CONFORMED COPY WITH EXHIBITS
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission File Number 33-83618
SELKIRK COGEN PARTNERS, L.P.
(Exact name of Registrant (Guarantor) as specified in its charter)
Delaware 51-0324332
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
SELKIRK COGEN FUNDING CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 51-0354675
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Bowdoin Square, Boston, Massachusetts 02114
(Address of principal executive offices, including zip code)
(617) 227-8080
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
8.65% First Mortgage Bonds Due 2007, Series A
8.98% First Mortgage Bonds Due 2012, Series A
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
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This document consists of 24 pages of which this page is page 1.
<PAGE>
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996......................................... 3
Condensed Consolidated Statements of Operations for the three
and six months ended June 30, 1997 and June 30, 1996.......... 4
Condensed Consolidated Statements of Cash Flows for the three
and six months ended June 30, 1997 and June 30, 1996......... 5
Notes to Condensed Consolidated Financial Statements.......... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations......................................... 7
Liquidity and Capital Resources............................... 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................ 13
SIGNATURES.......................................................... 14
2
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
(unaudited)
June 30, December 31,
1997 1996
---------- -----------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash............................................ $ 1,056 $ 2,591
Restricted funds................................ 4,717 6,284
Accounts receivable............................. 15,920 19,899
Due from affiliates............................. 14 40
Fuel inventory and supplies..................... 4,687 4,401
Other current assets............................ 634 449
--------- ---------
Total current assets...................... 27,028 33,664
Plant and equipment, net........................ 327,861 334,229
Long-term restricted funds...................... 21,605 20,446
Deferred financing charges, net................. 12,529 13,115
--------- ---------
Total Assets $ 389,023 $ 401,454
--------- ---------
--------- ---------
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Accounts payable................................ $ 233 $ 588
Accrued bond interest payable................... 377 385
Accrued expenses................................ 11,719 16,239
Due to affiliates............................... 2,134 937
Advances from customer.......................... --- 17
Current portion of long-term bonds.............. 2,987 2,167
--------- ---------
Total current liabilities................. 17,450 20,333
Other long-term liabilities..................... 13,101 10,678
Long-term bonds, less current portion........... 387,372 389,253
General partners' capital....................... (277) (173)
Limited partners' capital....................... (28,623) (18,637)
--------- ---------
Total partners' capital................... (28,900) (18,810)
--------- ---------
Total Liabilities and
Partners' Capital $ 389,023 $ 401,454
--------- ---------
--------- ---------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
<CAPTION>
For the For the
Three Months Ended Six Months Ended
--------------------- --------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenues:
Electric and steam......... $ 35,533 35,996 $ 78,054 $ 73,709
Gas resale................. 5,317 6,113 6,721 14,805
--------- --------- --------- ---------
Total operating
revenues.............. 40,850 42,109 84,775 88,514
Cost of revenue............. 29,124 29,833 60,415 59,666
--------- --------- --------- ---------
Gross Profit................ 11,726 12,276 24,360 28,848
Other operating expenses:
Administrative services -
affiliates............... 729 626 1,338 1,180
Other general and
administrative expenses.. 574 758 1,220 1,826
Amortization of deferred
financing charges........ 293 294 586 587
--------- --------- --------- ---------
Total other operating
expenses.............. 1,596 1,678 3,144 3,593
--------- --------- --------- ---------
Operating income............ 10,130 10,598 21,216 25,255
Net interest expense........ 8,144 8,107 16,386 16,489
--------- --------- --------- ---------
Net income.................. $ 1,986 $ 2,491 $ 4,830 $ 8,766
--------- --------- --------- ---------
--------- --------- --------- ---------
Allocated to:
General partners.......... $ 20 $ 25 $ 49 $ 88
Limited partners.......... 1,966 2,466 4,781 8,678
--------- --------- --------- ---------
Total................... $ 1,986 $ 2,491 $ 4,830 $ 8,766
--------- --------- --------- ---------
--------- --------- --------- ---------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
SELKIRK COGEN PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
For the For the
Three Months Ended Six Months Ended
--------------------- --------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities....... $ (261) $ 3,333 $ 14,021 $ 18,552
Cash flows provided by
(used in) investing
activities:
Plant and equipment
additions............... --- (62) 34 (503)
Restricted funds......... 16,507 15,441 408 4,663
--------- --------- --------- ---------
Net cash provided by
investing activities.. 16,507 15,379 442 4,160
Cash flows provided by
(used in) financing
activities:
Cash distributions....... (14,920) (19,384) (14,920) (23,607)
Payments of principal on
long-term debt.......... (1,061) (284) (1,061) (284)
Advances from a
customer................ --- --- (17) (136)
--------- --------- --------- ---------
Net cash used in
financing activities.. (15,981) (19,668) (15,998) (24,027)
Net increase (decrease)
in cash.................... 265 (956) (1,535) (1,315)
Cash at beginning
of period.................. 791 2,313 2,591 2,672
--------- --------- --------- ---------
Cash at end of period....... $ 1,056 $ 1,357 $ 1,056 $ 1,357
--------- --------- --------- ---------
--------- --------- --------- ---------
Supplemental disclosures of
cash flow information:
Cash paid for interest.... $ 17,303 $ 17,328 $ 17,320 $ 17,620
--------- --------- --------- ---------
--------- --------- --------- ---------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
5
<PAGE>
SELKIRK COGEN PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
consolidate Selkirk Cogen Partners, L.P. and its wholly-owned subsidiary,
Selkirk Cogen Funding Corporation, (collectively the "Partnership"). All
significant intercompany accounts and transactions have been eliminated.
