<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
Commission File Numbers 333-84609 and 333-84609-01
LSP Energy Limited Partnership
LSP Batesville Funding Corporation
(Exact name of registrant as specified in its charter)
Delaware 22-3422042
Delaware 22-3615403
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Tower Center, 20th Floor East Brunswick, N.J. 08816 (732) 249-6750
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2 has been subject to such filing requirements
for the past 90 days. Yes |X| No |_|
<PAGE>
LSP Energy Limited Partnership
LSP Batesville Funding Corporation
Form 10-Q Index
Page
PART I
Item 1. Financial Statements 2
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 2
Item 3. Qualitative and Quantitative Disclosures about Market Risk 7
PART II
Item 1. Legal Proceedings 7
Item 2. Changes in Securities and Use of Proceeds 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
Financial Statement Index F-1
Exhibits Index EI-1
<PAGE>
PART I/ITEM 1. FINANCIAL STATEMENTS
See financial statements commencing at F-1. These unaudited financial
statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. While LSP Energy Limited Partnership, (the "Partnership") and LSP
Batesville Funding Corporation ("Funding") believe that the disclosures made are
adequate to make the information presented not misleading, these financial
statements should be read in conjunction with the audited financial statements
included in the Form S-4 as of December 31, 1999 and 1998 and for each of the
three years in the three year period ended December 31, 1999, filed with the
Commission by the Partnership and Funding.
PART I/ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Partnership is a Delaware limited partnership formed in February 1996
to develop, construct, own and operate a gas-fired electric generating facility
with a design capacity of approximately 837 megawatts located in Batesville,
Mississippi (the "Facility"). The 1% general partner of the Partnership is LSP
Energy, Inc. ("Energy"). The 99% limited partner of the Partnership is LSP
Batesville Holding, LLC ("Holding"), a Delaware limited liability company
established on July 29, 1998. Granite II Holding, LLC ("Granite"), an affiliate
of LS Power, LLC ("LS Power") and a Delaware limited liability company, holds a
48.63% membership interest in Holding and Cogentrix/Batesville, LLC
("Cogentrix"), an affiliate of Cogentrix Energy, Inc. and a Delaware limited
liability company, holds a 51.37% membership interest in Holding.
LSP Batesville Funding Corporation ("Funding") was established on August
3, 1998. Funding's business purpose is limited to maintaining its organization
and activities necessary to facilitate the acquisition of financing by the
Partnership from the institutional debt market and to offer debt securities.
Funding is wholly owned by Holding.
The Partnership expects that the total cost of developing, constructing
and financing the Facility and the Panola County gas and water infrastructure
that the Facility will use will be approximately $396,406,000. The Partnership
capitalized the costs pertaining to the construction of the Facility and the
Panola County gas and water infrastructure, net of the Panola County gas and
water infrastructure reimbursement funds of $14,278,000 received from the State
of Mississippi as property and construction in progress and the costs pertaining
to the financing of the Facility and the Panola County gas and water
infrastructure as debt issuance and financing costs, and the Partnership has
included these items as assets on its balance sheets.
The Facility commenced commercial operations under the Power Purchase
Agreement ("Aquila PPA") with Aquila Energy Marketing Corporation ("Aquila") and
Utilicorp United, Inc. ("Utilicorp") on August 8, 2000 and under the Power
Purchase Agreement ("VEPCO PPA") with Virginia Electric and Power Company
("VEPCO") on August 9, 2000.
Results of Operations
The Partnership expenses project development costs not directly related to
the construction, financing and operations and maintenance of the Facility. For
the three and six months ended June 30, 2000 project development expenses not
directly related to the construction, financing and operations and maintenance
of the Facility approximated $174,000 and $336,000, respectively, which amounts
consisted primarily of approximately $100,000 and $200,000, respectively, of
management fees and approximately $74,000 and $136,000, respectively, of labor
charges, related benefits and taxes and other management expenses incurred under
the management services agreement with LS Power Management, LLC ("LSP
Management").
For the three and six months ended June 30, 1999 project development
expenses not directly related to the construction,
2
<PAGE>
financing and operations and maintenance of the Facility approximated $88,000
and $117,000, respectively, which amounts consisted primarily of labor charges,
related benefits and taxes and other management expenses incurred under the
management services agreement with LSP Management.
For the three and six months ended June 30, 2000 general and
administrative expenses approximated $36,000 and $49,000, respectively, which
amounts consisted primarily of legal and accounting fees of approximately $5,000
and $19,000, respectively, and approximately $21,000 of rating agency and
Trustee fees.
For the three and six months ended June 30, 1999 general and
administrative expenses approximated $97,000 and $151,000, respectively, which
amounts consisted primarily of legal and accounting fees.
Operations and maintenance expenses for the three and six months ended
June 30, 2000 approximated $559,000 and $1,025,000, respectively, which amounts
consisted primarily of costs incurred under the operations and maintenance
agreement with Cogentrix Batesville Operations, LLC ("Cogentrix Batesville
Operations"). These costs consisted primarily of approximately $184,000 and
$427,000, respectively, of Cogentrix Batesville Operations labor charges,
related taxes and benefits, $117,000 and $234,000, respectively, of
precommencement services fees and approximately $132,000 and $152,000,
respectively, of fuel pipeline management fees and water supply costs.
Liquidity and Capital Resources
The Partnership is using the net proceeds from the issuance of the two
series of Senior Secured Bonds (the "Bonds"), $54,000,000 of capital
contributions that the Partnership has and will receive from Holding from time
to time, test energy revenues generated during the start-up and commissioning of
the Facility and the reimbursement payments that the Partnership has and will
receive from the State of Mississippi to pay the costs of developing,
constructing and financing the Facility and the Panola County gas and water
infrastructure.
As of June 30, 2000, the Partnership's principal sources of liquidity were
approximately $7,764,000 of remaining proceeds from the issuance of the Bonds,
test energy revenues generated during start-up and commissioning of the Facility
and Panola County gas and water infrastructure reimbursement funds received from
the State of Mississippi, plus investment earnings on such funds, and
$54,000,000 of capital contributions that the Partnership has and will receive
from Holding from time to time. During April 2000 and July 2000, Holding made
capital contributions of $5,000,000 and $5,000,000, respectively, to the
Partnership.
As of June 30, 2000, costs incurred on the Facility and the Panola
County infrastructure were approximately $363,815,000. Included in this
amount is approximately $332,874,000 (net of the Panola County infrastructure
reimbursement funds of approximately $14,278,000) of property and
construction in progress, approximately $10,194,000 of debt issuance and
financing costs and approximately $3,110,000 of inventory and other current
assets. In addition, $3,359,000 of costs incurred have been expensed as of
June 30, 2000. As of June 30, 2000, the Partnership has expended
approximately $334,642,000 of cash.
Costs expensed from inception through June 30, 2000 are comprised
primarily of $845,000, $1,545,000 and $534,000 of costs incurred for the
management services agreement with LSP Management, the operations and
maintenance agreement with Cogentrix Batesville Operations and legal fees
pertaining to contract negotiations and regulatory matters and accounting fees,
respectively.
Pursuant to the Turnkey Engineering, Procurement and Construction
Contract ("Construction Agreement") with BVZ the current dates by which BVZ
was obligated to complete construction and start-up to specified minimum
performance levels of the two VEPCO Units and the Aquila Unit were August 2,
2000, July 31, 2000 and July 31, 2000, respectively, as adjusted under the
terms of the Construction Agreement ("Guaranteed Completion Dates"). The
Guaranteed Completion Dates include extensions as a result of; (1) the
settlement of a force majeure event, which resulted from delays incurred in
August and September 1999 during the transportation of the first VEPCO Unit's
steam turbine generator to the Facility and (2) resolution of issues related
to water quality and maintenance performed by BVZ on the Facility's water
treatment system in April 2000. In addition, the Partnership has agreed to
reimburse BVZ approximately $325,000 of the costs associated with the
maintenance performed on the water treatment system.
3
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As a result of such transportation delays, the Partnership issued a force
majeure notice to VEPCO claiming delays of the delivery start date of June 1,
2000, under the VEPCO PPA. The Partnership has claimed a 21-day delay in the
delivery start date for the first VEPCO Unit and a 9-day delay in the
delivery start date for the second VEPCO Unit. VEPCO has initially rejected
the Partnership's claim of a force majeure event. If it is determined that
any portion of the delay in the delivery of the steam turbine generator
constitutes a force majeure event under the VEPCO PPA, then the date that the
Partnership was required to deliver energy from the respective VEPCO Units
will be extended day for day for the number of days of the force majeure
event. A final resolution of this issue has not occurred.
