SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): September 3, 1997
GREEN MOUNTAIN POWER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
VERMONT 03-0127430
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation) Identification Number)
1-8291
Commission File Number
25 Green Mountain Drive,
South Burlington, Vermont 05403
(Address of Principal Executive Offices) (Zip Code)
(802) 864-5731
(Registrant's telephone number,
including area code)
Item 5. Other Events
On September 3, 1997, the Board of Directors of Green Mountain Power
Corporation (the "Company") announced a reduction in the quarterly
dividend on the Company's common stock from $0.53 per share to $0.275 per
share. The dividend is payable September 30, 1997 to holders of
record at the close of business on September 17, 1997. The new
indicated annual dividend rate is $1.10 per share compared to the
previous rate of $2.12 per share. The Company's press release, dated
September 3, 1997, announcing the dividend reduction is attached hereto
as Exhibit 99(a) and is incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) and (b) -- Inapplicable.
(c) Exhibits
99(a) Press Release dated September 3, 1997
SIGNATURES
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.
GREEN MOUNTAIN POWER CORPORATION
Registrant
By /s/ C.L. Dutton
C.L. Dutton, President, Chief Financial
Officer and Treasurer
By /s/ R.J. Griffin
R.J. Griffin, Controller
DATED: September 9, 1997
EXHIBIT INDEX
EXHIBIT NO. PAGE
99(a) Press Release dated September 3, 1997
EXHIBIT 99(a) Press Release dated September 3, 1997
NEWS
FOR IMMEDIATE RELEASE
#25-97
September 3, 1997
GREEN MOUNTAIN POWER ANNOUNCES DIVIDEND REDUCTION
SOUTH BURLINGTON, Vt. -- The Board of Directors of Green Mountain Power
Corporation today announced a reduction in the quarterly dividend from $0.53
per share to $0.275 per share on the Company's common stock. The dividend
is payable September 30, 1997 to holders of record at the close of business
on September 17, 1997. The new indicated annual dividend rate is $1.10 per
share compared to the previous rate of $2.12 per share.
Regular quarterly dividends on Preferred Stock were also declared payable
December 1, 1997 to holders of record at the close of business on November
21, 1997, as follows: 4.75% Class B, $1.1875; 7% Class C, $1.75; 9.375%
Class D, Series 1, $2.34375; 8.625% Class D, Series 3, $2.15625; and 7.32%
Class E, Series 1, $1.83.
The Company's common stock dividend payout has ranged from 94 to 96 percent
of earnings over the past four years, and earnings for 1997 and 1998 are
expected to be lower than 1996 earnings, according to Christopher L. Dutton,
Green Mountain Power's President and Chief Executive Officer. Mr. Dutton
said, "The lack of earnings growth by GMP over the past four years, and the
likelihood of lower earnings this year and next indicate that the previous
payout level is no longer advisable."
As earlier reported, GMP's earnings for the six months ended June 1997 were
$0.75 per share, below the $0.96 per share earnings reported for the first
six months of 1996. The decline in 1997 earnings reflects warmer than
normal weather in the first quarter of 1997 and the impact of costs related
to the development of the Company's retail energy marketing business, Green
Mountain Energy Resources L.L.C. (GMER).
The Company's revised dividend policy, which incorporates a target payout
ratio of 60 to 70 percent, reflects the greater risks facing the Company as
a result of the changing environment for the electric utility industry.
This policy establishes a target payout that is in line with industry trends
and is comparable to that of other similar companies in the utility
industry. Mr. Dutton noted that the higher level of retained earnings will
enhance GMP's ability to pursue growth opportunities.
On June 16, 1997, GMP filed a 16.7 percent retail rate increase request with
the Vermont Public Service Board. Mr. Dutton said the Company delayed
filing for the rate increase because the Vermont Legislature was actively
considering electric restructuring proposals in its 1997 session that could
have eliminated or reduced the requirement for higher rates. When the
Legislature adjourned in June without passing restructuring legislation, GMP
filed for higher retail rates to cover increased power costs and to seek a
higher rate of return on common equity. "The delay in seeking a retail rate
increase will impact earnings in 1998," Mr. Dutton said, "but after 1998 we
expect a rebound in earnings by the core utility business. We believe the
Vermont Public Service Board will conclude that GMP should continue to
recover the costs of the Hydro-Quebec contract which represent the bulk of
the need for increased rates."
Mr. Dutton said GMP also expects steady improvement in the performance of
Mountain Energy, which has made successful investments in nine
energy-related projects, and most recently bought an interest in Micronair,
a company that holds patent rights in 35 states for a revolutionary
wastewater treatment process. In addition, he said, GMP's 33 percent
interest in GMER will result in growth opportunities for the Company from
the emerging national retail energy markets. On August 6, 1997, the Company
announced that the Sam Wyly Family had acquired a 67 percent interest in
GMP's retail marketing business, GMER, in exchange for a $30 million
investment commitment.
"We are committed to running each of the Company's business segments
profitably or exiting the businesses that are not profitable, and to
maintaining a sound financial base from which to work. Key to the Company's
success will be reasonable rate relief, the availability of low cost
interest to permit 'asset securitization' and a fair settlement of the
industry restructuring process in Vermont. Our decision to reduce the
dividend reflects a change in our outlook for earnings this year and next.
However, we remain hopeful that a reasonable framework for deregulating the
Vermont electric utility industry will be attained. The Company's
management team is optimistic about the long-term earnings and shareholder
value potential from the continued efficient operation of our distribution
and transmission system, GMER's opportunities related to retail energy
marketing, and further development of Micronair and other activities at our
Mountain Energy subsidiary." Mr. Dutton said.
Forward looking statements in this release are made pursuant to the safe
harbor provision of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks
and uncertainties, and are based on current expectations regarding important
risk factors, including but not limited to (1) the level and timing of rate
relief provided to the Company by the Vermont Public Service Board, (2) the
impact upon the Company of the resolution of electric utility restructuring
in Vermont, including the recovery of stranded costs and accounting
treatment afforded the Company (as discussed in greater detail in the
Company's "Management's Discussion and Analysis of Financial Condition and
Results of Operation - Risk Factors" in its Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997), (3) the availability of low cost debt
financing to permit "asset securitization", and (4) economic and market
conditions and their impact on the operating results of the Company's
unregulated business ventures, including Mountain Energy, Inc., and GMER.
Accordingly, actual results may differ materially from those expressed in
forward looking statements, and the inclusion of such statements should not
be regarded as a representation by the Company or any other person that the
results expressed therein will be achieved.
