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UNITED STATES
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 of 1934
Date of Report (Date of earliest event reported): June 30, 1999
AZURIX CORP.
(Exact name of registrant as specified in its charter)
Delaware 001-15065 76-0589114
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
333 Clay Street, Suite 1000
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 646-6001
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 18, 1999, Azurix Corp. (the "Registrant" and, with its
subsidiaries, "Azurix") was notified that it was the prevailing bidders in a
tender for a concession to operate the water and wastewater systems in two
regions of the Province of Buenos Aires, Argentina, previously operated by
Administracion General de Obras Sanitarias Buenos Aires. On June 30, 1999,
Azurix, through Azurix Buenos Aires S.A., an indirect, wholly owned subsidiary
of the Registrant, entered into a concession contract with the provincial
government covering the two regions and paid the government $438.6 million. On
July 1, 1999, Azurix assumed operation of the water and wastewater systems.
A 10% interest in Azurix Buenos Aires is required to be transferred
to the employees of Administracion General de Obras Sanitarias Buenos Aires who
became employees of the concession company under the concession contract. A 1.2%
interest will be sold for approximately $5 million to a company formed by a
group of Argentine electric cooperatives. The electric cooperatives have an
option to increase their interest to up to 10% within 30 days following the
assumption of the concession.
The Province of Buenos Aires surrounds the Argentine capital city. It
is the country's largest province, with a total population of approximately 13.5
million. The two regions included in the concession have a total population of
approximately two million and approximately 450,000 water or wastewater
customers. They include the provincial capital of La Plata and the large
industrial city of Bahia Blanca. The concession lasts for 30 years and requires
the concessionaire to complete a specified investment plan to improve water
quality, expand customer metering and water and wastewater connections and
reduce water losses.
In connection with the funding of this acquisition, the Registrant made
an equity investment in Azurix Buenos Aires of $45.0 million, and Azurix Buenos
Aires borrowed $394 million under a new credit agreement dated as of June 24,
1999, among Azurix Buenos Aires, Westdeutsche Landesbank Girozentrale, a German
bank, as agent, and a group of non-US lenders. This loan is secured by cash and
other short-term liquid investments in the aggregate amount of $395.7 million,
which the Registrant deposited into a cash collateral account and pledged as
security for its subsidiary's loan. The Registrant is not obligated to pledge
any additional collateral to secure the loan. The Registrant used proceeds from
its initial public offering of $230.6 million, together with $208.0 million in
funds drawn under the existing senior credit facility of its indirect, wholly
owned subsidiary Azurix Europe Ltd, together with interest on those funds and
other funds of Azurix, to fund its equity investment in Azurix Buenos Aires and
its deposit into the cash collateral account. On a consolidated basis, the
funding of the acquisition resulted in an increase in the short-term debt of the
Registrant and its consolidated subsidiaries of $602 million (representing $394
million drawn by Azurix Buenos Aires under the credit agreement and $208 million
drawn by Azurix Europe under the senior credit facility) and a corresponding
increase in the current assets of the Registrant and its consolidated
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subsidiaries of $395.7 million (representing the amount deposited by the
Registrant into the cash collateral account).
The loan to Azurix Buenos Aires matures on June 22, 2000, or at an
earlier time prior to such date if the direct or indirect ownership of Enron
Corp. of the outstanding voting stock of Azurix falls below 25%, and Azurix
Buenos Aires does not arrange for the assignment of the lenders' rights and
obligations under the credit agreement to a new group of lenders. Amounts
outstanding under this credit agreement currently bear interest at 5.36%.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of the Acquired Business. The provision of financial
statements is not required.
(b) Pro Forma Financial Information. The provision of financial statements is
not required.
(c) Exhibits.
(2) Concession Contract dated June 30, 1999, between the Executive
Authorities of the Province of Buenos Aires and Azurix Buenos Aires
S.A.
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*To be filed by amendment.
SIGNATURES
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.
AZURIX CORP.
Date: July 7, 1999 By: /s/ RODNEY L. GRAY
Vice Chairman and Chief
Financial Officer
