SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act 1934
Date of Report May 19, 1997
(Date of earliest event reported)
CE CASECNAN WATER AND ENERGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Republic of the Philippines 333-608 (not applicable)
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
6750 Ayala Avenue, 24th Floor, Makati, Metro Manila, Philippines
(Address of principal executive offices) (Zip Code)
Steven A. McArthur, Esq.
CE Casecnan Water and Energy Company, Inc.
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, NE 68131
(402) 341-4500
(Name, address, including zip code, and phone number, including area code,
of United States agent for service)
Registrant's Telephone Number, including area code: (402) 341-4500
N/A
(Former name of former address, if changed since last report)
Item 5. Other Events
In November 1995, CE Casecnan Water and Energy Company, Inc., a
Philippine corporation ("CE Casecnan"), closed the financing and commenced
construction of the Casecnan Project, a combined irrigation and 150 net MW
hydroelectric power generation project (the "Casecnan Project") located in the
central part of the island of Luzon in the Republic of the Philippines.
In its Form 8-K dated May 7, 1997, CE Casecnan reported that it had
terminated the fixed-price, date-certain, turnkey construction contract (the
"Hanbo Contract") with Hanbo Corporation and Hanbo Engineering and
Construction Co., Ltd., both of which are South Korean corporations
(collectively "Hanbo") due to defaults by Hanbo including Hanbo's insolvency.
CE Casecnan further reported that it had entered into a new turnkey
engineering, procurement and construction contract to complete the
construction of the Casecnan Project (the "Replacement Contract"). The work
under the Replacement Contract will be conducted by a consortium of
contractors and subcontractors including Siemens A.G., Sulzer Hydro Ltd.,
Black & Veatch and Colenco Power Engineering Ltd. and will be headed by
Cooperativa Muratori Cementisti CMC di Ravenna and Impressa Pizzarotti & C.
Spa.
In connection with the Hanbo Contract termination, CE Casecnan tendered a
Certificate of Drawing to Korea First Bank on May 7, 1997 under the irrevocable
standby letter of credit issued by Korea First Bank ("KFB") as security under
the Hanbo Contract to pay for certain transition costs and other presently
ascertainable damages under the Hanbo Contract. As a result of Korea First
Bank's wrongful dishonor of the draw request last week, CE Casecnan was forced
to file an action in New York State Court. That Court granted CE Casecnan's
request for a temporary restraining order requiring Korea First Bank to
deposit $79,329,000, the amount of the requested draw, in an interest bearing
account with an independent financial institution in the United States. KFB
appealed this order, but the appellate court denied KFB's appeal and on May
19, 1997, KFB was required to transfer funds in the amount of $79,329,000 to a
segregated New York bank account. A press release issued by CE Casecnan is
attached hereto and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
Exhibit 1 - Press Release dated May 20, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CE Casecnan Water and Energy Company, Inc.
By: \s\ Steven A. McArthur
Steven A. McArthur
Senior Vice President
Dated: May 20, 1997
Exhibit 1
FOR IMMEDIATE RELEASE
John G. Sylvia - Senior Vice President,
Chief Financial Officer (402) 341-4500
Jeffrey S. Laudin - Manager, Investor Relations (402) 341-4500
Court Orders Korea First Bank to Deposit $79,329,000 in a New York Bank
Account Pending Resolution of CE Casecnan's Summary Judgment Motion to Require
Korea First Bank to Honor Draw on its Letter of Credit
OMAHA, NEBRASKA, May 20, 1997 - CE Casecnan Water and Energy Company,
Inc. ("CE Casecnan") a 35% owned affiliate of CalEnergy Company, Inc.
("CalEnergy") (NYSE, PSE and LSE Symbol: CE) today reported that on May 19th
Korea First Bank funded, pursuant to a court order, the amount of $79,329,000
into a New York interest bearing bank account pending resolution of CE
Casecnan's summary judgment motion to require Korea First Bank to honor a
drawing on an irrevocable standby letter of credit Korea First Bank had issued
for the benefit of CE Casecnan. The letter of credit had been issued as
security for the obligations of Hanbo Engineering & Construction Co., Ltd. and
Hanbo Corporation (collectively "Hanbo") under a turnkey engineering,
procurement and construction contract for the Casecnan project which was
terminated by CE Casecnan earlier this month due to multiple defaults by
Hanbo, including Hanbo's insolvency.
CE Casecnan tendered a Certificate of Drawing to Korea First Bank on May
7, 1997 in the amount of $79,329,000. As a result of Korea First Bank's
wrongful dishonor of the drawing last week, CE Casecnan was forced to file an
action in New York State Court. That Court granted CE Casecnan's request for
an order requiring Korea First Bank to deposit $79,329,000 in an interest
bearing account with an independent financial institution in the United
States. Korea First Bank appealed this court ruling and the appeal was denied
by the Appellate Court. A hearing on CE Casecnan's motion for summary
judgment is set for June 11, 1997 and a ruling is expected by the end of June.
According to John G. Sylvia, Chief Financial Officer of CE Casecnan, "We
are very surprised and disappointed that Korea First Bank, South Korea's
second largest commercial bank, would let its troubled relationship with Hanbo
interfere with its independent obligations to CE Casecnan under its letter of
credit. Korea First Bank's failure to honor its standby letter of credit is
indefensible and will only result in increasing the bank's exposure to Hanbo
related problems. It appears that the criminal investigations in South Korea
which have been reported in the press, in connection with the alleged
fraudulent loans-for-kickbacks scheme implicating a number of top South Korean
government, Korea First Bank and Hanbo officials has greater ramifications
than previously reported." Added Mr. Sylvia, "It is essential that
international lending institutions honor their obligations under standby
letters of credit. We believe it is virtually unprecedented that Korea First
Bank has failed to comply with customary banking practices and failed to honor
its obligations." Mr. Sylvia further stated, "The sponsors of the Casecnan
Project recognize the value and importance of this facility to the
Philippines. Accordingly, we plan to proceed to complete construction of the
facility, and pursue all resulting damages from Korea First Bank."
# # #
CE CASECNAN WATER AND ENERGY COMPANY, INC.
An affiliate of
CalEnergy Company, Inc.
