,681
~~
Curtret Liabilities:
Current Maturities of Luog-Term Debt 2,322 1,670 Notes Payable 73,761 43,071 Preferred Stock Sinking Fund 650' 650 Accemnts Payable 30,916 38,536 Taxca Accrued 897 2,800 Liablility for EUA Power Oblipt;>ns 21,000 37,521
' interest Accrural 13,434 12,173 31,470 _
30,624,
Other Cuncut IAbilities -
Total Current thbilities 174,450~
167,051 Accumulated DefeTed Taxes, Defernd Credits mod Other Non-Cuneet Liabilities 195,308 196,321 Commitments and Contingcocies (Note D)
. Total Lists 11 ties and Capitalitation l,(95 134 1,173,05T
~
m__ m Sec accompamhg zunes to umaalidated condensed finnocisi statetaents.
m
~
l UA POWl R CORIORATION COtIDENSED STATEMEffi' OF INCOME (Delstor in Possession)
(In "thouurwis)
(Urtaiulitid) nrce Moot!4 Frwkd Six Mentha Ended
_ June 30 Juan 30, 1221 1Z9 1221 JEd (Note 11)
(tiote U)
Oprating Revrotva 4.948 0
$ _12,M3 $
0 0;< rating Engenses:
Ogratko 6,264 315 12,530
$$3 Maintruance 871 1,$39 Ikpreciatiou ar=1 Decorntninskvilng 2,125 4,36R Tasts - Other Than Ixone 463 896
- Incouw (Credit)
(2,302)
(2,375)
- Deferrtd (Credit) 583 (4,4%)
(2,tM)
Toral 8,038 (4,121) 14,389 _
J,770),
(8.223)
Oprsting (loss) Incone (3,110) 4,121 (1,M6) 8,223 Other lucona ard (Deductims) - Net 164 235 19(a 4(y2 (tou) !rcomo Defore Interest C'erges (2,940) 4.236 (1 53),
8,62,51 3
Interest Charges Internt on Img-Term Deld (Cmtractural Interest Er.puw for the there month and six nwnth pri<da erwied June 30,1991 was $12,000,884 ard $25,147,669, retfectively, Nota !!)
12,232 A,204 24,465 Other laterest Expense (Contractual Interest Espense for de dace ownth eral six mouth priida coded June 30,1991 was $285,700 and $X97,221, ressctively, Note B) 613 509,
1,106 Total interest (.hrges (Crvdit) 0 12,875 8,713 25,$71 (losi) After Interest Charges (2,94(i)
(V,519)
(10,213)
(16,946)
Preferred Divkicud Requirernents 3,943, 3,894 7 $%6_
7#))
Net (las)
,g), 3 (12.413)~
(18,09'!)_ $.,(24.639) e a
4 4
S 4
h e
l See acco.npnoyirig sween to cautensed fiamdal stskments,._.
EUA POWER CORPORATION CONDENSED STATEMENT OF CAS11 FLOWS (Debtor in Possculon)
(la Thousands)
(Unaudited)
Six Month Ended Juta 30, 1991 1990 CASl! FLOW FROM OPERATING ACTIVITIES:
(Rutated)
(Note fl)
(twes) After Interest Chargea (10,213) $
(16,946)
Adjustments to Recorelle (lus) After Interest Clarges to Net Cuh Providad from Operating Activities:
Deptociaton and Arnortiration 4,389 927 Amortization of Nucler Fuel 4,354 Investrnent Ta s Credit - Net (134)
Deferred Taxes (2,509)
(A,776)
Allowance for Funds Used During Caatruction-(0g)
Deannmissioning Furd 10,000 Other - Net (1,213) 5,820 Change in Operating Assets arut Liabilities 11,023 (353)
Net Cnh Provided From (Used in) Operating Activities 5,337 (9,3961 4
INVESTMP.NT IN PLANT:
Construction Expermlitures (2,686)
,. (10,248)
Net Cah (Used in) 1nvestant Activit is (2,686)
(10,248)
CASH FLOW FROM FINANCINO ACTIVITIES:
lasuances:
Preferred Stock 2,300 Finarcing Expenses (458)
(49) 4 Netlacreme in Short-Terrn Debt 1,17 0 :
17,195 Net Cnh Provided From Financing Activities 712 19,446 Net increase (Decrease) in Cash 3,363 (198)
~"~
Cuh and Teruporary Cub lavestawata at Beginning of Period 16 208
' Cah and Temporary Cash Inycatruents at End of Period 3,379, e __to Cash M during the period for:
Interest 316.$
24,465 Incomm Taxeg (Refund) -
, l(2,200).$
. (5,700).