BVZ completed the construction and start-up of the Aquila Unit and the
VEPCO Units on August 8, 2000.
A gap of 61 to 63 days currently exists between the Guaranteed Completion
Dates and the guaranteed delivery start dates of June 1, 2000 under the VEPCO
PPA and the Aquila PPA. This gap may be reduced if the Partnership is successful
in its claim that the steam turbine delay, as described above, constitutes a
force majeure event under the VEPCO PPA.
BVZ is required to pay delay liquidated damages of $43,333 per day per
Unit for failure to complete the construction and start-up of any Unit to
specified minimum performance levels on or prior to one day after the Guaranteed
Completion Date. Based on the completion of construction and start-up of the
Aquila Unit and the VEPCO Units on August 8, 2000, BVZ owes the Partnership
approximately $693,000 of delay liquidated damages. The delay liquidated damages
will not fully compensate the Partnership for the costs of incremental
replacement power or other costs associated with delays.
Contingency
The Partnership's original project budget included a line item, which the
Partnership refers to as "contingency", of approximately $10,649,000 that is
designed to cover things like change orders under the various construction
contracts, the cost of fuel consumed by the Facility during testing in excess of
the revenue received from the sale of test energy, other increased costs due to
force majeure and other events that may increase the Partnership's expenses. As
of June 30, 2000, the Partnership had reduced its available contingency budget
amount by approximately $1,527,000 for change orders under the Partnership's
various construction contracts, by approximately $2,330,000 for the cost of the
water pretreatment contract, by approximately $3,706,000 for fuel costs (net of
test energy revenue received) consumed during testing and commissioning of the
Facility, and by approximately $9,774,000 for budget overruns. Offsetting these
reductions is an increase to the contingency budget amount of approximately
$16,406,000 as a result of (1) the Panola County infrastructure reimbursement
payments of approximately $14,278,000 that have been made to the Partnership by
the State of Mississippi and (2) the Partnership's reallocation of approximately
$2,128,000 that the Partnership had previously allocated to the cost of the
Panola County infrastructure and have not yet spent, because Panola County was
obligated to pay such amounts due under the Panola County infrastructure
construction contracts.
The Partnership will further reduce the contingency budget, for
performance bonuses due to BVZ under the Construction Agreement, if any,
additional fuel costs (net of test energy revenues received) and budget overages
incurred prior to the commercial operations dates. Offsetting these potential
reductions will be increases for delay liquidated damages payable by BVZ to the
Partnership under the Construction Agreement.
Insurance
The Partnership is required to maintain casualty risk insurance during the
construction period, including delayed opening insurance covering a period of
approximately 18 months with a 30-day deductible per occurrence. The cost of
this insurance was approximately $1,608,000.
4
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As with any power generation facility, the construction of the Facility
involves certain risks, including shortages of labor, work stoppages, labor
disputes, weather interference, engineering, environmental, permitting and
unanticipated cost increases for reasons beyond the Partnership's and its
construction contractors' control. The occurrence of one or more of these events
could significantly increase the Partnership's expenses, which could adversely
impact the Partnership's ability to make payments of principal and interest on
the Bonds and other debt when due. Not all risks are insured and the proceeds
from insurance applicable to covered risks may not be adequate to cover the
Partnership's increased expenses.
Post-Completion liquidity
Subsequent to the completion of the Facility, the Partnership's primary
sources of liquidity will be the VEPCO PPA and Aquila PPA for the sale of the
capacity of and electric energy from the Facility. The VEPCO PPA covers the sale
of the capacity of and electrical energy from two of the Partnership's
generating Units for an initial term of 13 years, which VEPCO can extend at its
option for an additional 12 years. The Aquila PPA covers the sale of the
capacity of and electric energy from the Partnership's other generating Unit for
an initial term of 15 years and seven months, which Aquila can extend at its
option for an additional five years.
Both of these power purchase agreements allow the power purchasers to
dispatch the generating Units the Partnership has dedicated to them, meaning
that the power purchasers have the right to control how much electrical energy
they want their dedicated Units to produce. However, even if the Facility is not
dispatched at all by VEPCO and Aquila, they will still have to pay us the
reservation payment as provided under the power purchase agreements.
The Partnership had agreed with VEPCO and Aquila that their respective
generating units would be able to begin delivering power to them by June 1,
2000, which date may be extended as a result of certain excused delays. However,
BVZ had not guaranteed that it would substantially complete the Facility by that
date. Instead, BVZ was obligated to substantially complete the Units by the
Guaranteed Completion dates.
The Partnership was required to provide security to support the
Partnership's obligations under the VEPCO PPA. The Partnership issued two
letters of credit each in the amount of $5,660,000 as security for this
obligation. On August 9, 2000, the energy delivery start date for the VEPCO
Units was achieved. As a result of this delay in achieving the energy
delivery date, the Partnership may be responsible for the incremental
replacement power during the period of delay, subject to a maximum of $20 per
kilowatt ($5,660,000) of committed capacity from each VEPCO Unit. VEPCO has
claimed that the Partnership is responsible for an aggregate of approximately
$9,300,000 of incremental replacement power for the period June 1, 2000
through July 19, 2000 and has drawn approximately $4,650,000 on each of the
two letters of credit. The draws on the letters of credit each converted into
5-year loans. The Partnership has disputed the validity of the draws on the
two letters of credit, the amount of the incremental replacement power costs
and the methodology used by VEPCO to calculate the incremental replacement
power costs, including the failure by VEPCO to acknowledge the force majeure
events described above. In connection with this dispute the Partnership
issued a notice of default to VEPCO. VEPCO has indicated its intent to repay
the Partnership an amount equal to the draws on the two letters of credit
plus accrued interest. When such amount is repaid it will be held in escrow
pending resolution of this dispute. VEPCO has not waived its claim for
incremental replacement power under the VEPCO PPA. The Partnership cannot
reasonably estimate its liability for incremental replacement power based on
the information available to it as of the date hereof, therefor the
Partnership has not recorded a liability for incremental replacement power
under the VEPCO PPA at June 30, 2000. A final resolution of this dispute has
not occurred.
The draws on the letters of credit each converted into 5-year loans ("LOC
Loans"). Principal amounts under each LOC Loan are repayable in 20 equal
quarterly installments commencing on the commercial operations date of the VEPCO
Units. Interest payments on Base Rate LOC Loans are payable quarterly. Interest
payments on LIBOR LOC Loans are payable on the last day of the LIBOR term, or if
the LIBOR loan term is longer than three months, every three months after the
date of such LIBOR LOC Loan. As of July 31, 2000, interest on each outstanding
LOC Loan was 8.12%.
Upon the commercial operation date for the VEPCO dedicated Units, the
Partnership issued an additional letter of credit in the amount of $5,660,000.
This letter of credit will be subject to replenishment if drawn and the
Partnership will be required to reimburse the issuing bank if this letter of
credit is drawn.
On August 8, 2000, the energy delivery milestone for the Aquila Unit was
achieved. The Partnership had the option of electing to incur an adjustment to
the reservation payment to be received under the Aquila PPA or to be responsible
for incremental replacement power during the period of delay. The Partnership
elected to incur an adjustment to the reservation payments to be received under
the Aquila PPA. The adjustment to the future reservation payments is determined
by contract capacity, the duration of delay and a percentage factor for the
month in which the delay occurred. The magnitude of the percentage factors for
July and August are two times greater than the percentage factor for June. The
reduction in future reservation payments approximates $1,375,000.
5
<PAGE>
As of June 30, 2000 the adjustments to future reservation payments
under the Aquila PPA approximated $10,000.
The Partnership also may be required to provide security to support the
Partnership's obligations under the Aquila PPA. This security would be in the
form of cash, a surety bond, or a letter of credit or guarantee from an
investment grade entity. If the Partnership's debt service coverage ratio for
each of the previous four consecutive calendar quarters is less than 1.25 to
1.00 then the Partnership must provide Aquila, upon their request, reasonable
security for the Partnership's obligations. The security must be in an amount
equal to $5.00 per kilowatt of the contract capacity or approximately
$1,300,000. The Partnership must maintain this security until the earlier of
the date on which (1) the Partnership provides Aquila documentation that the
Partnership's debt service coverage ratio was 1.25 to 1.00 or greater for a
period of four consecutive calendar quarters and (2) the Aquila power
purchase agreement terminates, and the Partnership has paid in full to Aquila
the amounts that the Partnership owes Aquila.
