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)
February 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 8.
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Item 7. Exhibits
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(c) Exhibits
(99.1) Letter to the Financial Community,
dated February 11, 1999
(99.2) Press Release, dated February 11, 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.
ILLINOVA CORPORATION
(Registrant)
By /s/ Larry F. Altenbaumer
---------------------------
Larry F. Altenbaumer
Chief Financial Officer
Treasurer and Controller
on behalf of
Illinova Corporation
Date: February 12, 1999
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/ Larry F. Altenbaumer
---------------------------
Larry F. Altenbaumer
Senior Vice President and
Chief Financial Officer
on behalf of
Illinois Power Company
Date: February 12, 1999
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Exhibit Index
The following Exhibits are hereby filed as part of this Current Report on Form
8-K:
Exhibit
Number Description
99.1 Letter to the Financial Community,
dated February 11, 1999
99.2 Press Release, dated February 11, 1999
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Larry F. Altenbaumer
Chief Financial Officer,
Treasurer and Controller
Illinova Corporation
500 South 27th Street
P.O. Box 511
Decatur, IL 62525-1805
Tel 217 424-6678
Fax 217 362-7417
February 11, 1999
Members of the Financial Community:
Illinova/Illinois Power Company (Company) Board of Directors met yesterday.
Among the issues discussed was the strategy for exiting the nuclear business.
The Board was advised that progress in restoring Clinton Power Station (Clinton)
to service early in the second quarter was proceeding according to plan and that
serious expressions of interest in the purchase of Clinton had been received.
Consequently, management recommended and the Board approved proposals to
continue the restart and sales efforts. Concurrently, the company is proceeding
with all necessary actions to permit a timely shutdown of the plant if the
restart and/or sales efforts should be unsuccessful.
The company has also made excellent progress in resolving the key accounting
issues surrounding the implementation of the quasi financial reorganization. The
company recently completed its fossil valuation study. As a result of this
study, Illinois Power will increase its fossil system valuation to about $2.9
billion as of December 31, 1998, a $1.35 billion net of tax increase.
While the quasi-reorganization accounting entries have not been finalized, the
company is confident that the amounts presented below will be very close to the
final amounts. In view of this progress, I felt it was important to provide this
update pending the release of 1998 results at the end of the month. The
write-off for Clinton-related costs will be approximately $1.8 billion, net of
tax, and a regulatory asset of approximately $450 million, net of tax, will be
established. The net difference between these amounts, approximately $1.35
billion, will be charged to 1998 earnings. For balance sheet purposes, the
company expects this net difference to be fully offset by the write-up of the
fossil generating system assets, thereby avoiding any reduction in total common
equity as a result of the quasi-reorganization. The quasi-reorganization
accounting entries addressed above reflect the company's decision to book the
most conservative outcome currently foreseen. If the actual exit option produces
a smaller write-off for Clinton-related expenses, the adjustment will be
reflected as a balance sheet item only - the income statement will not be
affected.
The final quasi-reorganization accounting entries will be reported when the
company releases 1998 earnings after the market closes on Friday, February 26,
1999. A conference call will be conducted the following Monday morning, March,
1, 1999, to discuss and answer any questions regarding the 1998 results,
including the quasi-reorganization accounting issues. We will advise you during
the last week of February of the specific time and other particulars regarding
this call. I hope you will be able to join us in the call.
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In the interim please contact Bob Schultz (217-424-8780), Eric Weekes
(217-362-7635), Cindy Steward (217-362-7633), Greg Gudeman (217-424-8715) or me
if you have any questions regarding this letter.
Sincerely,
[OBJECT OMITTED]
Larry F. Altenbaumer
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For Release: Feb. 11, 1999
UTILITY PURSUES RESTART, SALE OF CLINTON POWER STATION
DECATUR, Ill. -- Illinois Power today affirmed that it is continuing its
work toward restarting the Clinton Power Station while it pursues negotiations
with potential buyers. Concurrently, the utility is continuing to develop
contingency plans for permanently closing the 950-megawatt nuclear generating
facility.
"Our primary focus is to restart and sell the plant," said Illinova and
Illinois Power Chairman Charles E. Bayless. "We will resolve the Clinton issues
and clear the way to aggressively pursue other forward-looking business
strategies."
Efforts to sell Clinton are based on expectations that it will be in
operation by late spring. Several parties have already expressed interest in the
plant and discussions are ongoing. Illinois Power soon will send letters to
additional prospective buyers requesting expressions of interest in buying
Clinton. If satisfactory offers are not received in a timely manner, Illinois
Power will be prepared to proceed with closing and decommissioning the facility.
Illinova Corp. announced in December that it would exit its nuclear
business, most likely by selling or closing Clinton, its only nuclear-powered
generating station.
In conjunction with the decision to dispose of its nuclear assets, the
board also moved in December 1998 to effect a quasi-reorganization, an
accounting restructuring whereby a company
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ILLINOVA
Feb. 11, 1999
Page 2
restates all its assets and liabilities to their current market value.
Illinois Power's 1998 year-end balance sheet will reflect a new valuation
of about $2.9 billion for its fossil-fueled generating system, a write-up of
approximately $1.35 billion, net of taxes. This valuation is based on current
assumptions about future energy prices, plant operations, environmental costs,
and electric generating capacity throughout the Midwest region.
The two additional significant elements of the quasi-reorganization will be
finalized before Illinova releases 1998 earnings. The company believes the
after-tax write-off for Clinton and related costs will be approximately $1.8
billion. Illinois Power will also establish a regulatory asset of approximately
$450 million, net of taxes. The difference between the write-off and the
regulatory asset, approximately $1.35 billion, will be recorded as a charge to
1998 earnings. The company expects that, when complete, the quasi-reorganization
will result in no reduction in its total common equity.
Illinova Corp., headquartered in Decatur, Ill., is an energy services
company with annual revenues of $2.5 billion. Its subsidiaries include Illinois
Power, an electric and natural gas utility; 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.
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