Securities and Exchange Commission
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act 1934
Date of Report April 8, 1998
(Date of earliest event reported)
CalEnergy Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9874 94-2213782
(State of other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
302 South 36th Street, Suite 400, Omaha, NE 68131
(Address of principal executive offices) Zip Code
Registrant's Telephone Number, including area code: (402) 341-4500
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
On April 8, 1998, the Registrant announced that its
Philippine subsidiary, CE Casecnan Water and Energy Company, Inc.
("CE Casecnan"), received a unanimous New York Appellate Court
ruling in its favor in a letter of credit dispute with Korea
First Bank ("KFB"). A press release issued by the Registrant is
attached hereto as Exhibit 1 and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits
Exhibit 1 - Press Release dated April 8, 1998.
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 hereunto duly authorized.
CalEnergy Company, Inc.
By: \s\ Douglas L. Anderson
Douglas L. Anderson
Assistant Secretary and
Assistant General Counsel
Dated: April 8, 1998
FOR IMMEDIATE RELEASE
Craig M. Hammett - Senior Vice President, Chief Financial Officer 402-341-4500
Craig S. Allen - Manager, Investor Relations 402-341-4500
CalEnergy Announces That New York Appellate Court Orders
Korea First Bank
To Honor Draws On Its Letter Of Credit For The Casecnan
Project
OMAHA, NEBRASKA, April 8, 1998 --- CalEnergy Company,
Inc. ("CalEnergy") (NYSE, PCX and LSE Symbol: CE) announced
today that its Philippine subsidiary, CE Casecnan Water and
Energy Company, Inc. ("CE Casecnan"), received a unanimous
New York Appellate Court ruling in its favor in a letter of
credit dispute with Korea First Bank ("KFB"). The New York
Appellate Division unanimously denied KFB's appeal of a
summary judgment ruling requiring KFB to honor draws by CE
Casecnan on KFB's irrevocable standby letter of credit. The
letter of credit was issued as financial security to support
the obligations of the construction contractors for the
Casecnan project under a turnkey construction contract. The
turnkey construction contractors for the project (members of
the Hanbo Group) were terminated and replaced in May 1997 by
CE Casecnan due to multiple defaults, including insolvency,
at which time CE Casecnan made an initial draw under the KFB
letter of credit which was wrongfully dishonored by KFB.
The Appeal Court's unanimous decision, which affirmed
summary judgment against KFB, with costs, ruled that KFB's
dishonor of draws under its letter of credit was "wrongful
as a matter of law."
Pending this appeal decision, KFB had been required by
the trial court, and by stipulation of the parties, to
deposit funds relating to three draws under the letter of
credit in an interest-bearing New York bank account with an
independent financial institution. The effect of the
Appellate Court decision is that KFB must now pay CE
Casecnan the principal amount of those three draws under the
letter of credit (totaling approximately U.S. $93 million)
plus accrued interest at nine percent per annum.
A fourth draw under the letter of credit, reflecting
additional damages to CE Casecnan, raises the unpaid
principal amount of the draws under the KFB letter of credit
to $117.5 million.
Craig M. Hammett, Chief Financial Officer of CE
Casecnan, stated, "Korea First Bank's failure to comply with
customary banking practices and honor its own irrevocable
standby letter of credit is virtually unprecedented in
international lending transactions. Accordingly, we expect
KFB to promptly honor its court-ordered payment obligations
and avoid further damage to its credit standing and
international reputation which would result if KFB chooses
to engage in further frivolous delay tactics."
CalEnergy, which manages and owns interests in over
5,000 net megawatts of power generation facilities in
operation, construction and development worldwide, currently
operates 20 generating facilities and also supplies and
distributes electricity and gas to 1.8 million customers.
www.calenergy.com
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