The Partnership is dependent on the fixed reservation payments and other
fixed payments under the VEPCO and Aquila power purchase agreements to meet the
Partnership's fixed obligations, including debt service under the exchange bonds
and LOC Loans. The Partnership's power purchasers' obligations to pay the
Partnership these fixed payments are dependent upon the Facility operating at
minimum capacity and availability levels. The Partnership expects to achieve the
minimum capacity and availability levels; however, any material shortfall in
tested capacity or availability over a significant period could impact the
Partnership's ability to make payments of principal and interest on the exchange
bonds, LOC Loans and the Partnership's other debt when due.
As with any power generation facility, operation of the Facility will
involve risk, including performance of the Facility below expected levels of
output and efficiency, shut-downs due to the breakdown or failure of equipment
or processes, violations of permit requirements, operator error, labor disputes,
or catastrophic events such as fires, earthquakes, explosions, floods or other
similar occurrences affecting a power generation facility or its power
purchasers. The occurrence of any of these events could significantly reduce or
eliminate revenues generated by the Facility or significantly increase the
expenses of the Facility, adversely impacting the Partnership's ability to make
payments of principal and interest on the exchange bonds, LOC Loans and the
Partnership's other debt when due.
6
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PART I/ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership uses fixed rate debt as a source of capital. At June 30,
2000 and December 31, 1999 the Partnership had $326,000,000 of outstanding bonds
at an average fixed interest rate of 7.70%.
PART II/ITEM 1. LEGAL PROCEEDINGS
During the first six months of 2000, Funding and the Partnership have not
been parties to any material legal proceedings.
PART II/ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
PART II/ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
PART II/ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II/ITEM 5. OTHER INFORMATION
None.
PART II/ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See the Exhibits Index at EI-1.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
7
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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 of the
undersigned thereunto duly authorized.
LSP ENERGY LIMITED PARTNERSHIP
By: LSP-Energy, Inc.
Its: General Partner
By: /s/ MIKHAIL SEGAL
--------------------------------
Name: Mikhail Segal
Title: President
Date: August 14, 2000
By: /s/ MARK BRENNAN
--------------------------------
Name: Mark Brennan
Title: Treasurer
Date: August 14, 2000
LSP BATESVILLE FUNDING CORPORATION
By: /s/ MIKHAIL SEGAL
--------------------------------
Name: Mikhail Segal
Title: President
Date: August 14, 2000
By: /s/ MARK BRENNAN
--------------------------------
Name: Mark Brennan
Title: Treasurer
Date: August 14, 2000
8
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LSP Energy Limited Partnership
LSP Batesville Funding Corporation
Financial Statement Index
Page
----
LSP ENERGY LIMITED PARTNERSHIP
Balance Sheets as of June 30, 2000 and December 31, 1999 ............ F-2
Statements of Operations for the three and six months ended
June 30, 2000 and 1999 and the period from Inception
(February 7, 1996) to June 30, 2000 .............................. F-3
Statements of Changes in Partner's Capital (Deficit) for the
three and six months ended June 30, 2000 and 1999, and the
period from Inception (February 7, 1996) to June 30, 2000 ........ F-4
Statements of Cash Flows for the three and six months ended
June 30, 2000 and 1999, and the period from Inception
(February 7, 1996) to June 30, 2000 .............................. F-5
Notes to financial statements ....................................... F-6
LSP BATESVILLE FUNDING CORPORATION
Balance Sheets as of June 30, 2000 and December 31, 1999 ............ F-14
Statements of Operations for the three and six months
ended June 30, 2000 and 1999 ..................................... F-15
Statements of Changes in Stockholder's Equity (Deficit) for the
three and six months ended June 30, 2000 and 1999 ................ F-16
Statements of Cash Flows for the three and six months
ended June 30, 2000 and 1999 ..................................... F-17
Notes to financial statements ....................................... F-18
F-1
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
BALANCE SHEETS
June 30, 2000 and December 31, 1999
ASSETS
<TABLE>
<CAPTION>
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 301,314 $ 202,924
Investments held by Trustee, at amortized cost
which approximates fair value 12,462,572 53,547,410
Spare parts inventory 3,024,228 733,462
Other current assets 866,142 174,174
------------- -------------
Total Current Assets 16,654,256 54,657,970
Property and construction in progress 332,873,625 296,509,139
Debt issuance and financing costs, net of accumulated
amortization of $4,286,337 and $4,046,139 at June 30, 2000
and December 31, 1999, respectively 10,194,271 10,099,017
------------- -------------
Total Assets $ 359,722,152 $ 361,266,126
============= =============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable $ 8,599,391 $ 9,923,894
Contract retainage payable 11,528,627 11,944,208
Accrued expenses 277,819 --
Accrued interest payable 11,674,386 15,345,443
------------- -------------
Total Current Liabilities 32,080,223 37,213,545
Bonds payable 326,000,000 326,000,000
------------- -------------
Total Liabilities 358,080,223 363,213,545
Commitments and contingencies
PARTNERS' CAPITAL (DEFICIT) 1,641,929 (1,947,419)
------------- -------------
Total Liabilities and Partners' Capital (Deficit) $ 359,722,152 $ 361,266,126
============= =============
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Inception
June 30, June 30, (February 7, 1996)
to June 30,
2000 1999 2000 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ -- $ 5,382,289
Operations and maintenance expenses 558,997 -- 1,024,984 -- 1,943,766
Project management expenses 174,386 87,986 336,260 116,986 845,659
General and administrative expenses 35,761 96,873 49,408 150,758 577,595
----------- ----------- ----------- ----------- -----------
Total expenses 769,144 184,859 1,410,652 267,744 3,367,020
----------- ----------- ----------- ----------- -----------
Net income (loss) $ (769,144) $ (184,859) $(1,410,652) $ (267,744) $ 2,015,269
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
Three and Six Months Ended June 30, 2000 and 1999 and
Period from Inception (February 7, 1996)
To June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Limited Partner General Partner
--------------- ------- -------
LSP Batesville Granite Power
Holding, LLC Partners II, L.P. LSP Energy, Inc. Total
------------ ----------------- ---------------- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $(1,927,945) $ -- $ (19,474) $(1,947,419)
Net loss (635,093) -- (6,415) (641,508)
----------- ----------- ----------- -----------
Balance at March 31, 2000 $(2,563,038) $ -- $ (25,889) $(2,588,927)
Net loss $ (761,452) $ -- $ (7,692) $ (769,144)
Capital contributions 5,000,000 -- -- 5,000,000
----------- ----------- ----------- -----------
Balance at June 30, 2000 $ 1,675,510 $ -- $ (33,581) $ 1,641,929
=========== =========== =========== ===========
Balance at December 31, 1998 $ (438,298) $ -- $ (4,427) $ (442,725)
Net loss (82,056) -- (829) (82,885)
----------- ----------- ----------- -----------
Balance at March 31, 1999 $ (520,354) $ -- $ (5,256) $ (525,610)
Net loss $ (183,010) $ -- $ (1,849) $ (184,859)
----------- ----------- ----------- -----------
Balance at June 30, 1999 $ (703,364) $ -- $ (7,105) $ (710,469)
=========== =========== =========== ===========
Balance at inception $ -- $ -- $ -- $ --
Capital contributions 5,000,000 990 10 5,001,000
Transfer of partnership interests 990 (990) -- --
Net income (loss) (3,325,480) 5,320,597 20,152 2,015,269
Distributions to partners -- (5,320,597) (53,743) (5,374,340)
----------- ----------- ----------- -----------
Balance at June 30, 2000 $ 1,675,510 $ -- $ (33,581) $ 1,641,929
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
June 30,
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (769,144) $ (184,859)
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating activities:
Increase in spare parts inventory (1,714,251) --
Increase in other current assets (433,486) (30,733)
Increase (decrease) in accounts payable (1,191,081) 2,080,306
Increase in accrued expenses 277,819 --
Decrease in accrued interest
on loans payable -- (213,454)
------------- -------------
Cash provided by (used in) operating activities (3,830,143) 1,651,260
------------- -------------
Cash Flows from Investing Activities:
Investments held by Trustee -- (183,648,081)
Investments drawn for project costs 12,299,006 53,462,117
Payments on property and
construction in progress (13,371,771) (74,428,140)
------------- -------------
Cash used in investing activities (1,072,765) (204,614,104)
------------- -------------
Cash Flows from Financing Activities:
Debt issuance and financing costs (12,411) (2,726,826)
Proceeds from issuance of loans -- 15,700,000
Repayments of loans -- (136,600,000)
Proceeds from issuance of bonds -- 326,000,000
Capital contributions 5,000,000 --
Distributions to partners -- --
------------- -------------
Cash provided by financing activities 4,987,589 202,373,174
------------- -------------
Increase (decrease) in cash 84,681 (589,670)
Cash, beginning of period 216,633 794,410
------------- -------------
Cash, end of period $ 301,314 $ 204,740
============= =============
RECONCILIATION OF CHANGES IN PROPERTY
AND CONSTRUCTION IN PROGRESS:
