Securities and Exchange Commission
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act 1934
Date of Report January 18, 2001
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(Date of earliest event reported)
CE Generation, LLC
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(Exact name of registrant as specified in its charter)
Delaware 333-89521 47-0818523
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation or
organization)
302 South 36th Street, Suite 400 Omaha, NE 68131
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (402) 341-4500
N/A
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(Former name or former address, if changed since last report)
<PAGE>
3
Item 5. Other Events.
On January 18, 2001, Moody's Investors Service, Inc. ("Moody's")
announced that it had lowered its rating of the senior secured bonds of CE
Generation, LLC ("CE Generation") to B1 from Baa3. The basis for this decision
was Moody's downgrade of its ratings for Southern California Edison Company
("Edison") announced earlier this week. According to Moody's, the rating of the
CE Generation bonds remains on review for possible further downgrade reflecting
the possibility that the ratings of Edison could decline further.
The CE Generation bonds are secured by the distributions received from
thirteen power projects: ten operating geothermal power plants in the Imperial
Valley, California (the "Geothermal Projects"), with an approximate aggregate
capacity of 326 MW, and three gas-fired plants, with an aggregate net rated
capacity of 490 MW (the "Gas Projects"). Eight of the Geothermal Projects with
an approximate aggregate net rated capacity of 267 MW sell their capacity and
energy to Edison under long-term power sales contracts.
The eight Geothermal Projects having contracts with Edison have not yet
received payment from Edison for capacity and energy delivered during November
2000. These contracts provide for billing and payment on a schedule where
payment would normally be received in early January 2001. Edison has provided no
assurance as to when it will make these payments. A failure by Edison to make
these payments as well as subsequent monthly payments, for a substantial period
of time after the payments are due, is not expected to have a material adverse
effect on the ability of CE Generation to make payments on the CE Generation
bonds due to cash flows from the Gas Projects. However, there can be no
assurance that such a failure by Edison would not cause such a material adverse
effect.
Certain information included in this report contains forward-looking
statements made pursuant to the Private Securities Litigation Reform Act of 1995
("Reform Act"). Such statements are based on current expectations and involve a
number of known and unknown risks and uncertainties that could cause the actual
results and performance of the Registrants to differ materially from any
expected future results or performance, expressed or implied, by the
forward-looking statements including expectations regarding the future results
of operations of Registrants. In connection with the safe harbor provisions of
the Reform Act, the Registrants have identified important factors that could
cause actual results to differ materially from such expectations, including
development and construction uncertainty, operating uncertainty, acquisition
uncertainty, uncertainties relating to geothermal resources, uncertainties
relating to economic and political conditions and uncertainties regarding the
impact of regulations, changes in government policy, industry deregulation and
competition. Reference is made to all of the Registrants' SEC Filings,
incorporated herein by reference, for a description of such factors. The
Registrants assume no responsibility to update forward-looking information
contained herein.
Item 7. Financial Statements and Exhibits
Exhibit 1 - Moody's Press Release dated January 18, 2001
<PAGE>
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 thereunto duly authorized.
CE GENERATION, LLC
Dated: January 19, 2001 By: /s/ Paul J. Leighton
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Paul J. Leighton
Secretary
<PAGE>
New York, January 18, 2001 -- In addition to our downgrade yesterday of Salton
Sea Funding Corp. (SSFC) to Caa2 from Baa3, Moody's Investors Service has
lowered its debt ratings for CE Generation LLC (CE Gen) to B1 from Baa3.
These rating actions have been precipitated by Moody's downgrade of Southern
California Edison Company (SCE) announced earlier this week. As previously
mentioned, it is Moody's practice for the credit rating of a project whose
cash flow is largely derived from a single source to be capped by the
unsecured rating of the respective source of funds. These projects have
substantial cash flow exposure to SCE and therefore have been lowered to
reflect the further deterioration of the credit quality of the SCE cash flows
and recent action taken by SCE which includes non-payment to power suppliers.
However, in the case of CE Gen, the B1 rating reflects the fact that 60% of
the revenues are received from non-California based projects.
The ratings for each of these projects remain on review for downgrade to
reflect the possibility that the ratings of SCE could decline further. In
light of the liquidity issues the utility, Moody's believes that it is
increasingly probable that additional payments to Qualifying Facilities in the
state could be delayed or deferred.
Eight of the ten California-based projects are under long-term contracts with
SCE, which had been approved by the California Public Utility Commission. The
two uncontracted projects have sold power to the California PX. Current
actions by SCE include the non-payment for electricity supplied by generators
through the California PX and its contracted payments.
Moody's believes that the portfolio is well-positioned for recovery based on
the current liquidity mechanisms, which include a six-month debt service
reserve fund for CE Gen and a 12-month debt service reserve fund for SSFC,
both of which are backed by a Letter of Credit. In addition, CE Gen benefits
from contracted revenue generated by the Saranac, PRI and Yuma projects. It is
estimated that the liquidity facility and this revenue could cover debt
service obligations for the portfolio for some time. Therefore, CE Gen has not
been downgraded to the level of SSFC, or other California-based projects.
SSFC and CE Gen are 50%-owned indirect subsidiaries of MidAmerican Energy
Holdings Company, a U.S. based privately-owned global energy company with
publicly traded fixed income securities, headquartered in Omaha, Nebraska.
New York
Susan D. Abbott
Managing Director
Corporate Finance
Moody's Investors Service
JOURNALISTS: (212) 553-0376
SUBSCRIBERS: (212) 553-1653
New York
Cheryl Solometo
Vice President - Senior Analyst
Corporate Finance
Moody's Investors Service
JOURNALISTS: (212) 553-0376
SUBSCRIBERS: (212) 553-1653
Moody's Investors Service
end
Copyright (c) 2001 Internal News
Received By NewsEDGE/LAN:Thu Jan 18 17:22:16 2001