The condensed consolidated financial statements for the interim periods
presented are unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. The information
furnished in the condensed consolidated financial statements reflects all
normal recurring adjustments which, in the opinion of management, are
necessary for a fair presentation of such financial statements. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to rules and regulations
applicable to interim financial statements.
These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in
the Partnership's December 31, 1996 Annual Report on Form 10-K.
Note 2. Contingency
In connection with transactions in 1994 involving the investment by
affiliates of Cogen Technology, Inc. in the Partnership and the purchase of
J. Makowski Company, Inc. by Beale Generating Company, the Partnership filed
New York State real estate transfer and gains tax returns with New York tax
authorities. The New York tax authorities have raised certain questions and
issues about such tax returns.
Although the New York tax authorities have assessed no additional tax against
the Partnership or any other transferor at this time, the issue currently is
under consideration and it is possible that the New York tax authorities will
assert that additional tax is owed by the Partnership or one or more of the
other transferors in connection with these transactions. The Partnership
presently cannot predict the likelihood of the New York tax authorities
making such an assertion or, if made, the amount of tax that might be
asserted.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Results of Operations
Three and Six Months Ended June 30, 1997 Compared to the Three and Six Months
Ended June 30, 1996
Net income for the quarter ended June 30, 1997 was approximately $2.0 million
as compared to $2.5 million for the corresponding period in the prior year.
Net income for the six months ended June 30, 1997 was approximately $4.8
million compared to $8.8 million for the corresponding period in the prior
year. The decrease in net income for the quarter ended June 30, 1997 is
primarily due to a $0.8 million decrease in gas resale revenues. The
decrease in net income for the six months ended June 30, 1997 is primarily
due to a $8.1 million decrease in gas resale revenues offset by a $4.4
million increase in electric revenues.
Total revenues for the quarter and six months ended June 30, 1997 were
approximately $40.9 million and $84.8 million as compared to $42.1 million
and $88.5 for the corresponding periods in the prior year.
Electric Revenues (dollars and kWh's in millions):
- -------------------------------------------------
For the Three Months Ended
June 30, 1997 June 30, 1996
------------------------------- -------------------------------
Dollars kWh's Capacity Dispatch Dollars kWh's Capacity Dispatch
------- ----- -------- -------- ------- ----- -------- --------
Niagara Mohawk 6.2 27.5 15.74% 18.32% 7.3 74.4 42.64% 43.91%
Con Edison 29.3 418.8 72.36% 81.91% 28.1 352.9 61.00% 80.33%
For the Six Months Ended
June 30, 1997 June 30, 1996
------------------------------- -------------------------------
Dollars kWh's Capacity Dispatch Dollars kWh's Capacity Dispatch
------- ------ ------- -------- ------- ----- -------- --------
Niagara Mohawk 16.2 135.6 53.43% 58.93% 13.9 120.6 34.56% 43.18%
Con Edison 61.7 904.6 78.59% 90.19% 58.1 799.4 69.08% 88.95%
Revenues from Niagara Mohawk Power Corporation ("Niagara Mohawk") decreased
approximately $1.1 million and increased approximately $2.3 million for the
quarter and six months ended June 30, 1997 when compared to the corresponding
periods in the prior year. For the six months ended June 30, 1997, Niagara
Mohawk dispatched the Unit on-line for the months of January, February, March
and June, at full contract rates except for the month of March. Energy
delivered in March was sold under special dispatch arrangements which called
7
<PAGE>
for the pricing of the delivered energy at variable rates less than full
contract rates. For the six months ended June 30, 1996, Niagara Mohawk
dispatched the Unit January, February, April, May and June at full contract
rates. The decrease for the quarter and increase for the six months ended
June 30, 1997 in delivered energy as evidenced by the 26.9% decrease and
18.87% increase, respectively, in the corresponding capacity factors was the
primary contributor for the changes in Niagar a Mohawk revenue. Revenue for
energy delivered pursuant to the special dispatch arrangement with Niagara
Mohawk for the six months ended June 30, 1997 was approximately $1.2 million
as compared to $29.3 thousand for the corresponding period in the prior year.