.t s
t 4 -
. 4 3., -
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)
EUA IWER CDRPOPATION tDIT,S TU IMDE86TIIWCIAL3rATEMDrfS The accmpanying Notes shculd be read in conjunction with the Nott.s to Finan-cial Statenents appearing in the EUA Power Corporation (EUA Fower or the Cocyany) 1990 Annual P.eport on Fom 10-K and the March 31, 1991 EUA Powr Form 10-Q.
the acecrpanying uncudited ccndensed Note A - In the opinion of the Cecpany, fairly the financial position of the Capcny financial statumnts present as of June 30, 1991 and kenrber 31, 1990, and the results of operations for the three and six mnths ended June 30, 1991 and cash flows for the six mnths ended June 30, 1991 and 1990.
On February 28, 1991, EUA Pcwr filed a voluntary petition in the. thited States Fx:truptcy Court for the District of New Fr:pshire (Bankruptcy Court) for protection under Chapter 11 of the Federal B nkruptcy Code (Bankruptcy Code).
On March 29, 1991, EUA Pcuer announced that it had provided an inpairnent reserve in 1990 against its invest:ent in Scabrook Unit 1 (Unit 1).
%e Cmpany restated its financial statments with respect to the recunt of Allo rance for Funds Used During Construction -
recorded during the first thm quarters of 1990, re4 acing such cmount to nero.
(See Other Matters under Note B - Comitrents and Contiigencies).
Note B - Ccmitments and Contingencies:
PM FRUPICY FROCEEDING As a recult of its February 28, 1991 Chapter 11 filing, EUA Power is now operating its business as a debtor-in-possession and will endeavor to a plan of reoraanization which would enable it to develop or support merge fran bankruptcy on a financinIly viable basis (although utmagezent of the Cocyany cannot predict the timing or likelihood of developing such a plan),
On July 2,1991, the Bankruptcy Court teradnated ELTA Pcwer's exclusivity period with respect to filing such plan.
The officially appointed Bondholders Cemittee, reprecenting the holders of the Series B Secured Notes and Series C Leured Notes has indicated that it ray file a plan of reorganization which would convert the Series B and Series C Secured Notes into substantially all of the equity of the Ccapany.
EUA Fewer cannot predict whether such a plan, if filed, would be confinted by the Bs.tuptcy Court.
Under Chapter 11, certain claims against EUA Fower in existence prior to the filing of the petition for relief under the federal bankruptcy laws are stayed while EUA Fowr continues buainesa operations as debtor-in-ws-
- session,
%ese claims are reflected in the June 30,1991,. balance sheet as "linbilities subject to conpromise."
Additicnal claims ' (liabilities subject to comprecise) may arise subsequent to the filing date resultin6 fran rejection of executory contracts, including 1 cases, and from the determinatico by the Bankruptcy Court.(or agreed to by partina in interest) of allowed claims for contingencies and other disyated amounts.
Enforement of claims secured by certain of EUA Power's assets (secured claims) also are stayed, although the holders of such claims have the right to nove the court for relief from the stay. Secured b$b 4
Note B - Ccendtwnts and Contingencies -- (Continued) 1 claims are cecured by an interect in certain Scabrock annets of IlfA Fwer, principally realty and personalty.
