UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): December 15, 1997
KENETECH CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
33-53132 94-3009803
(Commission File Number) (I.R.S.Employer
Identification Number)
500 Sansome Street, Suite 300
San Francisco, California 94111
(Address of Principal Executive Offices) (Zip Code)
(415) 398-3825
(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS.
Annexed hereto as Exhibit 99.1 and incorporated herein by reference is a
press release jointly issued on December 15, 1997 by KENETECH Energy Systems,
Inc., a wholly-owned subsidiary of the Registrant ("KES"), and Enron
International, a wholly-owned subsidiary of Enron Corporation ("Enron"),
announcing that financial close has been achieved on the $670 million
EcoElectrica Liquefied Natural Gas Terminal and Cogeneration Project (the
"Project") to be located in the Penuelas/Guayanilla area on the south coast of
Puerto Rico. KES and Enron, either directly or through subsidiaries, jointly
developed and each owns 50% of the Project. It is the intent of the Registrant
to sell KES' interest in the Project during 1998.
Notwithstanding the above events, the liquidity of KENETECH Corporation and
its consolidated subsidiaries (the "Company") will continue to be severely
constrained. The Company expects to generate operating losses prior to the sale
of the Project due to administrative expenses with no corresponding revenue and
interest expense on debt. These factors raise substantial doubt about the
Company's ability to continue as a going concern in its current form. In
addition, there can be no assurance that the Company will be successful in
implementing the sale of the Project, that substantial proceeds will be
received, or that the Company will continue as a going concern. Management
believes that such sale, even if consummated, will not generate sufficient
proceeds to ultimately provide any return of invested capital to the holders of
the Company's stock. The Company believes that any proceeds received from the
sale of the Project will be paid to creditors. Consequently, after, or as a part
of a sale of the Company's interest in the Project, the Company believes that it
is likely that it, or certain of its subsidiaries, will seek protection under
the Federal Bankruptcy Code.
ITEM 7. EXHIBITS.
Exhibit
Number Description
99.1 Press Release, dated December 15, 1997
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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.
KENETECH Corporation
(registrant)
Date: December 17, 1997 By:/s/ Mark D. Lerdal
Mark D. Lerdal
President and Chief Executive Officer
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EXHIBIT INDEX
The following Exhibits are hereby filed as a part of this Current Report
on Form 8-K:
Exhibit Page
Number Description Number
99.1 Press Release, dated December 15, 1997 5
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EXHIBIT 99.1
PRESS RELEASE, DATED DECEMBER 15, 1997
Enron Corp.
P. O. Box 1188
Houston, TX 77251-1188
News Release
Margarita Bernal
(713) 853-7161
ENRON/KENETECH CONSORTIUM COMPLETES FINANCING OF PUERTO RICO POWER PROJECT
FOR IMMEDIATE RELEASE: Monday, December 15, 1997
HOUSTON - Enron International, a wholly-owned subsidiary of Enron Corp.,
(Enron), and KENETECH Energy Systems, Inc., a wholly-owned subsidiary of
KENETECH Corporation, (KENETECH) announced today that financial close has been
achieved on the $670 million EcoElectrica LNG Terminal and Cogeneration Project.
Enron and KENETECH jointly developed and each own 50 percent of the project,
which will be located in the Penuelas/Guayanilla area on the south coast of
Puerto Rico.
The power plant portion of the project, an approximately 500 megawatt combined
cycle power facility, will be fueled primarily by liquefied natural gas (LNG).
The LNG will be imported from Trinidad under a long term contract with Cabot LNG
and delivered at the project's receiving terminal which includes a pier, docking
and unloading facilities, and a one million barrel LNG storage tank. When
completed, the project will be the first in the world to combine a private power
plant and an LNG terminal as part of the same project financing. It will also be
the first opportunity for natural gas -- the cleanest of all fossil fuels -- to
be used to generate electricity in Puerto Rico, which presently uses oil for 98%
of its power generation. Construction activities will begin immediately, with
commercial operations slated for the 4th quarter of 1999.
Power produced by the facility will be sold solely to the Puerto Rico Electric
Power Authority (PREPA) under a 22 year power purchase agreement. Miguel A.
Cordero, executive director of PREPA, considers the culmination of this
financial process to be a solid step towards the diversification of sources of
electricity, a principal goal of the authority.
"The construction of the EcoElectrica Project will not only provide our system
with additional highly reliable capacity to meet the increasing demands for the
next century, but will mark a historic moment in the development of our
electrical system, which frees us of the dependency on oil," Cordero stated.
In addition to the power plant and the LNG facility, the EcoElectrica Project
includes a desalination plant that will utilize waste heat to produce
approximately two million gallons of clean water per day for use in the power
plant and to supplement the public water supplies in the area. The project will
generate over 500 jobs during the construction phase and contribute
significantly to the local economy.
"We are very pleased we are getting an opportunity to contribute to the island's
fuel diversification and to the revitalization of the Penuelas/Guayanilla area,"
said Mark Lerdal, CEO and president of KENETECH Corp.
"We are also very pleased to see this project brought to financial closure and
construction underway," said Rebecca P. Mark, chairman and CEO of Enron
International. "It will provide a clean, reliable and economically attractive
power source for Puerto Rico and significantly reduce greenhouse gases and
other pollutants on the island."
The project will be constructed on a turnkey basis by an Enron affiliate. As
part of the financial closing, KENETECH's CNF Industries subsidiary sold its 50%
interest in the construction contract to Enron for $15 million plus accrued
expenses. Approximately $600 million of non-recourse construction and permanent
financing for the project is being provided on a fully underwritten basis by ABN
AMRO Bank and Bank Paribas.
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Enron Corp., one of the world's largest integrated natural gas and electricity
companies with approximately $23 billion in assets, operates one of the largest
natural gas transmission systems in the world; is the largest marketer of
natural gas and electricity in North America; is a leading participant in
liberalized energy markets in the United Kingdom and the Nordic Countries;
markets natural gas liquids worldwide; manages the largest portfolio of
fixed-price natural gas risk management contracts in the world; is among the
leading entities arranging new capital to the energy industry; owns a majority
interest in Enron Oil & Gas Company, one of the largest independent
(non-integrated) exploration and production companies in the United States; owns
and manages operating power plants and natural gas pipelines around the world;
is one of the largest independent developers and producers of electricity in the
world; and is a major supplier of solar and wind energy worldwide. Enron's
internet address is www.enron.com and its common stock is traded under the
ticker symbol, "ENE."
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