8-K, 2001-01-19
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                       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
                        (Date of earliest event reported)

                               CE Generation, LLC
             (Exact name of registrant as specified in its charter)

    Delaware                     333-89521                        47-0818523

(State or other               (Commission File                   (IRS Employer
 jurisdiction of                   Number)                   Identification No.)
 incorporation or

 302 South 36th Street, Suite 400              Omaha, NE              68131
(Address of principal executive offices)                            (Zip Code)

Registrant's Telephone Number, including area code:   (402) 341-4500


           (Former name or former address, if changed since last report)



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

         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



         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
                                                          Paul J. Leighton


  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

  Copyright (c) 2001 Internal News
  Received By NewsEDGE/LAN:Thu Jan 18 17:22:16 2001

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