Revenues from Consolidated Edison Company of New York, Inc. ("Con Edison")
for the quarter and six months ended June 30, 1997 increased approximately
$1.2 million and $3.6 million when compared to the corresponding periods in
the prior year. An increase in delivered energy as evidenced by the 11.36%
and 9.51% increase in the capacity factors for the quarter and six months
ended June 30, 1997 and higher contract energy rates resulting from higher
index fuel prices were the contributing factors to the increase in revenues.
Pursuant to the Steam Sales Agreement General Electric may implement
productivity or energy efficiency projects in its manufacturing processes,
including projects involving the production of steam within the General
Electric plant commencing in 1996. General Electric has implemented an
energy efficiency project in 1997 that will reduce the quantity of steam
required by the General Electric plant. Under the energy efficiency project,
General Electric anticipates managing its annual average steam demand at
160,000lbs/hr. Steam revenues for the six months ended June 30, 1997 and
June 30, 1996 were reduced by an annual true-up of $0.9 million and $0.2
million, respectively, so that General Electric would be charged a nominal
amount which is the annual equivalent of 160,000lbs/hr. Steam revenues for
the quarter and six months ended June 30, 1997 were approximately $80.1
thousand and $172.5 thousand on 322.337 million and 828.680 million pounds of
steam delivered as compared to approximately $566.4 thousand and $1.7 million
on 435.265 million and 1,021.256 million pounds of steam delivered for the
corresponding periods in the prior year. The decrease in steam revenues
during the quarter and six months ended June 30, 1997 was due to lower steam
demand and a reduction in fuel prices.
Gas resale revenues for the quarter ended June 30, 1997 was approximately
$5.3 million on sales of 2.3 million MMBtu's as compared to $6.1 million on
sales of 2.4 million MMBtu's for the corresponding period in the prior year.
Gas resale revenues for the six months ended June 30, 1997 were approximately
$6.7 million on 2.8 million MMBtu's as compared to approximately $14.8
million on sales of 4.2 million MMBtu's for the corresponding period in the
prior year. The $0.8 million and $8.1 million decrease in gas resale
revenues during the quarter and six months ended June 30, 1997 was primarily
8
<PAGE>
due to lower natural gas resale prices and higher dispatch of Units 1 or 2,
which resulted in lower volumes of natural gas becoming available for resale.
The decrease in natural gas resale prices during the quarter and six months
ended June 30, 1997 generally resulted from more moderate temperatures in the
Northeast region as compared to the colder than normal temperatures, which
caused an increase in the demand for na tural gas and resulted in lower than
normal gas storage levels during the corresponding period in the prior year.
The Partnership enters into gas resales during periods when Units 1 and 2 are
not operating at full capacity.
Cost of revenues for the quarter and six months ended June 30, 1997 were
approximately $29.1 million and $60.4 million on purchases of 7.1 million
MMBtu's and 14.0 million MMBtu's as compared to approximately $29.8 million
and $ 59.7 million on purchases of 7.1 million MMBtu's and 14.2 million
MMBtu's for the corresponding periods in the prior year. The cost of
revenues and MMBtu's purchases for the quarter and six months ended June 30,
1997 are comparable to the corresponding periods in the prior year.
Total other operating expenses for the quarter and six months ended June 30,
1997 were approximately $1.6 million and $3.1 million as compared to
approximately $1.7 million and $3.6 million for the corresponding periods in
the prior year. The decrease in other operating expenses is primarily due to
a decrease in other general and administrative expenses.
Net interest expense for the quarter and six months ended June 30, 1997 of
approximately $8.1 million and $16.4 million are comparable to the
corresponding periods in the prior year.
Liquidity and Capital Resources
Net cash flows provided by operating activities decreased from approximately
$3.3 million and $18.6 million for the quarter and six months ended June 30,
1996 to approximately ($0.3) thousand and $14.0 million for the quarter and
six months ended June 30, 1997. The decrease in net cash flows provided by
operating activities is due to the decrease in net income and normally
recurring cash receipts and disbursements within the Partnership's operating
asset and liability accounts during the quarter and six months ended June 30,
1997.