Increase in property and construction in progress $ (17,929,423) $ (82,788,594)
Increase (decrease) in contract retainage (179,596) 4,010,133
Investment income on investments held by Trustee (307,554) (732,532)
Reimbursement received from the State of Mississippi -- --
Test energy revenues received (1,446,601) --
Amortization of debt issuance and financing costs 120,099 2,400,123
Increase (decrease) in accrued interest payable on bonds 6,371,304 2,682,730
------------- -------------
Payments on property and construction in progress $ (13,371,771) $ (74,428,140)
============= =============
<CAPTION>
Six Months Inception
Ended (February 7, 1996)
June 30, to June 30,
2000 1999 2000
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (1,410,652) $ (267,744) $ 2,015,269
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating activities:
Increase in spare parts inventory (2,290,766) -- (3,024,228)
Increase in other current assets (691,968) (30,733) (866,142)
Increase (decrease) in accounts payable (1,324,503) 2,383,905 8,599,391
Increase in accrued expenses 277,819 -- 277,819
Decrease in accrued interest
on loans payable -- (154,898) --
------------- ------------- -------------
Cash provided by (used in) operating activities (5,440,070) 1,930,530 7,002,109
------------- ------------- -------------
Cash Flows from Investing Activities:
Investments held by Trustee -- (183,648,081) (183,648,081)
Investments drawn for project costs 43,335,743 53,462,117 190,862,617
Payments on property and
construction in progress (42,461,831) (116,881,789) (325,061,383)
------------- ------------- -------------
Cash used in investing activities 873,912 (247,067,753) (317,846,847)
------------- ------------- -------------
Cash Flows from Financing Activities:
Debt issuance and financing costs (335,452) (2,741,903) (14,480,608)
Proceeds from issuance of loans -- 58,600,000 136,600,000
Repayments of loans -- (136,600,000) (136,600,000)
Proceeds from issuance of bonds -- 326,000,000 326,000,000
Capital contributions 5,000,000 -- 5,001,000
Distributions to partners -- -- (5,374,340)
------------- ------------- -------------
Cash provided by financing activities 4,664,548 245,258,097 311,146,052
------------- ------------- -------------
Increase (decrease) in cash 98,390 120,874 301,314
Cash, beginning of period 202,924 83,866 --
------------- ------------- -------------
Cash, end of period $ 301,314 $ 204,740 $ 301,314
============= ============= =============
RECONCILIATION OF CHANGES IN PROPERTY
AND CONSTRUCTION IN PROGRESS:
Increase in property and construction in progress $ (36,364,486) $(128,260,177) $(332,873,625)
Increase (decrease) in contract retainage (415,581) 6,246,810 11,528,627
Investment income on investments held by Trustee (804,304) (732,532) (3,952,748)
Reimbursement received from the State of Mississippi -- -- (14,277,759)
Test energy revenues received (1,446,601) -- (1,446,601)
Amortization of debt issuance and financing costs 240,198 3,181,380 4,286,337
Increase (decrease) in accrued interest payable on bonds (3,671,057) 2,682,730 11,674,386
------------- ------------- -------------
Payments on property and construction in progress $ (42,461,831) $(116,881,789) $(325,061,383)
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BUSINESS
LSP Energy Limited Partnership (the "Partnership") is a Delaware limited
partnership formed in February 1996 to develop, construct, own and operate a
gas-fired electric generating facility with a design capacity of approximately
837 megawatts located in Batesville, Mississippi (the "Facility"). The 1%
general partner of the Partnership is LSP Energy, Inc. ("Energy"). The 99%
limited partner of the Partnership is LSP Batesville Holding, LLC ("Holding"), a
Delaware limited liability company established on July 29, 1998. Granite II
Holding, LLC ("Granite"), an affiliate of LS Power, LLC and a Delaware limited
liability company, holds a 48.63% membership interest in Holding and
Cogentrix/Batesville, LLC ("Cogentrix"), an affiliate of Cogentrix Energy, Inc.
and a Delaware limited liability company holds a 51.37% membership interest in
Holding.
During April 2000 and July 2000, Cogentrix made capital contributions
to Holding of $5,000,000 and $5,000,000, respectively, which contributions
were contributed to the Partnership by Holding. Cogentrix's remaining capital
contribution commitment of $44,000,000 is supported by an irrevocable letter
of credit.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The financial statements, included herein, have been prepared in
accordance with generally accepted accounting principles ("GAAP") for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, the information contained
herein reflects all adjustments, including normal recurring accruals, necessary
to present fairly the financial condition, results of operations and cash flows
for the periods disclosed. Operating results for the three and six months ended
June 30, 2000 are not necessarily indicative of the results anticipated for the
year ending December 31, 2000.
These financial statements should be read in conjunction with the audited
financial statements, and footnotes thereto, included in the Form S-4 for the
year ending December 31, 1999.
Basis of Presentation
The Partnership has been in the development stage since its inception and
has not generated any operating revenues. The Facility commenced commercial
operations under the Power Purchase Agreement ("Aquila PPA") with Aquila Energy
Marketing Corporation ("Aquila") and Utilicorp United, Inc. ("Utilicorp") on
August 8, 2000 and under the Power Purchase Agreement ("VEPCO PPA") with
Virginia Electric and Power Company ("VEPCO") on August 9, 2000.
As with any new business venture of this size and nature, the ultimate
operation of the Facility could be affected by many factors.
(continued)
F-6
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Construction in Progress
All costs directly related to the acquisition and construction of
long-lived assets are capitalized. Interest costs (including amortization of
debt issuance and financing costs), net of interest income on excess proceeds
from loans and bonds, is capitalized during construction. As of June 30, 2000
and December 31, 1999, capitalized interest since inception including
amortization of debt issuance and financing costs was approximately $32,936,000
and $20,823,000, respectively, ($28,650,000 and $16,777,000, respectively,
before amortization). Cash paid for interest was approximately $16,352,000,
$3,143,000, $1,479,000 and $20,950,000 for the six months ended June 30, 2000,
and June 30, 1999, for the three months ended June 30, 1999 and for the period
from Inception (February 7, 1996) to June 30, 2000, respectively. No interest
was paid during the three months ended June 30, 2000.
All start-up costs not directly related to the acquisition or construction
of long-lived tangible assets are expensed as incurred.
3. FACILITY CONTRACTS
The VEPCO PPA specifies an energy delivery milestone of June 1, 2000
for two of the three Combined Cycle Units ("Unit" or "Units") at the
Facility, which date may be extended by a force majeure event or a delivery
excuse. As a result of transportation delays in the delivery of one of the
VEPCO Unit's steam turbine generator to the Facility, the Partnership issued
a force majeure notice to VEPCO claiming delays of the energy delivery
milestone date of June 1, 2000, under the VEPCO PPA. The Partnership has
claimed a 21-day delay in the energy delivery milestone date for the first
VEPCO Unit and a 9-day delay in the energy delivery milestone date for the
second VEPCO Unit. VEPCO has initially rejected the Partnership's claim of a
force majeure event. If it is determined that any portion of the delay in the
delivery of the steam turbine generator constitutes a force majeure event
under the VEPCO PPA, then the date that the Partnership was required to
deliver energy from the respective VEPCO Units will be extended day for day
for the number of days of the force majeure event. A final resolution of the
issue has not occurred.
On August 9, 2000, the energy delivery milestone for the VEPCO Units
was achieved. As a result of this delay in achieving the energy delivery
milestone, the Partnership may be responsible for the incremental replacement
power during the period of delay, subject to a maximum of $20 per kilowatt
($5,660,000) of committed capacity from each VEPCO Unit. The Partnership has
issued two letters of credit each in the amount of $5,660,000 as security for
this obligation (see Note 4). VEPCO has claimed that the Partnership is
responsible for an aggregate of approximately $9,300,000 of incremental
replacement power for the period June 1, 2000 through July 19, 2000 and has
drawn approximately $4,650,000 on each of the two letters of credit. The
draws on the letters of credit each converted into 5 year loans. The
Partnership has disputed the validity of the draws on the two letters of
credit, the amount of the incremental replacement power costs and the
methodology used by VEPCO to calculate the incremental replacement power
costs, including the failure by VEPCO to acknowledge the force majeure events
described above. In connection with this dispute the Partnership issued a
notice of default to VEPCO. VEPCO has indicated its intent to repay the
Partnership an amount equal to the draws on the two letters of credit plus
accrued interest. When such amount is repaid it will be held in escrow
pending resolution of this dispute. VEPCO has not waived its claim for
incremental replacement power under the VEPCO PPA. The Partnership cannot
reasonably estimate its liability for incremental replacement power based on
the information available to it as of the date hereof, therefor the
Partnership has not recorded a liability for incremental replacement power
under the VEPCO PPA at June 30, 2000. A final resolution of this dispute has
not occurred.
