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 April 8, 1998
(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
On April 8, 1998, the Registrant announced that it had
received a unanimous New York Appellate Court ruling in its
favor in a letter of credit dispute with Korea First Bank
("KFB"). A press release issued by the Registrant is attached
hereto as Exhibit 1 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
Exhibit 1 - Press Release dated April 8, 1998
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\ Douglas L. Anderson
Douglas L. Anderson
Assistant Vice President
Dated: April 8, 1998
Exhibit 1
FOR IMMEDIATE RELEASE
Craig M. Hammett - Senior Vice President, Chief Financial Officer 402-341-4500
Craig S. Allen - Manager, Investor Relations 402-341-4500
CE Casecnan Announces That New York Appellate Court Orders
Korea First Bank
To Honor Draws On Its Letter Of Credit For The Casecnan
Project
OMAHA, NEBRASKA, April 8, 1998 --- CE Casecnan Water
and Energy Company, Inc. ("CE Casecnan") announced today
that it received a unanimous New York Appellate Court ruling
in its favor in a letter of credit dispute with Korea First
Bank ("KFB"). The New York Appellate Division unanimously
denied KFB's appeal of a summary judgment ruling requiring
KFB to honor draws by CE Casecnan on KFB's irrevocable
standby letter of credit. The letter of credit was issued
as financial security to support the obligations of the
construction contractors for the Casecnan project under a
turnkey construction contract. The turnkey construction
contractors for the project (members of the Hanbo Group)
were terminated and replaced in May 1997 by CE Casecnan due
to multiple defaults, including insolvency, at which time CE
Casecnan made an initial draw under the KFB letter of credit
which was wrongfully dishonored by KFB.
The Appeal Court's unanimous decision, which affirmed
summary judgment against KFB, with costs, ruled that KFB's
dishonor of draws under its letter of credit was "wrongful
as a matter of law."
Pending this appeal decision, KFB had been required by
the trial court, and by stipulation of the parties, to
deposit funds relating to three draws under the letter of
credit in an interest-bearing New York bank account with an
independent financial institution. The effect of the
Appellate Court decision is that KFB must now pay CE
Casecnan the principal amount of those three draws under the
letter of credit (totaling approximately U.S. $93 million)
plus accrued interest at nine percent per annum.
A fourth draw under the letter of credit, reflecting
additional damages to CE Casecnan, raises the unpaid
principal amount of the draws under the KFB letter of credit
to $117.5 million.
Craig M. Hammett, Chief Financial Officer of CE
Casecnan, stated, "Korea First Bank's failure to comply with
customary banking practices and honor its own irrevocable
standby letter of credit is virtually unprecedented in
international lending transactions. Accordingly, we expect
KFB to promptly honor its court-ordered payment obligations
and avoid further damage to its credit standing and
international reputation which would result if KFB chooses
to engage in further frivolous delay tactics."
CE Casecnan is a Philippine subsidiary of CalEnergy
Company, Inc. CalEnergy manages and owns interests in over
5,000 net megawatts of power generation facilities in
operation, construction and development worldwide, currently
operates 20 generating facilities and also supplies and
distributes electricity and gas to 1.8 million customers.