Net cash flows used in investing activities for the quarter and six months
ended June 30, 1997 were approximately $16.5 million and $0.4 thousand as
compared to approximately $15.4 million and $4.2 million for the
corresponding periods in the prior year. Net cash flows used in investing
activities represent monies deposited into or withdrawn from funds created
pursuant to the Partnership's Depositary and Disbursement Agreement,
administered by Bankers Trust Company, as depositary agent (the "Funds").
Monies deposited into the Funds for the six months ended June 30, 1997 and
9
<PAGE>
1996 primarily represent monies set aside for interest and principal payments
to Bondholders scheduled for June 26 of each year and Partner distributions.
Monies withdrawn from the Funds for the three months ended June 30, 1997 and
1996 represent the payment of interest and principal on the Bonds and
distributions to Partners.
Net cash flows used in financing activities decreased from approximately
$19.7 million for the quarter ended June 30, 1996 to approximately $16.0
million for the quarter ended June 30, 1997. Net cash flows decreased from
approximately $24.0 million for the six months ended June 30, 1996 to
approximately $16.0 million for the six months ended June 30, 1997. The
decrease in net cash flows for the quarter and six months ended June 30, 1997
is primarily due to a decrease in distributions to Partners.
Con Edison by a letter dated September 19, 1994 claimed the right to acquire
that portion of Unit 2's firm natural gas supply not used in operating Unit
2, when Unit 2 is dispatched off-line or at less than full capability. The
Con Edison Power Purchase Agreement contains no express language granting Con
Edison any rights with respect to such excess natural gas. Nevertheless, Con
Edison has argued that, since payments under the contract include fixed fuel
charges which are payable whether or not Unit 2 is dispatched on-line, Con
Edison is entitled to take delivery of any excess natural gas. The
Partnership vigorously disputes the position adopted by Con Edison, based
notably on the absence of any contractual provision according Con Edison the
claimed rights but also on the fact that the Partnership has assumed the risk
under the Con Edison Power Purchase Agreement that the fuel charges payable
by Con Edison are insufficient to cover the costs actually incurred by the
Partnership. By a letter dated May 23,1995, Con Edison indicated its
intention to pursue the claim asserted in the September 19, 1994 letter. In
the May 23, 1995 letter, Con Edison reserved the right to claim 100% of the
margins derived from the sales of Unit 2's firm natural gas supply not used
in operating Unit 2 (non-plant gas sales) and requested that the Partnership
reduce the monthly amount invoiced to Con Edison by 50% of a calculated value
of the non-plant gas sales. The Partnership strenuously objected to Con
Edison's contentions and, at a meeting between the Partnership and Con
Edison, Con Edison agreed to continue not to deduct any amount attributable
to non-plant gas sales from payments made upon monthly invoices but stated it
would do so under protest, pending further discussions between the parties.
Since the commencement of commercial operations of Unit 2, the Partnership
made and continues to make, from time to time, excess gas lay-off sales from
Unit 2's gas supply. The Partnership does not intend to adjust the monthly
inv oices issued to Con Edison and continues to assert that Con Edison is not
entitled to any revenues or margins derived from non-plant gas sales. In the
event Con Edison were to pursue its asserted claim, the Partnership would
expect to pursue all available legal remedies, but there can be no certainty
that the outcome of such remedial action would be favorable to the
Partnership or, if favorable, would provide for the Partnership's full
recovery of its damages.
10
<PAGE>
The Partnership's cash flows from the sale of electric output would be
materially and adversely affected if Con Edison were to prevail in its claim
to Unit 2's excess natural gas volumes and the related margins.
On October 6, 1995, Niagara Mohawk filed its "PowerChoice" proposal with the
New York State Public Service Commission ("NYPSC"). On October 12, 1995,
Niagara Mohawk filed a Report on Form 8-K with the Securities and Exchange
Commission (the "Commission") explaining the PowerChoice proposal (the
"PowerChoice Statement"). In the PowerChoice Statement, Niagara Mohawk
describes a number of related proposals to restructure the utility's
business, including the reorganization of its assets and the renegotiation of
its contracts with generators which, like the Partnership, are not regulated
as utilities ("non-utility generators"). On July 10, 1997, Niagara Mohawk
filed a Report on Form 8-K with the Commission stating that Niagara Mohawk
had entered into a Master Restructuring Agreement ("MRA") pursuant to which
it and the twenty-nine independent power producers which have signed the MRA
propose to terminate, restate or amend their respective power purchase
agreements. The consideration for the independent power p urchasers'
agreement varies by party, and may consist of cash, short term notes, shares
of Niagara Mohawk's Common Stock or certain swap contracts. Among the
contracts which is proposed to be amended and restated is the Niagara Mohawk
Power Purchase Agreement for the electric output of Unit 1. Pursuant to the
MRA and subject to negotiation as described below, the parties propose to
restructure the Niagara Mohawk Power Purchase Agreement to provide for the
sale of electricity by the Partnership pursuant to a pre-determined schedule
of output at one or more pricing arrangements for up to 12 years in lieu of
the delivery and price provisions of the Niagara Mohawk Power Purchase
Agreement as currently in effect.