Under the terms of the VEPCO PPA, VEPCO is providing natural gas for
the startup and commissioning of each of its Units. The Partnership is
obligated to reimburse VEPCO for the delivered cost of such natural gas. As
of June 30, 2000, the Partnership has purchased approximately $4,128,000 of
natural gas from VEPCO for the start-up and commissioning of each of its
Units. This amount has been recorded as a component of construction in
progress in the accompanying June 30, 2000 balance sheet.
(continued)
F-7
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The Aquila PPA specifies an energy delivery milestone deadline of June
1, 2000 for the Aquila Unit. On August 8, 2000, the energy delivery milestone
of the Aquila Unit was achieved. The Partnership had the option of electing
to incur an adjustment to the reservation payment to be received under the
Aquila PPA or to be responsible for incremental replacement power during the
period of delay. The Partnership elected to incur an adjustment to the
reservation payments to be received under the Aquila PPA. The adjustment to
the future reservation payments is determined by contract capacity, the
duration of delay and a percentage factor for the month in which the delay
occurred. The magnitude of the percentage factors for July and August are two
times greater than the percentage factor for June. The reduction in future
reservation payments approximates $1,375,000. As of June 30, 2000, the
adjustments to future reservation payments under the Aquila PPA approximated
$10,000.
Under the terms of the Aquila PPA, Aquila is providing natural gas for the
startup and commissioning of its Unit. The Partnership is obligated to reimburse
Aquila for the delivered cost of such natural gas. As of June 30, 2000, the
Partnership has purchased approximately $1,281,000 of natural gas from Aquila
for the start-up and commissioning of its Unit. This amount has been recorded as
a component of construction in progress in the accompanying June 30, 2000
balance sheet.
For the period between February 25, 2000 and May 23, 2000, the Partnership
was a party to a power purchase agreement with Tennessee Valley Authority
("TVA") for the sale of test energy generated during startup and commissioning
of the Facility ("Test Energy Agreement"). As of June 30, 2000, the Partnership
has recorded approximately $1,447,000 in revenue from the sale of test energy to
TVA. This amount has been recorded as a component of construction in progress in
the accompanying June 30, 2000 balance sheet.
Under the terms of the VEPCO PPA, VEPCO is acting as the Partnership's
agent for the purpose of marketing and selling test energy generated during the
start-up and commissioning of the VEPCO Units. In return for VEPCO's services,
the Partnership is obligated to pay VEPCO a marketing fee equal to $1.00 per MW
hour of test energy sold plus a reimbursement for any reasonable costs related
to the sale of such test energy. For the period May 23, 2000 through June 30,
2000, the Partnership has recorded approximately $156,000, net of related
marketing fees, in revenue from the sale of test energy under this arrangement
with VEPCO. This amount has been recorded as a component of construction in
progress in the accompanying June 30, 2000 balance sheet.
Under the terms of the Aquila PPA, Aquila is acting as the Partnership's
agent for the purpose of marketing and selling test energy generated during the
start-up and commissioning of the Aquila Unit. In return for Aquila's services,
the Partnership is obligated to pay Aquila a marketing fee equal to $0.25 per MW
hour of test energy sold plus a reimbursement for any reasonable costs related
to the sale of such test energy. For the period May 23, 2000 through June 30,
2000, the Partnership has recorded approximately $100,000, net of related
marketing fees, in revenue from the sale of test energy under this arrangement
with Aquila. This amount has been recorded as a component of construction in
progress in the accompanying June 30, 2000 balance sheet.
(continued)
F-8
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
On July 22, 1998, the Partnership entered into a $240 million fixed price
Turnkey Engineering, Procurement and Construction Contract ("Construction
Agreement") with BVZ Power Partners-Batesville ("BVZ"), a joint venture
formed by H.B. Zachary Company and a subsidiary of Black & Veatch, LLP. The
obligations of BVZ are guaranteed by Black & Veatch, LLP and the entire
Construction Agreement is backed by a performance bond. Under the terms of
the Construction Agreement, BVZ has committed to develop and construct the
Facility subject to the terms, deadlines and conditions set forth in the
Construction Agreement. The current dates by which BVZ is obligated to
complete construction and start-up to specified minimum performance levels of
the two VEPCO Units and the Aquila Unit are August 2, 2000, July 31, 2000 and
July 31, 2000, ("Guaranteed Completion Dates"), respectively. The Guaranteed
Completion Dates include extensions as a result of, (1) the settlement of a
force majeure event, which resulted from delays incurred in August and
September 1999 during the transportation of the first VEPCO Unit's steam
turbine generator to the Facility and (2) resolution of issues related to
water quality and maintenance performed by BVZ on the Facility's water
treatment system in April 2000. In addition, the Partnership has agreed to
reimburse BVZ approximately $325,000 of the costs associated with the
maintenance performed on the water treatment system.
BVZ completed the construction and start-up of the Aquila Unit and the
VEPCO Units on August 8, 2000.
A gap of 61 to 63 days currently exists between the Guaranteed Completion
Dates and the guaranteed delivery start dates of June 1, 2000 under the VEPCO
PPA and the Aquila PPA. This gap may be reduced if we are successful in our
claim that the steam turbine delay, as described above, constitutes a force
majeure event under the VEPCO PPA.
BVZ is required to pay delay liquidated damages of $43,333 per day per
Unit for failure to complete the construction and start-up of any Unit to
specified minimum performance levels on or prior to one day after the Guaranteed
Completion Date. Based on the completion of construction and start-up of the
Aquila Unit and the VEPCO Units on August 8, 2000, BVZ owes the Partnership
approximately $693,000 of delay liquidated damages. The delay liquidated damages
will not fully compensate the Partnership for the costs of incremental
replacement power or other costs associated with delays.
(continued)
F-9
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
During an inspection of the second VEPCO Unit's combustion turbine on May
9, 2000, damage to the compressor blades was discovered. The combustion turbine
manufacturer was notified and additional technical support was dispatched to the
Facility to determine the cause and extent of the damage and assist in repairs.
As a result of the damage and repairs required to the second VEPCO Unit's
combustion turbine compressor, inspections of the other Units' combustion
turbine compressors were performed. As a result, the combustion turbine
manufacturer performed a product modification to prevent a similar occurrence on
the other Units by increasing blade tip clearances. In addition, a single
combustion turbine blade of the first VEPCO Unit's combustion turbine was found
to be exhibiting signs of thermal degradation. The combustion turbine supplier
determined that the one blade had inadvertently not been coated during the
manufacturing process, and recommended that the blade be replaced with a new
blade while the Unit was out of service undergoing maintenance. All compressor
and combustion turbine repairs were completed and the Units resumed testing on
June 30, 2000, June 12, 2000 and June 23, 2000, respectively.
BVZ and the heat recovery steam generator ("HRSG") manufacturer have
determined that a modification to the HRSG's was necessary to allow the units to
achieve their maximum rated output. This modification will improve the overall
heat transfer characteristics of the HRSG's by reducing heat transfer in certain
sections of the HRSGs by removing tubes, thereby increasing heat transfer in
other sections of the HRSGs. The HRSG modifications were completed and the Units
resumed testing and commissioning on July 17, 2000, July 16, 2000 and July 16,
2000, respectively.
As of June 30, 2000, engineering, procurement and construction was
estimated to be approximately 98% complete and total costs incurred to date
under the Construction Agreement were approximately $235,641,000, including
retainage. As of June 30, 2000, the Partnership had retained construction
contract payments under the Construction Agreement totaling approximately
$11,506,000.
The Partnership entered into electrical interconnection agreements with
Tennessee Valley Authority (the "TVA Interconnection Agreement") and with
Entergy Mississippi, Inc. (the "Entergy Interconnection Agreement" and together
with the TVA Interconnection Agreement, the "Interconnection Agreements"). The
TVA Interconnection Agreement provides for the cost of the interconnection
facilities of approximately $4,000,000 and system upgrades of approximately
$9,500,000 to be paid by the Partnership. The Entergy Interconnection Agreement
provides for the cost of the interconnection facilities of approximately
$1,100,000 and system upgrades of approximately $7,100,000 to be paid by the
Partnership. As of July 31, 2000, the TVA and Entergy interconnection facilities
and system upgrades had been completed. All related costs for the Entergy
interconnection facilities and system upgrades have been paid in full by the
Partnership with the exception of approximately $1,770,000. As of June 30, 2000,
total costs incurred under the TVA Interconnection Agreement were approximately
$12,556,000. A final summary of costs for the TVA interconnection facilities and
system upgrades has not been received by the Partnership.