WA Fwer has udvised the Bankruptcy Court that beginning September 1, 1991 it will not be able to teet its mnthly payments representing itt chare of Seabrook costa.
EUA Pwer has not determined thether it will be EUA Pcwr,ay all or any part of its chare of Seabrook Au~ust 1991 costs.
able to p o ability to pay costs dependo on khether it can sell its share of Seabrook's output at prices adequate to pay its cash costa or khether it can arranga for debtor-in-possession financing.
On July 25, 1991, Unit I was shut dwn for a refueling period khich is expected to last approximately 65 days.
Since WA Pwer will not generate any revenues during the refueling period, it does not expect to pay my of its share of Seabrook costs for the balance of the refueling period unless it is able to cecure debtor-in-possession financing.
WA Power, certain scabreck Joint Owners and representatives of the Official Cmtnittee representing holders of WA Fwer's Secured Notes are attempting to arrange debtor-in-possession financing to enable WA Power to fund wrking capital requirements and operating evnenses including its Ownnrsnip 1s (JOA).
Any-obligations under the Seabrook Joint financing facility edtht require the approval of;rcemnt the Securities and Evchange ccrmission (SEC) under the Public U*.ility Holding Cmpany Act of 19% (the Holding Camany Act) and would be subject to the approval of the Bankruptcy Court.
There is no assurance a satisfa nory finnneing arrangamnt will be egreed upon and approved.
Since the Chapter 11 filing, through June 30, 1991, the Cmpany recorded no reorganization expenses.
For the same period. interest inccno on temporary canh investwnts umaunted to approxientely twenty-nine thousand dollars.
Since the Chapter 11 filing on February 28, 1991, EUA Fwor has not -
recorded interest expense.
Additional contactual interest expense for the periods since tho filing being $17.3 - million, respeccively, reported herein vould have arounted to approxicately $12.9 million and for the second quarter and six nanths ended June 30, 1991.
SEABECOK UNIT 1_
Backgroundi
[
EUA Fwer has a 12.1% ownership interest in the Seabrook Unit l-(Unit 1).
nucicar generating plant located in Seabrook, New Hampshire which cctinenced cmmercial operation on August 19, 1990.
For the first. six renths of 1991, Unit I had operated on average at approxinntely 87.2% of its total capacity.
Licensing:
i Still peadi at Decembee 31,- 1990 before the -United' States Court of Appeals and the Nuclear Regulatory Comisnion (NRC) and its adjudicatery boards were a rurber of issues and appeals relating to operation of Unit 1,
- which, i.f adversely decided, could have impacted the continued
'l 5
Note B - Cocmitrxmts and Contingencies -- (Continued) effectiveneva of its operstirg license.
On Januar 25, 1991, the. Court of Appeals rejected a challenge to the NRC icsmn/
ce of the full pwcr eperating license for thit 1.
%c Massachusette Attorney General has filed a petition for a writ of certiorari with the thited States Suprme Court, asking the ccurt to review the Court of Appeals decision. We IEC has filed a notion ooposing Supree Court review.
The Suprme Court is ex >eeted to act on w,cther or not to review the decision in October of 1991.
In May, 1991, the Intpector Cencral of the NRC cnd a Congrecsional oversight cmiaittee conducted an investigation of thit 1 weld packages.
'Ihe NRC questioned the quility of the radiographs of six..cids.
The Congreasional oversight cectittee is also investigating whether the NRC had an adcqute basis for issuing' I has been adequate.an operating license f whether the NRC's oversight of Unit The final issue pending before an NRC adjudicatory bor d involves the adequacy of the Seabrook energency response program.
' Pwer cannot
,redict the course or outeaue of cny of these proceedig but dces not
- ,elieve that any is likely to have a pennanent adverse impact on the Unit '
1 operating license.
Uncertaintics Regarding !belcar Plants:
Seabrcok Joint Owners are cubject to the risk that one of their nucher may be unable or unwilling to finance its sharc of the project's costs, thus jeopardizing continued operation of the project.
