SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 6, 1998
CENTRAL MAINE POWER COMPANY
(Exact name of registrant as specified in its charter)
Maine 1-5139 01-0042740
(State of Incorporation) (Commission (IRS Employer
File Number) Identification Number)
83 Edison Drive, Augusta, Maine 04336
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (207) 623-3521
Item 1 through Item 4. Not applicable.
Item 5. Other Events.
Agreement for sale of Company's generating assets. As previously reported, on
April 28, 1997, the Company announced a plan to seek proposals to purchase its
generating assets and, as part of an auction process, received final bids on
December 10, 1997. On January 6, 1998, the Company announced that it had reached
agreement to sell all of its hydro, fossil and biomass power plans with a
combined generating capacity of 1,185 megawatts for $846 million in cash to
Florida-based FPL Group, the winning bidder in the auction process.
The hydropower assets to be included in the sale represent approximately 373
megawatts of generating capacity. The Company's interest in the William F. Wyman
steam plant in Yarmouth, Maine, the largest of the Company's three fossil-fueled
generating assets included in the sale, is 594 megawatts, followed by Mason
Station in Wiscasset, Maine, at 145 megawatts, and Cape Station in South
Portland, Maine, at 42 megawatts. The sole biomass plant is the 31-megawatt unit
in Fort Fairfield, Maine, owned by a wholly-owned subsidiary of the Company.
The Company's interests in the power entitlements from approximately 50
power-purchase agreements with non-utility generators representing approximately
488 megawatts, its 2.5-percent interest in the Millstone III nuclear generating
unit in Waterford, Connecticut, its 3.59-percent interest in the output of the
Vermont Yankee nuclear generating plant in Vernon, Vermont, and its entitlement
in the NEPOOL Phase II interconnection with Hydro-Quebec all attracted
insufficient interest to be included in the present sale. The Company will
continue to seek buyers for those assets. The Company did not offer for sale its
interests in the Maine Yankee (Wiscasset, Maine), Connecticut Yankee (Haddam,
Connecticut) and Yankee Atomic (Rowe, Massachusetts) nuclear generating plants,
all of which are in the process of being decommissioned.
The electric utility restructuring law passed by the Maine Legislature in the
spring of 1997 required the Company to divest its generating plants and
power-purchase agreements by March 1, 2000, when its customers will be free to
choose among competitive energy suppliers, but the Company elected to conduct an
earlier sale. In addition, as part of its agreement with FPL Group, the Company
entered into energy buy-back agreements to assist in fulfilling its obligation
to supply its customers with power until March 1, 2000.
Substantially all of the generating assets included in the sale are subject to
the lien of the Company's General and Refunding Mortgage Indenture dated as of
April 15, 1976, (the "Indenture"). Therefore, substantially all of the proceeds
from the sale must be deposited with the trustee under the Indenture at the
closing of the sale to free the generating assets from the lien of the
Indenture. Proceeds on deposit with the trustee may be used by the Company to
redeem or repurchase bonds under the terms of the Indenture, including the
possible discharge of the Indenture. In addition, the proceeds could provide the
flexibility to redeem or repurchase outstanding equity securities. The Company
must also provide for payment of applicable taxes resulting from the sale. The
manner and timing of the ultimate application of the sale proceeds after closing
are in any event subject to various factors, including Indenture provisions,
market conditions and terms of outstanding securities.
The bid value in excess of the remaining investment in the power plants will
reduce the Company's stranded costs and other costs, which could lower the
amount that would otherwise be collected from customers by nearly half a billion
dollars. However, the Company will incur incremental costs as a result of the
power buy-back arrangements in excess of the pre-sale costs of capacity and
energy from the plants being sold, which will effectively lower the amount of
sale proceeds available to reduce stranded and other costs. The Company believes
that the reduction in stranded and other costs could permit a reduction in rates
for the Company's customers.
The sale is subject to various closing conditions, including the approval of
state and federal regulatory agencies, which approval process the Company
expects could take approximately six to twelve months, and is subject to
consents or covenant waivers from certain of the Company's lenders. The Company
cannot predict whether or in what form such approvals, consents or waivers will
be obtained.
This Report on Form 8-K contains statements that may be considered
"forward-looking statements" as defined in the federal Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. The Company believes that consummation of the asset sale described
above would constitute significant progress in resolving some of the
uncertainties regarding the effects of electric-utility industry restructuring
on the Company's investors; however, significant risks and uncertainties would
remain. These include, in addition to those enumerated in the Company's Report
on Form 10-Q for the quarterly period ended September 30, 1997, but are not
limited to: (1) the possibility that a state or federal regulatory agency will
impose adverse conditions on its approval of the asset sale; (2) the possibility
that new state or federal legislation will be implemented that will increase the
risks to such investors from those contemplated by current legislation; and (3)
the possibility of legislative, regulatory or judicial decisions that would
reduce the ability of the Company to recover its stranded costs from that
contemplated by existing law.
Item 6 through Item 9. Not applicable.
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.
CENTRAL MAINE POWER COMPANY
By __________________________
D. E. Marsh
Chief Financial Officer
Dated: January 12, 1998
