UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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)
July 12, 1999
Commission Registrants; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification
No.
1-11327 Illinova Corporation 37-1319890
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62525
(217) 424-6600
1-3004 Illinois Power Company 37-0344645
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62525
(217) 424-6600
Total number of sequentially numbered pages is 6.
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Item 5. Other Events
Certain information contained in this release is forward-looking information
based on current expectations and plans that involve risks and uncertainties.
Forward-looking information includes, among other things, statements concerning
the intentions of the parties to the sale transaction and the timing and effect
of the formation of the new generation subsidiary. Although Illinova
Corporation, (Illinova) and Illinois Power, (IP) believe that this
forward-looking information is accurate, their businesses are dependent on
various regulatory issues, general economic conditions and future trends, and
these factors can cause actual results to differ materially from the
forward-looking information that has been provided. The reader is cautioned not
to put undue reliance on this forward-looking information, which is not a
guarantee of future performance and is subject to a number of uncertainties and
other factors, many of which are outside the control of Illinova and IP.
The following factors, in addition, to those discussed in the
companies' Annual Reports on Form 10-K for the year ended December 31, 1998, and
subsequent securities filings, could cause results to differ materially from
management expectations as suggested by such forward-looking information: the
ability of the parties to receive appropriate governmental approvals and
actions, the requirement that certain aspects of the formation of the new
generation subsidiary receive regulatory approval, the need to establish an
appropriate capital structure for the new generation facility and for IP
following the formation, and the impact of increased competition in the energy
marketplace on the companies' businesses.
ILLINOIS POWER, AMERGEN SIGN DEFINITIVE AGREEMENT --
Clinton Power Station sale expected to close by year's end
Illinois Power Company, (IP) and AmerGen Energy Company, (AmerGen) have signed
an asset purchase agreement under which AmerGen will purchase and operate the
Clinton Power Station, (Clinton). The final remaining step toward completing the
sale is to secure approvals from numerous governmental and regulatory bodies.
Both companies are targeting approvals for the transaction by year's end.
Reaching a definitive agreement for selling the nuclear station also
moves IP parent, Illinova Corporation, (Illinova) closer to meeting a condition
of its recently announced merger with Dynegy, Inc., (Dynegy). On June 14, 1999,
Illinova and Dynegy announced their intention to merge by early 2000, contingent
on Illinova's divesting its nuclear assets.
Basic terms for the sale remain essentially unchanged from the
framework proposed in the interim agreement announced in April. The asset
purchase agreement, signed June 30, 1999, provides that IP will purchase at
least 75 percent of Clinton's electricity output for its customers through 2004.
AmerGen will offer employment to existing plant personnel at the time of
ownership transfer, at substantially similar wages and benefits, and will
recognize the International Brotherhood of Electrical Workers Local Unions 51
and 1306 as bargaining agents for transferred bargaining unit employees.
At closing, AmerGen will pay IP up to $20 million for the plant and
property and will assume full responsibility and liability for operating and
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ultimately decommissioning the nuclear station. IP will transfer to AmerGen the
existing decommissioning trust funds, expected to total approximately $95
million at the end of 1999. IP also will make additional payments to the
decommissioning trust funds intended to be sufficient to provide for the actual
decommissioning of Clinton by 2026, when the plant's operating license is
scheduled to expire.
Over the next few weeks, IP and AmerGen will prepare and submit
numerous filings for review by regulatory bodies, including the Nuclear
Regulatory Commission, the Illinois Commerce Commission, the Federal Energy
Regulatory Commission, the Internal Revenue Service, and the Federal Trade
Commission. The companies also will file requests for transfer of permits and
licenses granted by numerous agencies, including the Illinois Environmental
Protection Agency, the Illinois Department of Nuclear Safety, the Illinois
Department of Natural Resources, and others. Until all approvals are obtained
and the parties close on the sale, IP will continue to maintain the license for
Clinton's operation and retain ultimate operating authority over the plant.
Terms of the April interim agreement between IP and PECO Energy, (PECO)
will remain in effect until the transaction closes. Specifically, PECO is now
paying Clinton's direct operating and capital expenses and continues to manage
the station under the existing management contract, while IP compensates PECO
for management services based on the amount of electricity the station produces.
During the interim period, IP retains 80 percent of Clinton's power output for
its customers, and the other 20 percent is available to PECO. British Energy has
agreed separately with PECO to share equally in these costs and benefits.
Following an extended outage lasting more than two years, Clinton Power
Station was returned to service May 27, 1999 and has operated at full power
since June 2, 1999. The plant, a nuclear-fueled boiling water reactor, began
producing electricity in 1987. Clinton is owned by IP, an electric and natural
gas utility that serves 650,000 customers over a 15,000 square-mile area of
Illinois. IP is a subsidiary of Illinova Corporation, headquartered in Decatur,
IL, an energy services holding company with annual revenues of $2.4 billion.
Other Illinova subsidiaries include Illinova Generating, which invests in,
develops and operates independent power projects worldwide; and Illinova Energy
Partners, which markets energy and energy-related services in the United States
and Canada.
ILLINOVA A STEP CLOSER TO FORMING NEW GENERATING SUBSIDIARY --
Illinova is a step closer to becoming the first energy company in the nation to
transfer its entire fossil generating fleet into a separate unregulated
affiliated company, a strategic move designed to help Illinova capitalize on
growth opportunities in the rapidly emerging deregulated electric industry. On
July 8, 1999, IP received unanimous approval from the Illinois Commerce
Commission to transfer all its fossil-fueled generating stations and associated
support staff into a new subsidiary of parent company Illinova.
Illinova's plan to form a new subsidiary, coupled with greater access
to national power markets through the Dynegy merger, will enhance IP's ability
to provide reliable service for its customers.
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IP will continue to serve its customers with electricity from the power
plants under a power purchase agreement with the new subsidiary that extends
through 2004, with options for annual renewal. Rate reductions, choice options
and other customer benefits provided by Illinois' 1997 utility deregulation law
are unaffected.
The power purchase agreement between IP and the new subsidiary is also
being reviewed by the Federal Energy Regulatory Commission, which could act on
the company's request this fall. Upon final approval from federal regulators, IP
will transfer into the new subsidiary the assets associated with its five major
fossil-fueled power stations (Baldwin, Hennepin, Wood River, Havana, and
Vermilion) and natural gas-fired turbines at three sites (Tilton, Oglesby, and
Stallings). Power plant support staff in Swansea, Decatur and Bloomington plus
IP's wholesale power marketing and trading operations will be part of the new
subsidiary as well. In total, approximately 500 IP employees will move to the
new subsidiary.
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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.
ILLINOVA CORPORATION
(Registrant)
By /s/ Leah Manning Stetzner
----------------------------
Leah Manning Stetzner
General Counsel and
Corporate Secretary
on behalf of
Illinova Corporation
Date: July 12, 1999
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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.
ILLINOIS POWER COMPANY
(Registrant)
By /s/ Leah Manning Stetzner
----------------------------
Leah Manning Stetzner
Vice President, General
Counsel and Corporate
Secretary on behalf of
Illinois Power Company
Date: July 12, 1999
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