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: November 22, 1996
LG&E ENERGY CORP.
(Exact name of registrant as specified in its charter)
Kentucky 1-10568 61-1174555
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
220 West Main Street
P.O. Box 32030
Louisville, KY 40232
(Address of principal executive offices)
(502) 627-2000
(Registrant's telephone number)
Item 5. Other Events.
On November 22, 1996, LG&E Natural Inc. announced the discovery of certain
unauthorized transactions by an individual in its Calgary, Alberta, office.
LG&E Natural Inc. is a wholly-owned subsidiary of LG&E Energy Corp.
Item 7(c). Exhibits Filed.
Exhibit
Number Description
99.01 News Release dated November 22, 1996.
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.
LG&E ENERGY CORP.
Registrant
Date: November 22, 1996 /s/ Walter Z. Berger
Walter Z. Berger
Executive Vice President and
Chief Financial Officer
(On behalf of the registrant in his
capacity as Principal Financial Officer)
Exhibit 99.01
Dallas, TX - LG&E Natural has discovered that a "rogue" marketer in its
Calgary, Alberta, office has been engaged in unauthorized and fraudulent
transactions, resulting in significant losses in the company's Canadian natural
gas marketing business.
The activities of the marketer, which occurred primarily within the last weeks
prior to discovery, included creating unsupported purchase and sales agree-
ments. Immediately upon discovering the irregularities, the company launched
an investigation and full review of its operations and controls in the Calgary
office. The company has concluded that its trading and management controls are
thorough, and meet or exceed industry standards.
The marketer's employment with the company has been terminated and the company
is pursuing legal action against the marketer and those Canadian marketing
firms that were involved in the collusion. The company has determined that no
other employees are implicated.
Company officials, assisted by outside investigators and auditors, have turned
information over to the Commercial Crime Unit of the Calgary Police Service. A
criminal investigation is under way.
LG&E Natural is meeting commitments on all legitimate transactions but will
take appropriate actions on any transactions found to be fraudulent.
LG&E Natural's insurance carrier has been notified of the company's intent to
pursue claims under the company's Blanket Crime Policy, which covers losses of
$10 million per loss.
As a result of the Calgary incident, LG&E Natural has experienced an after-tax
loss of $17 million (U.S.). This includes the amount of losses previously
reported in the company's third quarter Form 10-Q and additional amounts
primarily reflecting the impact of the anticipated inability to perform by one
of the company's suppliers, which developed subsequent to the discovery of the
marketer's deals. The loss is partly offset by a previously announced conver-
sion to the mark-to-market accounting method and numerous business successes in
other units of LG&E Energy.
LG&E Energy's 1996 year-end earnings will exceed that of 1995, but the Calgary
incident is likely to cause LG&E Energy to fall somewhat short of anticipated
year-end earnings. The incident does not affect the corporation's continuing,
fundamental strength in earnings and market growth.
LG&E Natural Inc. is a wholly owned natural gas marketing subsidiary of LG&E
Energy Corp. (NYSE:LGE), an energy services holding company based in Louis-
ville, Ky.
Statements made in this release that state the Company's or management's
intentions, expectations or predictions of the future are forward looking
statements. The Company's actual results could differ materially from those
projected in the forward looking statements, and there can be no assurance that
estimates of future results will be achieved. The Company's SEC filings,
including but not limited to its Form 10-Q filed with the SEC on November 12,
1996, contain additional information concerning factors that could cause actual
results to differ materially from those in the forward looking statements.
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