The Partnership is entitled to receive system upgrade credits in the
amount of incremental revenue received by TVA and Entergy for transmission
services procured for the delivery of energy from the Facility. TVA and
Entergy are currently determining the amount of the system upgrade credits
earned by the Partnership prior to the commercial operations dates of the
Units.
(continued)
F-10
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The Partnership entered into three contracts aggregating approximately
$18,350,000 for the construction of the Facility's gas lateral pipeline and the
pipelines through which the Facility receives water and disposes of waste water
(collectively the "Panola County Infrastructure"). These contracts were
subsequently transferred to Panola County, Mississippi ("Panola County"). The
Partnership has leased the Panola County Infrastructure under terms, which
provide the Partnership with the operational control and responsibility for the
Infrastructure and with the use of the Panola County Infrastructure for the full
projected requirements of the Facility.
As of July 31, 2000, construction of the Panola County Infrastructure had
been substantially completed.
These and other contracts and activities incident to the construction and
ultimate operation of the Facility require various other commitments and
obligations by the Partnership. Additionally, the contracts contain various
restrictive covenants, which allow the contracted party to terminate the
contract upon the occurrence of specified events or, in certain cases, default
under other contractual commitments.
4. FINANCING
On May 21, 1999, the Partnership and Funding issued two series of Senior
Secured Bonds (the "Bonds") in the following total principal amounts:
$150,000,000 7.164% Series A Senior Secured Bonds due 2014 and $176,000,000
8.160% Series B Senior Secured Bonds due 2025. Effective March 7, 2000, the
Partnership and Funding filed a registration statement with the Securities and
Exchange Commission (the "SEC") for a registered offer to exchange the Bonds for
two series of debt securities (the "Exchange Bonds") which are in all material
respects substantially identical to the Bonds. Interest is payable semiannually
on each January 15 and July 15, commencing January 15, 2000, to the holders of
record on the immediately preceding January 1 and July 1. On July 15, 2000, the
Partnership made interest payments aggregating approximately $12,649,000.
Principal payments are payable on each January 15 and July 15, commencing on
July 15, 2001.
The Exchange Bonds are secured by substantially all of the personal
property and contract rights of the Partnership and Funding. In addition,
Holding and Energy have pledged all of their interests in the Partnership, and
Holding has pledged all of the common stock of Energy and all of the common
stock of Funding.
The Exchange Bonds are senior secured obligations of the Partnership and
Funding, rank equivalent in right of payment to all other senior secured
obligations of the Partnership and Funding and rank senior in right of payment
to all existing and future subordinated debt of the Partnership and Funding.
The Letter of Credit and Reimbursement (the "LOC Agreement"), entered into
by the Partnership with a bank provides for letter of credit commitments
aggregating $16,980,000. The LOC Agreement provides for the bank to issue three
separate letters of credit ("Letter of Credit A", "Letter of Credit B" and
"Letter of Credit C"). The Bank has issued Letter of Credit A and Letter of
Credit B each in the amount of $5,660,000 as security for the Partnership's
incremental replacement power obligation under the VEPCO PPA until the
commercial operations date. On July 21, 2000, VEPCO issued a draw of
approximately $4,650,000 on each of Letter of Credit A and Letter of Credit B
(see Note 3).
The draws on Letter of Credit A and Letter of Credit B each converted into
5-year loans ("LOC Loans"). Principal amounts under each LOC Loan are repayable
in 20 equal quarterly installments on each March 31, June 30, September 30, and
December 31 commencing on the first such date subsequent to the commercial
operations date of the VEPCO Units.
(continued)
F-11
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
For the period prior to the completion of the Facility, amounts
outstanding, based on loan types designated by the Partnership, bear interest at
(i) .625% above the higher of the Prime Rate or 1/2% above the Federal Funds
Rate (collectively the "Base Rate") or (ii) 1.50% above the selected London
Interbank Offered Rate ("LIBOR") term not to exceed one year. The interest rate
spreads are adjusted in future periods beginning on the completion date of the
Facility as follows:
Base Rate LIBOR
Loans Loans
----- -----
Years 1 - 2 .750% 1.625%
Years 3 - 5 .875% 1.750%
Interest payments on Base Rate LOC Loans are payable quarterly. Interest
payments on LIBOR LOC Loans are payable on the last day of the LIBOR term, or if
the LIBOR loan term is longer than three months, every three months after the
date of such LIBOR LOC Loan. As of July 31, 2000, interest on each outstanding
LOC Loan was 8.12%.
Letter of Credit C was issued in the amount of $5,660,000 on the
commercial operations date of the VEPCO Units.
5. RELATED PARTY TRANSACTIONS
LS Power Management, LLC ("LSP Management"), a wholly owned subsidiary of
LS Power, provides certain management services to the Partnership pursuant to a
management services agreement. Under this management services agreement, LSP
Management manages the business affairs of the Partnership during construction
and operation of the Facility. LSP Management is reimbursed for its reasonable
and necessary expenses incurred in performing its services, including salaries
of its personnel, other than executive officers, to the extent related to
services provided under the management services agreement. LSP Management also
receives a monthly management fee of approximately $33,300 during the
construction and operation of the Facility. This management fee will be adjusted
annually based on published indices. Management fee payments began during the
third quarter of 1999. For the six months ended June 30, 2000 and for the period
from inception (February 7, 1996) through June 30, 2000, LSP Management billed
the Partnership approximately $548,000 and $1,959,000, respectively, under the
management services agreement. For the three months ended June 30, 2000 LSP
Management billed the Partnership approximately $237,000
The Facility is operated and maintained under a long-term operations and
maintenance agreement with Cogentrix Batesville Operations, LLC (the
"Operator"). The initial term of the operations and maintenance agreement is
twenty-seven years. The Partnership has the option of extending the term of the
agreement for successive two-year terms with one hundred and eighty days notice.
Under the terms of the agreement the Partnership is required to pay the Operator
a fixed fee of $390,000, payable in ten monthly installments, for services
provided during construction of the Facility and a fixed monthly fee of
approximately $42,000 during operation of the Facility. The Partnership is also
required to reimburse the Operator for all labor costs, including payroll and
taxes, subcontractor costs and other costs deemed reimbursable by the
Partnership. The management fee will be adjusted annually based on published
indices. For the six months ended June 30, 2000 and for the period from
inception (February 7, 1996) through June 30, 2000 Cogentrix billed the
Partnership approximately $1,400,000 and $2,384,000, respectively, under the
operations and maintenance agreement. For the three months ended June 30, 2000
Cogentrix billed the Partnership approximately $669,000.
(continued)
F-12
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
6. DEPENDENCE ON THIRD PARTIES
The Partnership is highly dependent on BVZ for the construction of the
Facility, contractors for the construction of the interconnection facilities and
the Operator for the operation and maintenance of the Facility. During the terms
of the VEPCO PPA and Aquila PPA, the Partnership will be highly dependent on two
utilities for the purchase of electric generating capacity and dispatchable
energy from their respective Units at the Facility. Any material breach by any
one of these parties of their respective obligations to the Partnership could
affect the ability of the Partnership to make payments under the various
financing agreements. In addition, bankruptcy or insolvency of other parties or
default by such parties relative to their contractual or regulatory obligations
could adversely affect the ability of the Partnership to make payments under the
various financing agreements. If an agreement were to be terminated due to a
breach of such agreement, the Partnership's ability to enter into a substitute
agreement having substantially equivalent terms and conditions, or with an
equally creditworthy third party, is uncertain and there can be no assurance
that the Partnership will be able to make payments under the various financing
agreements.
F-13
<PAGE>
LSP BATESVILLE FUNDING CORPORATION
BALANCE SHEETS
June 30, 2000 and December 31, 1999
ASSETS
<TABLE>
<CAPTION>
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Current asset-Cash $ 1,000 $ 1,000
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Due to LS Power Management, LLC $ 900 $ --
Due to LSP Energy Limited Partnership 8,510 5,960
------- -------
Total Current Liabilities 9,410 5,960
------- -------
Commitments and contingencies
Common stock, $.01 par value, 1,000 shares authorized, 100 shares
Issued and outstanding 1 1
Additional paid-in-capital 999 999
Accumulated deficit (9,410) (5,960)
------- -------
Total Stockholder's Equity (Deficit) (8,410) (4,960)
------- -------
Total Liability and Stockholder's Equity (Deficit) $ 1,000 $ 1,000
======= =======
</TABLE>
See accompanying notes to financial statements.
