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): September 14, 1999
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
- ----------- ----------------------------------- -----------------
1-6047 GPU, Inc. 13-5516989
(a Pennsylvania corporation)
300 Madison Avenue
Morristown, New Jersey 07962-1911
Telephone (973) 455-8200
1-3141 Jersey Central Power & Light Company 21-0485010
(a New Jersey corporation)
2800 Pottsville Pike
Reading, Pennsylvania 19640-0001
Telephone (610) 929-3601
<PAGE>
ITEM 5. OTHER EVENTS.
-------------
As previously reported, GPU, Inc.'s ("the Company") subsidiary Jersey
Central Power & Light Company ("JCP&L"), doing business as GPU Energy, has been
exploring the possible sale or early retirement of the Oyster Creek Nuclear
Generating Station ("Oyster Creek"). Oyster Creek, a 619 MW facility located in
Lacey Township, New Jersey, entered commercial service in 1969. Oyster Creek is
wholly owned by JCP&L and operated by GPU Nuclear, Inc.
("GPUN").
Following a competitive bidding process begun earlier this year, on
September 14, 1999, the Company announced that it had entered into a Letter of
Intent to sell Oyster Creek to AmerGen Energy Company LLC ("AmerGen"), a joint
venture of PECO Energy Company and British Energy Company. AmerGen is also in
the process of purchasing Three Mile Island Unit No. 1 from the Company's
affiliates as well as other nuclear generating stations.
The transaction is subject to the negotiation of a definitive purchase
agreement and the receipt of various federal and state regulatory approvals,
including from the Nuclear Regulatory Commission, the Federal Energy Regulatory
Commission and the New Jersey Board of Public Utilities, as well as favorable
rulings from the Internal Revenue Service. Assuming timely receipt of these
approvals, the transaction is scheduled to close in the Spring of 2000.
Under the terms of the transaction, AmerGen would pay JCP&L $10 million
for Oyster Creek and assume full responsibility for decommissioning the plant.
JCP&L would provide at closing $430 million of decommissioning trust funding as
well as funding for the station's outage costs, including the fuel reload, for
the next refueling outage scheduled for the Fall of 2000. AmerGen would repay
these outage costs (estimated at $84 million) to JCP&L in nine installments
beginning a year after the closing.
JCP&L has also agreed to purchase Oyster Creek's capacity and energy at
fixed prices for three years following the closing. The transaction assumes a
March 31, 2000 closing, and provides for certain pricing adjustments if the
closing occurs before or after that date.
AmerGen will assume the collective bargaining agreement covering Oyster
Creek's union employees and will have the right to offer employment to Oyster
Creek's union and to non-union GPUN personnel. JCP&L will be responsible for a
specified amount of severance payments to Oyster Creek employees and benefit
payments under GPUN's existing transition programs up to certain limits.
JCP&L expects that the sale of Oyster Creek will reduce customer costs by
more than $150 million than if the plant were shut down and decommissioned.
A copy of GPU's related news release is annexed as an exhibit.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
-----------------------------------------------------
AND EXHIBITS.
-------------
(c) Exhibit
1. GPU News Release, dated September 14, 1999.
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANTS HAVE DULY CAUSED THIS REPORT TO BE SIGNED ON THEIR BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GPU, INC.
JERSEY CENTRAL POWER & LIGHT COMPANY
By: /s/ T. G. Howson
--------------------
T. G. Howson, Vice President
and Treasurer
Date: September 15, 1999
EXHIBIT TO BE FILED BY EDGAR
----------------------------
(c) 1 GPU News Release, dated September 14, 1999.
Exhibit (c) 1
GPU News Release
September 14, 1999
GPU, AmerGen Reach Agreement on Sale of Oyster Creek Facility
Enables GPU to Concentrate on Distribution, Transmission,
Unregulated Businesses
MORRISTOWN, NJ - September 14, 1999 - GPU, Inc. and AmerGen Energy Company
today announced that they have reached agreement in principle for GPU to sell
its Oyster Creek nuclear generating facility in Lacey Township, NJ, to AmerGen
for $10 million.
The purchase was conducted using a competitive bidding process approved by
the New Jersey Board of Public Utilities.
For GPU, the sale of Oyster Creek is a landmark step that essentially
concludes its divestiture of domestic merchant generating facilities, enabling
it to concentrate on the transmission, distribution, and related energy services
businesses.
For AmerGen, a joint venture of PECO Energy Company and British Energy
Company, purchase of the facility will mark another acquisition in its business
plan to become the nation's leading nuclear power generator. The company is in
the process of purchasing TMI Unit 1, the Clinton Power Station, Nine Mile Point
Unit 1, and Unit 2. It is also involved in negotiations for several other as yet
undisclosed nuclear power plants.
The transaction is subject to the negotiation of a definitive asset
purchase agreement, which is expected by early- to mid-October. Closing of the
transaction is anticipated in the Spring of 2000.
The sale is subject to approval by the Nuclear Regulatory Commission, the
Federal Energy Regulatory Commission, the New Jersey Board of Public Utilities,
and the receipt of favorable Internal Revenue Service rulings.
