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: January 26, 1995
EASTERN UTILITIES ASSOCIATES
(Exact name of registrant as specified in this charter)
Massachusetts 1-5366 04-1271872
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
One Liberty Square, Boston, Massachusetts 02109
(Address of principal executive offices) (Zip Code)
Item 5. Other Events.
(a) On January 20, 1995, Eastern Utilities Associates ("EUA") and a
former shareholder of EUA, which on February 11, 1992 had filed suit against
EUA and three officers of EUA in the Federal District Court of Massachusetts,
filed a voluntary dismissal of the suit with the court following the
fulfillment of the terms of a settlement agreement among EUA, the one officer
remaining as a defendant in the action and the former shareholder (the
"Settlement Agreement"). The dismissal prevents the former shareholder from
suing EUA again on any claim asserted in the suit.
EUA and the officer continue to deny any and all allegations of wrongdoing
asserted by the former shareholder but determined it to be in their best
interests to settle the suit. Under the provisions of the Settlement
Agreement, the settlement terms are to remain confidential. The Settlement
Agreement will not have an adverse impact on EUA's current earnings due to
reserves that EUA had previously established. In the suit the former
shareholder alleged fraudulent and negligent misrepresentations and violations
of Rule 10b-5 under the Securities Exchange Act of 1934 in connection with
statements made regarding the business and prospects of EUA's former
subsidiary, EUA Power Corporation (now Great Bay Power Corporation), and the
portion of EUA's earnings attributable to allowance for funds used during
construction (AFUDC) from EUA Power Corporation.
(b) On December 13, 1994, the United States District Court for the
District of Massachusetts issued a judgment against Blackstone Valley Electric
Company, a wholly-owned subsidiary of EUA ("Blackstone"), finding Blackstone
liable to the Commonwealth of Massachusetts (the "Commonwealth") for the full
amount of response costs incurred by the Commonwealth in the cleanup of a coal
gasification waste site at Mendon Road in Attleboro, Massachusetts. The
judgment also found Blackstone liable for interest and litigation expenses
calculated to the date of judgment. The total liability is approximately $5.9
million, including approximately $3.6 million in interest which has accumulated
since 1985.
Blackstone has filed a Notice of Appeal of the court's judgment and will
file its brief with the First Circuit Court of Appeals in February, 1995.
On January 20, 1995, Blackstone entered into an escrow agreement with the
Commonwealth whereby Blackstone deposited $5.9 million with an escrow agent who
will transfer the funds into an interest bearing money market account. The
distribution of the proceeds of the escrow account will be determined upon the
final resolution of the judgment. No additional interest expense will accrue
on the judgment amount.
On January 28, 1994, Blackstone filed a complaint in the United States
District Court for the District of Massachusetts, seeking among other relief,
contribution and reimbursement from Stone & Webster, Inc. of New York City, and
several affiliated companies ("Stone & Webster"), and Valley Gas Company of
Cumberland, Rhode Island ("Valley") for any damages incurred by Blackstone
regarding the Mendon Road site. The court has denied motions to dismiss the
complaint which were filed by Stone & Webster and Valley in 1994.
In addition, Blackstone has notified certain liability insurers and has
filed claims with respect to the Mendon Road site, as well as other sites.
As a general matter, Blackstone will seek to recover costs relating to
environmental proceedings in its rates, although there is no assurance that it
will be authorized to recover any particular cost. Blackstone has applied for
and received authority to recover in rates certain incurred costs over a five-
year period. As a result of the recoverability in current rates and the
uncertainty regarding potential contributions from insurance carriers and other
responsible parties, Blackstone does not believe that the ultimate liability of
the Mendon Road judgment will be material and thus, no loss accrual has been
recorded. Blackstone will defer on its books the $5.9 million payment pending
final resolution of all appeals from the judgment and the determination of its
ultimate liability, if any.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EASTERN UTILITIES ASSOCIATES
(Registrant)
By: /s/ John R. Stevens
John R. Stevens,
President
Date: January 26, 1995