On Februarf 28, 1991, EUA Pov =, a 12.1% owner of the Seabrook project, filed for azotection under Chapter 11 of the Bankruptcy %
Code.
On May 6, 1991, New Lwpshire Electric Ccoperative,
- Inc, a 2.2 owner of the Scabrook
- project, announced that it had filed for-Chapter 11 bankruptcy arotection.
On May 17, 1991, the Public Service Com3any of New 3rpshire, which has a 35.6% interest in Seabrook and which had filed for protection frun its creditors under Chapter 11 in January 1988, merged fran bankruptcy.
EUR Pour cannot predict the ultirate outecme or effects of any of these bankruptcy proceedings.
Seabrook Joint Omership Agreerrent:
Ela Power is required under the JOA to pay its shara of - thit 1 expenditures including without. limitation operations and unintenance expenses, construction and nucicar-fuel expenditures and deccmntssioning costs,- regardless of Unit l's operations. Under certain circumstances, a adversely affect its entitlerent in thit 1. yants under the JOA could failure by EUA Power to unke its nonthly pa Elh Powr has advised the '
Bankruptcy Court that beginning September 1,1991 it will not be able to reet its conthly paynents representing its share of Saabrook costs.
EUA' Pcuar has not &termined whether it vill be able to pay all or any part of its share of Seabrook August 1991 costs.
EUA Powr s ability to pay costo depends crimbether it can sell its chare of Seabrook's output at prices adequate to pay -its cash costs' or whether it can arrange for debtor-in-possession financing.
On July 25,1991, Unit 1 was shut down for a refueling period which is expected to last approximately 65 days.
-6
Note B - Cccinitanen and Contingencies -- (Continued)
Since 13% Pcwer will not pnerate any revenues during the refuelin6 period, it doen not expect to pay any of its share of Scabrook coots for the balance of the refuding period unless it is able to secura debtor-in-ponnescica financing.
The Coapany's ability to pay costo cub:,equent to thin outage depends on its ability to cell its dhare of Scabrwk' n output at prices nuf ficient to cover its cath costs or its ability to cecure debtor-in-possession financing.
(See Bankmptcy l'roceeding above).
ShAURCG LUlT 2 El% Powr also has n 12.1'; Osnerchip interont in Scabrook Unit 2 (Unit 2).
On Ibvmber 6,1986, the joint wners of Seabrook, recognizing that Unit 2 had been cancelled, voted to dispece of the Unit. Plans regarding disposition of Unit 2 are nw under consideration, but have not been finalized and approved.
KUA Fwer is urmble, therefore, to estfrate the costs for which it wuld be responsible in connectfon with the disposition of Unit 2.
tbnthly charges nre required to be paid by E%
Pwer with recpect to Unit 2 in order to preserve and protect ita emponents and various warranties, C m 3 MATIERS Accountin;; Changes In 1990, EUA Powr adopted Fitymcial Acewnting Stendard Ib. 96 (FAS 96)
" Accounting for Incam Taxes".
As a revult, necmulated deferred tt/:ns include a?proximtely $6.8 mi)1 ion related to deferred taxen established at rates higher than the current statutory rato.
EI.% Pcver has daierred recognition of these anrmats in inemn pending the eutcwn of w;nin6 long-term power cales contractF and the ultirnte determinat{or. as to whether this arount M11 be refuaded to custmers.
Cn May 1,1991 El% Power announced that it would restate its financial statenwnts with respect to the nmunt of Allowance for Funds Used During Construction (AWDC) recorded in 1988 and 1989 h excess of the non-cash interest expense and all AFUDC recorded in tha first three quarters of 1990.