F-14
<PAGE>
LSP BATESVILLE FUNDING CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenues $ -- $ -- $ -- $ --
General and administrative expenses 3,450 -- -- --
------- -------- -------- ---------
Total expenses 3,450 -- -- --
------- -------- -------- ---------
Net income (loss) ($3,450) $ -- $ -- $ --
======= ======== ======== =========
See accompanying notes to financial statements.
F-15
<PAGE>
LSP BATESVILLE FUNDING CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
Three and Six Months Ended June 30, 2000 and 1999
(Unaudited)
Common Additional Accumulated
Stock Paid-in-Capital Deficit Total
----- --------------- ------- -----
Balance at December 31, 1999 $ 1 $ 999 $(5,960) $(4,960)
Net loss -- -- -- --
------- ------- ------- -------
Balance at March 31, 2000 $ 1 $ 999 $(5,960) $(4,960)
Net loss -- -- (3,450) (3,450)
------- ------- ------- -------
Balance at June 30, 2000 $ 1 $ 999 $(9,410) $(8,410)
======= ======= ======= =======
Balance at December 31, 1998 $ 1 $ 999 $ -- $ 1,000
Net loss -- -- -- --
------- ------- ------- -------
Balance at March 31, 1999 $ 1 $ 999 $ -- $ 1,000
Net loss -- -- -- --
------- ------- ------- -------
Balance at June 30, 1999 $ 1 $ 999 $ -- $ 1,000
======= ======= ======= =======
See accompanying notes to financial statements.
F-16
<PAGE>
LSP BATESVILLE FUNDING CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net loss $(3,450) $ -- $(3,450) $ --
Adjustments to reconcile net loss to
cash provided by operating activities:
Increase in due to LS Power Management, LLC 900 -- 900 --
Increase in due to LSP Energy Limited Partnership 2,550 -- 2,550 --
------- ------- ------- -------
Cash provided by (used in) operating activities -- -- -- --
------- ------- ------- -------
Cash Flows from Investing Activities -- -- -- --
------- ------- ------- -------
Cash Flows from Financing Activities -- -- -- --
------- ------- ------- -------
Increase in cash -- -- -- --
Cash, beginning of period 1,000 1,000 1,000 1,000
------- ------- ------- -------
Cash, end of period $ 1,000 $ 1,000 $ 1,000 $ 1,000
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-17
<PAGE>
LSP BATESVILLE FUNDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
LSP Batesville Funding Corporation ("Funding") was established on August
3, 1998. Funding's business purpose is limited to maintaining its organization
and activities necessary to facilitate the acquisition of financing by LSP
Energy Limited Partnership ("the Partnership") from the institutional debt
market and to offering debt securities. Funding is wholly owned by LSP
Batesville Holding, LLC ("Holding"), a Delaware limited liability company.
Holding was established on July 29, 1998 for the purpose of owning and
managing the limited partnership interests of the Partnership, the common stock
of LSP Energy, Inc., the general partner of the Partnership, and the common
stock of Funding.
The Partnership is a Delaware limited partnership formed in February 1996
to develop, finance, construct, own and operate a gas-fired electric generating
facility with a design capacity of approximately 837 megawatts to be located in
Batesville, Mississippi (the "Facility"). The Partnership has been in the
development stage since its inception and is not expected to generate any
operating revenues until the Facility achieves commercial operations. As with
business ventures of this size and nature, the ultimate construction and
operation of the Facility could be affected by many factors. Construction of the
Facility is expected to be completed in August 2000.
Due to the insignificance of income tax effects applicable to Funding, the
accompanying financial statements do not reflect any income tax effects.
The financial statements, included herein, have been prepared in
accordance with generally accepted accounting principles ("GAAP") for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, the information
contained herein reflects all adjustments, including normal recurring
accruals, necessary to present fairly the financial condition, results of
operations and cash flows for the periods disclosed. Operating results for
the three and six months ended June 30, 2000 are not necessarily indicative
of the results anticipated for the year ending December 31, 2000.
These financial statements should be read in conjunction with the
audited financial statements, and footnotes thereto, included in the Form S-4
for the year ending December 31, 1999.
2. FINANCING
On May 21, 1999, the Partnership and Funding issued two series of Senior
Secured Bonds (the "Bonds") in the following total principal amounts:
$150,000,000 7.164% Series A Senior Secured Bonds due 2014 and $176,000,000
8.160% Series B Senior Secured Bonds due 2025. Effective March 7, 2000, the
Partnership and Funding filed a registration statement with the Securities and
Exchange Commission (the "SEC") for a registered offer to exchange the Bonds for
two series of debt securities (the "Exchange Bonds") which are in all material
respects substantially identical to the Bonds. Interest is payable semiannually
on each January 15 and July 15, commencing January 15, 2000, to the holders of
record on the immediately preceding January 1 and July 1. On July15, 2000, the
Partnership made interest payments aggregating approximately $12,649,000.
Principal payments are payable on each January 15 and July 15, commencing
on July 15, 2001.
The Exchange Bonds are secured by substantially all of the personal
property and contract rights of the Partnership and Funding. In addition,
Holding and Energy have pledged all of their interests in the Partnership, and
Holding has pledged all of the common stock of Energy and all of the common
stock of Funding.
The Exchange Bonds are senior secured obligations of the Partnership and
Funding, rank equivalent in right of payment to all other senior secured
obligations of the Partnership and Funding and rank senior in right of payment
to all existing and future subordinated debt of the Partnership and Funding.
F-18
<PAGE>
LSP ENERGY LIMITED PARTNERSHIP
LSP BATESVILLE FUNDING CORPORATION
EXHIBIT INDEX
Exhibit No. Description of Exhibit
----------- ---------------------------------------------------------
**3.1 Amended and Restated Certificate of Incorporation of LSP
Batesville Funding Corporation.
**3.2 Amended and Restated Limited Partnership Agreement of LSP
Energy Limited Partnership.
**3.3 By-Laws of LSP Batesville Funding Corporation.
**4.1 ___ Indenture, dated as of May 21, 1999, among LSP Batesville
Funding Corporation, LSP Energy Limited Partnership and
The Bank of New York, as Trustee.
**4.2 First Supplemental Indenture, dated May 21, 1999 among
LSP Batesville Funding Corporation, LSP Energy Limited
Partnership and The Bank of New York, as Trustee,
relating to $150,000,000 aggregate principal amount of
7.164% Series A Senior Secured Bonds due 2014.
**4.3 ___ Second Supplemental Indenture, dated May 21, 1999 among
LSP Batesville Funding Corporation, LSP Energy Limited
Partnership and The Bank of New York, as Trustee,
relating to $176,000,000 aggregate principal amount of
8.160% Series B Senior Secured Bonds due 2025.
**4.4 Form of Third Supplemental Indenture among LSP Batesville
Funding Corporation, LSP Energy Limited Partnership and
The Bank of New York, as Trustee, relating to
$150,000,000 aggregate principal amount of 7.164% Series
C Senior Secured Bonds due 2014.
**4.5 ___ Form of Fourth Supplemental Indenture among LSP
Batesville Funding Corporation, LSP Energy Limited
Partnership and The Bank of New York, as Trustee,
relating to $176,000,000 aggregate principal amount of
8.160% Series D Senior Secured Bonds due 2025.
**4.6 Specimen Certificate of 7.164% Series A Senior Secured
Bonds due 2014.
**4.7 ___ Specimen Certificate of 8.160% Series B Senior Secured
Bonds due 2025.
**4.8 Form of Specimen Certificate of 7.164% Series C Senio9r
Secured Bonds due 2014.
**4.9 ___ Form of Specimen Certificate of 8.160% Series D Senior
Secured Bonds due 2025.
**4.10 Registration Rights Agreement, dated as of May 21, 1999,
among LSP Batesville Funding Corporation, LSP Energy
Limited Partnership, Credit Suisse First Boston
Corporation, Scotia Capital Markets (USA) Inc. and TD
Securities (USA) Inc.
**4.11 ___ Second Amended and Restated Common Agreement, dated as of
May 21, 1999, among LSP Batesville Funding Corporation,
LSP Energy Limited Partnership and The Bank of New York,
as Collateral Agent, Administrative Agent and
Intercreditor Agent.
**4.12 ___ Intercreditor Agreement, dated as of May 21, 1999, among
LSP Batesville Funding Corporation, LSP Energy Limited
Partnership, Credit Suisse First Boston, as VEPCO L/C
Agent, and The Bank of New York, as Collateral Agent,
Trustee, Administrative Agent and Intercreditor Agent.
**4.13 Second Amended and Restated Equity Contribution
Agreement, dated as of May 21, 1999, among LSP Batesville
Holding, LLC, LSP Energy Limited Partnership and The Bank
of New York, as Collateral Agent.