"The sale of Oyster Creek to a responsible buyer is the final major step
in GPU's strategy to exit the merchant generation business," said Fred D. Hafer,
Chairman, President and Chief Executive Officer of GPU. "This move will enable
us to focus on electrical transmission and distribution, as well as new,
unregulated businesses, which we believe hold the best opportunity for us to
produce an attractive, stable return for our shareholders. This transaction will
also keep the plant running, producing important benefits for our customers,
employees and the local community."
<PAGE>
Jerry Rainey, AmerGen CEO, agreed, saying, "We are pleased to be acquiring
another quality nuclear plant, and at the same time maintaining electric
reliability, jobs and economic benefits for New Jersey. Oyster Creek is a good
fit for our growing generation portfolio."
The sale provides for AmerGen to assume full responsibility for the
ultimate decommissioning of Oyster Creek. At the financial closing, GPU will
provide funding for the decommissioning trust of $430 million. The transaction
will reduce by more than $150 million the costs GPU customers would bear for
decommissioning and for other plant-related transitional costs if the plant were
shut down rather than sold to AmerGen. The sale will provide the Oyster Creek
employees with an opportunity to join an organization that is becoming a major
operator and owner of nuclear generating facilities. The facility employs
approximately 700 people.
AmerGen will have the right to hire all employees at Oyster Creek. AmerGen
will also be given the opportunity to interview and extend offers to interested
GPU Nuclear headquarters staff in New Jersey. GPU will be responsible for
severance payments to Oyster Creek employees for a two-year period following
financial closing and for benefits payable under GPU Nuclear's transition
program. The agreement limits GPU's liability for benefits paid to Oyster Creek
employees.
AmerGen will adopt employee benefit plans that provide substantially
similar benefits to GPU's plans. AmerGen will also assume the collective
bargaining agreement covering the Oyster Creek union employees and will
recognize the union as the bargaining agent.
GPU will purchase the electricity generated by Oyster Creek at a fixed
price for a period of three years. GPU will fund the outage costs, including
re-load fuel, for the next refueling at Oyster Creek, scheduled for the Fall of
2000, estimated at a cost of up to $84 million subject to a cap. AmerGen will
repay that amount to GPU in nine equal annual installments beginning on the
first anniversary date of the closing.
The Oyster Creek facility is a 619-megawatt, single unit and boiling water
reactor. It is owned by GPU's subsidiary Jersey Central Power & Light Company.
The sale includes the adjacent Finninger farm property.
GPU has taken a series of steps to exit the merchant generation business.
In July 1998, it entered into an agreement to sell Three Mile Island Unit 1 to
AmerGen, and it has also sold, or entered into agreements to sell its fossil and
hydro generating stations. GPU has been exploring the sale or early retirement
of Oyster Creek since April 1997.
GPU, Inc. (NYSE:GPU), headquartered in Morristown, NJ is a registered
utility holding company. GPU International Group develops, owns and operates
transmission and distribution facilities overseas and generating plants both in
the United States and abroad. GPU's three domestic operating utility
subsidiaries--Jersey Central Power & Light Company, Metropolitan Edison Company
and Pennsylvania Electric Company--do business under the trade name of GPU
Energy and serve approximately two million customers in a service area
encompassing about half the land areas of New Jersey and Pennsylvania. GPU's
<PAGE>
other subsidiaries include: GPU Advanced Resources, Inc., GPU Generation, Inc.,
GPU Nuclear, Inc., GPU Service, Inc. and GPU Telcom Services, Inc. In the U.K.,
GPU owns Midlands Electricity, which distributes electric power to 2.2 million
customers in an area that includes Birmingham, England.
PECO Energy is an electric and gas utility serving 1.5 million electric
customers in the five-county Philadelphia area and 400,000 natural gas customers
in four suburban counties. It is one of the nation's largest nuclear utilities,
producing more than 33 billion kilowatt-hours of electricity in 1998 at its
Limerick and Peach Bottom generating stations. PECO Energy has set new nuclear
performance standards in safety, availability and capacity factors, efficient
refueling outages, and low operating and maintenance costs.
PECO Energy also owns and operates coal, natural gas, oil, landfill gas
and hydro power plants. PECO Energy's Power Team operates a 24-hour energy
trading floor with transactions in 47 states and Canada.
British Energy provides more than 20 percent of Britain's electricity and
is the U.K.'s largest generator. It owns and operates 15 nuclear power reactors
in the United Kingdom, with 9,600 megawatts of generation, including seven
advanced gas-cooled nuclear stations and one pressurized water reactor station.
In July 1996, British Energy was successfully privatized through a public
offering of stock. The company has distinguished itself on nuclear operations
through its outstanding safety record and by reducing costs and increasing
output and profit following privatization. Headquartered in Edinburgh, Scotland,
it has market capitalization of 4bn pounds and has 5,300 employees. Its shares
were the top performers in the U.K. FTSE 100 Share Index in 1997-98, a year
during which its profits trebled.
-XX-
- ------------------------------------------------------------------------------
Contacts:
GPU - Ned Raynolds, (973) 455-8294
PECO Energy - Bill Jones, (215) 841-4129
British Energy - Doug McRoberts, (011) 131-44-527-2020