This action by EUA Powr followd the recci?t by Eastern Utilities Associates (EUA) of a 1cteer frun Ccopers & Lybrand, the independent cuditors for EUA and E% Fwer, in whf ch Coopers & Lybrand stated 'W have concluded that the financial statcents for the years ended December 31,1988 and 1989 should be restated for the mount of AFUDC recorded in the incam statenmt in excess of the uan-cash. interest expence and, accordingly, our prwiously issued opinions on such financial statecents' my no longer be relied upon."
The financial staterrents included herein
.have been restated accordingly.
As a result of cuch restatetmnt, HR Fower deferred approximitely $73,390,000 of AWDC-debt with respect to
- he periodo in question.
9 SEC Revie,w The SEC is conducting a review of NA Tower's Annual Peport on Fonn 10-K for the year onded Docenber 31, 1989 and subsequent Q.mrterly Fxports on 7
4
=.
liote B - Ctanitrents and Contingencies -- (Continued)
Fanu 10-Q.
%e staff of the Divirh i of Corporation Finrnce has raised
- certair, questions principally regarding the accounting for the capitalized firmncing costs related to ER Power's investment in Seabrook Unit 1 and th effect which reccrding such caxnts had on reported earnings for 1990, 1989 and 1988.
EW Power has been advised that the matter has been trarmferred to SEC's Division of Enforement and that they are conducting an inront.11 review.
ER Pwer has responded to the inquiries of that division.
On May 15, 1991 En Pwer restated its financial statemnts with respect to the amcunt of AWDC recorded in 1988 and 1989 in excess of the ncn-cach interest expence and all AWDC recorded in the first three quarters of 1990 as a result of a intter received by EUA fmn Coopers &
1,ybrand, the independent auditor for EUA and EUA Powr, Such restate:ent was intended to address coveral issues raised by the SEC.
lbwever, EUA Fowr emnot predict the outccce of the SEC's review.
The SEC could recuire that na Pwer further restate its financial statments for the years ended Deceber 31,1990,1989 or 1988 or for any quarterly period during such yearn.
Managerent cannot predict whether such a further restatetent, if cny, would result in a trate-ial change to ammnts reficcted in its 1990 Balanc.e Sheet or the cumulative reported incctne end losses for the three year period then ended.
EUA Pear believes its restated financial statcmants have been prepared in accord:nce with generally accepted accounting principles and present fairly the financial position and results of operations of H% Power.
Item 2.
Mtnanment's Discussion and Analysis of Financial Cendition and Ecsults
~
or Operationn Rncults of _ Operation
'Ihe financial statements for the first three qutrters of 1990 have been restated frcm mounts previously (reported relating to the mount of allowance for funde used during construction AFUDC) recorded in the first three quarters of 1990.
Seabrook Unit 1 (Unit 1) ccanenced emnmcial operation on August 19, 1990, consequently there are no results of operations prior to this date.
EUA Pwer million and $10.2 million for second quarter and six nonths ended June 30,y $2.9 reported a net loss, before preferred duvidend requirment, of approximatel
- 1991, respectively, compared with a net loss of approximstely $8.5 million and $16.9 million (as restated) for the same periods in 1990.
The principal reason for the net loss in 'both periods of 1991 relates to short-term xmer sales of EUA Powr's entitlement from thit 1 at prices substantially iclow actual operations.
maintenance and capital-related costs.
Beginning February 28,1991, the date EUA Power filei for protection under Chapter 11' of. the Bankruptcy Code, EM Power ceased to accrue interest on all its debt securities.
The not loss for both l
- periods of 1990 is primsrily due to the accrual of interest expense on the 17-1/2%
l Series B Secured Notes due May 15, 1993 and the 17-1/2% Series C Secured Ibtes due tbvember 15,1992 (together, the Notes) and the deferral of AFUDC - Debt.
8
i l
As a result of the Chapter 11 fility, El'A Paavr is now operating its tusiness as a debter-in-possession.
EUA Tcwr :.ntends to continue its unrketin6 efforts which have consisted of both direct negotiaticos with utilities and participation in generation bidding processes.