EI-1
<PAGE>
Exhibit No. Description of Exhibit
----------- ---------------------------------------------------------
**4.14 ___ Second Amended and Restated Collateral Agency Agreement,
dated as of May 21, 1999, among LSP Batesville Funding
Corporation, LSP Energy Limited Partnership, the Senior
Secured Parties party thereto from time to time, The Bank
of New York, as Administrative Agent, Collateral Agent
and Intercreditor Agent and Credit Suisse First Boston,
as Additional Collateral Agent.
**4.15 Pledge and Security Agreement, dated as of May 21, 1999
(Funding Corporation's Stock), between LSP Batesville
Holding, LLC and The Bank of New York, as Collateral
Agent.
**4.16 ___ Second Amendment and Restated Pledge and Security
Agreement (LSP Energy, Inc.'s Stock), dated as of May 21,
1999, between LSP Batesville Holding, LLC and The Bank of
New York, as Collateral Agent.
**4.17 Second Amended and Restated Pledge and Security Agreement
(Limited Partnership Interest in the Partnership), dated
as of May 21, 1999, between LSP Batesville Holding, LLC
and The Bank of New York, as Collateral Agent.
**4.18 Second Amended and Restated Pledge and Security Agreement
(General Partnership Interest in the Partnership), dated
as of May 21, 1999, between LSP Energy, Inc. and The Bank
of New York, as Collateral Agent.
**4.19 ___ Second Amended and Restated Security Agreement, dated as
of May 21, 1999, between LSP Energy Limited Partnership
and The Bank of New York, as Collateral Agent.
**4.20 Security Agreement, dated as of May 21, 1999, between LSP
Batesville Funding Corporation and The Bank of New York,
as Collateral Agent.
**4.21 ___ Deed of Trust, Security Agreement, Assignment of Leases
and Rents and Fixture Filing, dated as of May 21, 1999,
by LSP Energy Limited Partnership, as trustor, to James
W. O'Mara, as trustee, for the benefit of The Bank of New
York, as Collateral Agent.
**4.22 ___ Second Amended and Restated Securities Account Control
Agreement, dated as of May 21, 1999, among LSP Batesville
Funding Corporation, LSP Energy Limited Partnership and
The Bank of New York, as Collateral Agent and Securities
Intermediary.
**5.1 Opinion of Latham & Watkins regarding the validity of the
exchange bonds.
**10.1 ___ Purchase Agreement, dated May 13, 1999, among LSP Energy
Limited Partnership, LSP Batesville Funding Corporation,
Credit Suisse First Boston Corporation, Scotia Capital
Markets (USA) Inc. and TD Securities (USA) Inc.
**10.2 ___ Power Purchase Agreement and amendments thereto, dated
May 18, 1998, July 22, 1998 and August 11, 1998, among
LSP Energy Limited Partnership and Virginia Electric and
Power Company.
**10.3 ___ Power Purchase Agreement and amendments thereto, dated
May 21, 1998, July 14, 1998, July 16, 1998 and August 27,
1998, among LSP Energy Limited Partnership, Aquila Energy
Marketing Corporation and Utilicorp United Inc.
**10.4 Interconnection Agreement, dated July 22, 1998, between
LSP Energy Limited Partnership and the Tennessee Valley
Authority.
**10.5 ___ Interconnection and Operating Agreement and amendments
thereto, dated May 18, 1998 and August 18, 1998, between
LSP Energy Limited Partnership and Entergy Mississippi,
Inc.
EI-2
<PAGE>
Exhibit No. Description of Exhibit
----------- ---------------------------------------------------------
**10.6 ___ Interconnection Agreement, dated July 28, 1998, between
LSP Energy Limited Partnership and ANR Pipeline Company.
**10.7 ___ Facilities Agreement, dated June 23, 1998, between
Tennessee Gas Pipeline Company and LSP Energy Limited
Partnership.
**10.8 ___ Turnkey Engineering, Procurement and Construction
Agreement and amendments thereto, dated July 22, 1998,
October 22, 1998, November 2, 1998, November 5, 1998,
December 10, 1998, February 1, 1999 and April 12, 1999,
between LSP Energy Limited Partnership and BVZ Power
Partners - Batesville.
**10.9 Engineering Services Agreement, dated July 24, 1998,
between LSP Limited Partnership and Black & Veatch, LLP.
**10.10 Guaranty Agreement, dated July 22, 1998, by Black &
Veatch, LLP in favor of LSP Energy Limited Partnership.
**10.11 ___ Management Services Agreement, dated August 24, 1998,
between LSP Energy Limited Partnership and LS Power
Management, LLC.
**10.12 ___ Operation and Maintenance Agreement, dated August 24,
1998, between LSP Energy Limited Partnership and
Cogentrix Batesville Operations, LLC.
**10.13 ___ Water Supply Storage Agreement and amendments thereto,
dated June 8, 1998 and March 15, 1999, between LSP Energy
Limited Partnership and the United Sates of America.
**10.14 ___ Letter Agreement/Blanket Purchase Order, dated July 23,
1998, between LSP Energy Limited Partnership and Siemens
Westinghouse Power Corporation.
**10.15 Ad Valorem Tax Contract, dated August 24, 1998, among LSP
Energy Limited Partnership, Panola County, Mississippi,
the City of Batesville, Mississippi, the Department of
Economic and Community Development and the Panola County
Tax Assessor/Collector.
**10.16 Letter of Credit Agreement, dated August 28, 1998, among
LSP Energy Limited Partnership, Credit Suisse First
Boston, as the VEPCO L/C Agent and the VEPCO L/C Issuer,
and the VEPCO L/C Banks.
**10.17 Infrastructure Use Agreement (Gasline Use), dated August
12, 1999, among LSP Energy Limited Partnership, the
Industrial Development Authority of the Second Judicial
District of Panola County, Mississippi, the Mississippi
Major Economic Impact Authority, Panola County,
Mississippi and the City of Batesville, Mississippi.
**10.18 ___ Inducement Agreement, dated August 12, 1999, among LSP
Energy Limited Partnership, the Industrial Development
Authority of the Second Judicial District of Panola
County, Mississippi, the Mississippi Department of
Economic and Community Development, the Mississippi Major
Economic Impact Authority, Panola County, Mississippi and
the City of Batesville, Mississippi.
**10.19 ___ Panola Partnership, dated August 12, 1999, among LSP
Energy Limited Partnership and Panola Partnership, Inc.
**10.20 Infrastructure Use Agreement (Water Use), dated August
12, 1999, among LSP Energy Limited Partnership, the
Industrial Development Authority of the Second Judicial
District of Panola County, Mississippi, the Mississippi
Major Economic Impact Authority, Panola County,
Mississippi
EI-3
<PAGE>
Exhibit No. Description of Exhibit
----------- ---------------------------------------------------------
**10.21 ___ Yalobusha County Agreement, dated February 16, 1999,
among LSP Energy Limited Partnership, Yalobusha County,
Mississippi and the Coffeeville School District.
**10.22 ___ Performance Bond and Payment Bond, dated August 13, 1998,
of United States Fidelity and Guaranty Company, as
surety.
***10.23 ___ Power Purchase Agreement between Tennessee Valley
Authority and LSP Energy Limited Partnership dated
February 25, 2000.
***10.24 ___ Facilities Interconnect, Construction, Ownership and
Operation Agreement between Trunkline Gas Company and LSP
Energy Limited Partnership for M&R Panola County,
Mississippi dated January 28, 2000.
10.25 ___ First Amendment to Power Purchase Agreement, dated as of
August 4, 2000, between LSP Energy Limited Partnership,
Aquila Energy Marketing Corporation and UtiliCorp United
Inc.
10.26 ___ Third Amendment to Power Purchase Agreement, dated August
9, 2000, between LSP Energy Limited Partnership and
Virginia Electric and Power Company.
**25.1 Statement of Eligibility and Qualification (Form T-1)
under the Trust Indenture Act of 1939 of The Bank of New
York.
27.1 Financial Data Schedule (LSP Energy Limited Partnership).
27.2 ___ Financial Data Schedule (LSP Batesville Funding
Corporation).
--------------------------------------------------------------------------------
** Incorporated herein by reference from the Registration Statement on Form S-4,
File No.'s 333-84609 and 333-84609-01 filed with the Securities and Exchange
Commission by LSP Energy Limited Partnership and LSP Batesville Funding
Corporation on March 6, 2000.
*** Incorporated herein by reference from the Quarterly Report on Form 10-Q,
File No.'s 333-84609 and 333-84609-01 filed with the Securities and Exchange
Commission by LSP Energy Limited Partnership and LSP Batesville Funding
Corporation on May 15, 2000.
EI-4