EUA Power recognins that ^e recent chenres in the long-tenn power supply m rket, the continued der atien of econer.ic conditions in the llcrtheast and the new and untested blu g requirments for pcser centracts being inpimented by varioca state utility eutmicsions are affecting its ability to enter into long-term saleu contracts.
Operatine Revenues Short-tena cales for the cecend quarter and six conths ended June 30, 1991 cyproximately $4.9 ndilien and $12.7, recpectively, cccpared to nono in wre 1990.
For the second quarter and cix mantlw cnded June 30, 1991. actual operations, rnintenance, interest md capital-related costa, excluding interest 0: pense since February 29, 1991, exceeded revenues frun short-tenn power cales by aaproxicotely $4.7 inillicn cnd $15.5 udllion, respectively, on a pre-tax basis, dA rever continues to sell electricity at prices belw cost.
On July 25, 1991, Unit ' was shut down for o 65 day scheduled refueling cutage. During this period.
EUA Pc,er will record no revenues.
Operations Farrense Fuel Fxpense for the cecond quarter and six renths ended June 30, 1991 was
$2.8 million and $6.0 ndllion, respectively, caupared to none for the sta periods in 1990 and represents EUA Power's wortization of fuel costs associated with Unit i generation during each respective period.
Other cperation md unintenance expense for the second quarter and six renths ended June 30,1991 was $4.9 million md $9.6 millico, respectively, en increase of $4.5 million and $8.9 million, respectively, over the see periods in 1990.
The increase reprecents EUA Fewr's share of operating costs of Unit 1.
Depreciatien,,
The Ccepany began recording depreciation expense on its investmcnt in Unit 1 as of August 19, 1990.
For the second quarter and siy. conths ended June 30, 1991 EUA Fewer recorded $2.0 million and $4.1 mi.llion, respectively, in depreciation.
Ib depreciation expence was recorded for the six tnanths ended June 30, 1990.
Interest Extenne Interest expense on long-term debt for the second quarter and six renths ended June 30, 1991 decreased approximately $12.1 millica and $16.3 million, respectively, as ccupared to the sme pc.riods of 1990.
The decrease is the result of the cessation of accruing interest expense as of February 28, 1991 as a result of the Cccpany's Chapter 11 filing offset somewhat by additional interest accrued frcta January 1,1991 through February 28, 1991 on the Cocpany's $21 millien of Solid Waste Disposal Facility Revenue Bonds (Revenue Bonds), issued en Dec&r 28, 1990.
9
@demx.,.
Financial Ccndition und Liquidity As a result of the bankngtcy filing, EUA Pcwr is in default under the Indenture pursuant to vhich the deries B and Series C Secured Motos were issued cnd under the tenns of the Fevenue Bonds.
%e cash resources of EUA Fewer are dependent upcn the price at which it sells its share of cicctricity generated by Unit 1 and the opnrating capacity of Unit 1.
At current mirket prices, the cash generated by such electricity sales is ins than EUA Powr's on-going cash requirments.
EUA Pcwer is required under the K A to pay its share of Unit 1 expenditures including without limitation operations and txtintenance expenses, censtruction and nucicar fuel egenditures and decannissiening costs, regardless of Unit l'a operations.
Under certain circumstances, a failure by EUA Pcwer to trake its nunthly payncnts under the JOA could adversely affect its entitlocent in Unit 1.
EUA Pcwr has advised the Fcnkn:ptcy Court that beginnirg Septenber 1,1991 it will not be able to rect its ncnthly paycents representing its share of Seabrook costs.
EUA Powr has not determined whether it will be able to may all or any part of its share of Seabrook August 1991 costs.
EUA Fowr's abil:.ty to pay costs depends en whether it can sell its share of Seabrook's cutput at prices adequate to pay its cash costs or whether it can arrange for debtor-in-possession financing.
On July 25, 1991, Unit I was shut down for a refueling period which is expected to last approximately 65 days.
Since EUA Pwer will not generate cny revenues durins; the refueling period, it deco not expect to pay any of its share of Scabroek costs for the balance of the refueling period unicss it is able to secura debtor-in-posseccion financing.
Any financing facility might require the approval of the Securities and F2 change Camission (SEC) under the Public Utility Holding Ca:pany Act of 1935-(the Eolding Carpany Act) and would be subject to the approval of the Bankruptcy Court, here is no assurance a satisfactory financing arrangment will be agreed upon and approved.
Re Cmpany files censolidated Federal inceme tax returns together with EUA and other EUA affiliates.
As a result of such consolidated filings, certain Federal inewc tax benefits available to the Carpany have reduced the Federal incme tax obligations of EUA and such other EUA affiliates.
Under a tax allocation agrement between EUA and its subsidiaries, the Co:cpany may receive cash paycents fran EUA and such EUA affiliates as ccupensation for the use of such tax benefits, PART II - OIEER IhT0rM1 TION item 1.
Legal Pro _ceedjngs See descriptions of Bankruptcy, Seabrook Licensing and SEC proceedings. in Note B - Ccmnitments and Contingencies - under PART 1, Item 1, above.
Item 3.
Defaults Upon Senior Securities As a result of its Chapter 11 filing, EUA Power is in default under the-terms -
of the Indenture dated Novmber 15, 1986, as monded, pursuant to which EUA Power's - Series B Secured Notes and Series C Secured Notes were issued and under the terms of the Loan and Trust Agreement and letter of Credit and Reinbursement Agreccent (LOC) dated December 1,.1990 and Decceter 21, 1990, respectively, h e Notes supporting $21 million of Solid Waste Disposal Facility Revenue Bonds.
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are solely the obligations of EUA Power and are not guaranteed by EUA or any other person. EUA Pcwr's obligaticos under the 1DC are guaranteed by EUA.
Item 5.
Other Information On Ity 2,1991 EUA Power petitioned the Bankruptcy Court for the District of
!!cw ikspshire for an order authorizing the Ccupany to expend funds for the xnpose of m:ending its Registration Statment (the Registration State:mnt) unc.cr the Securities Act of 1933 (the 1933 Act) so as to keep current the Registration Statment for the benefit of certain holders of the Company's Notes, and the Contingent Interest Certificates (CICs).
On Ity 24,1991, the Bankruptcy Court refused to grant the order which EUA Pcr'er sought.
Since the Pankruptcy Ccurt did not enter the order, the Notes and CICs my not be transferred under the Registratico Statement, and the Cmpany has instructed the Stato Street Bank and Trust Cmpcny State Street), as tr'ansfer agent for the Notes and CICs to require before process (ing a transfer of Notes vnd C1Cs a satisfactory opinion of counsel to the effect that the transfer is excrept frcm the registration requirecents of the 1933 Act.
The Ccepany is endeavoring to develop procedures so that Notes and CICs that are not restricted as to transfer under the 1933 Act my be traded with a tninin:n of formalities.
The Ocmpany also understands that Depository Trust Ccepany,d it is possible that the Cocpany m
'(IEC), has placed restrictions on tho' Notes and CICs on its trading system an request Inc, or MC my determine, to transfer the Notes and CICs on its trading-system to the appropriate MC participants so that future trensfers would be processed by State Street.
Item 6.
Exhibits and Py orts on Form 8-K (a) Exhibits - None (b) Reports on Fonn 8-K on Mty 1,1991 EUA Power filed a current reprt on Fonn 8-K, The item reported was Item 5 (Other Events).
On thy 29,1991 EUA Pom filed a current uport on Foun 8-K.
The item reported was Item 5 (Other Events).
SMRTLPES Pursuant to the require:ents of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed en its behalf by the undersigned thereunto duly authorized.
EUA Fower Corporation 9
Date: Aum:st 13,1991
_ Richard M. Burns Richardi, Burns, cceptroller (on behalf of the Registrant and-as Chief Acceenting Officer)-
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