The details of the price arrangements as well as other possible contract
modifications continue to be the subject of extensive negotiations and
implementation of the MRA is subject to a number of significant conditions,
including without limitation Niagara Mohawk and the Partnership negotiating
the amended and restated Unit 1 Power Purchase Agreement, the receipt of all
regulatory approvals, the receipt of all consents by third parties necessary
for the transaction contemplated by the MRA (including satisfying certain
standards under the Partnership's Trust Indenture relating to the absence of
material adverse changes and the maintenance of required projected debt
service coverage ratios or receiving any required approval of bondholders or
other creditors), the Partnership's entering into new third party
arrangements which will enable the Partnership to restructure its project on
a reasonably satisfactory economic basis, and the receipt by Niagara Mohawk
and the Partnership of all necessary approvals from the ir respective boards
of directors, shareholders and partners. Should Niagara Mohawk and the
Partnership satisfy all of the conditions to effectuating the transactions
contemplated by the MRA with respect to the Partnership, Niagara Mohawk may
nevertheless terminate the MRA if Niagara Mohawk determines that, as a result
of the failure to satisfy the conditions of the MRA by other independent
power producers, the benefits anticipated to be received by Niagara Mohawk
pursuant to the MRA have been materially and adversely affected.
11
<PAGE>
The Partnership, as a party to the MRA, is committed to negotiate to reach
agreement on an amended and restated power purchase agreement; however, the
Partnership expresses no opinion with respect to the likelihood that all of
the conditions to implementation of the MRA will be met. Further, the
Partnership expresses no opinion with respect to the viability of Niagara
Mohawk's proposed alternatives should the implementation of the MRA not be
completed, such as Niagara Mohawk's proposal in the context of the
PowerChoice Statement to take possession of independent power projects
through the power of eminent domain and to thereafter sell such projects or
Niagara Mohawk's position that it has not ruled out the ultimate possibility
of a filing for restructuring under Chapter 11 of the U.S. Bankruptcy Code as
set forth in the PowerChoice Statement. Nevertheless, in the absence of
agreement on a definitive restructured power purchase agreement, the
Partnership continues to believe that the Niagara Mohawk Power Purc hase
Agreement is a valid and binding contract with Niagara Mohawk. Until
negotiations on the restructured power purchase agreement advance further,
the Partnership will not be able to determine what effect, if any, the
restructured power purchase agreement or the PowerChoice proposal will have
on the Partnership, its business or net operating revenues. For the six
months ended June 30, 1997, electric sales to Niagara Mohawk accounted for
approximately 19.1% of total project revenues.
Previously in connection with Niagara Mohawk's March 10, 1997 announcement of
the agreement in principle, Standard & Poor's placed the Bonds on credit
watch "with negative implications," based in part on its analysis of the
current reports on Form 8-K filed in March 1997 by Niagara Mohawk and the
Partnership, respectively, and its belief that the restructuring has the
potential to erode cash flow coverage derived from long-term contracts
supporting the Bonds. To date Standard & Poor's has not changed their
outlook on the Bonds. Additionally, as of the date of this report, Moody's
Investors Service has not changed its rating or its previous "negative
outlook" on the Bonds as a result of the developments.
Future operating results and cash flows from operations are dependent on,
among other things, the performance of equipment and processes as expected,
level of dispatch, fuel deliveries and price as contracted and the receipt of
certain capacity and other fixed payments. A significant change in any of
these factors could have a material adverse effect on the results for the
Partnership.
The Partnership believes that based on current conditions and circumstances
it will have sufficient liquidity available provided by cash flows from
operations to fund existing debt obligations and operating costs.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) Exhibits
Exhibit No. Description Page No.
---------- ----------- -------
10.1 Amendment No. 2 to the Credit Agreement 16
dated as of April 7, 1995 between Selkirk
Cogen Partners, L.P. (the "Partnership")
and Dresdenr Bank, AG, New York Branch
which imposes certain restrictions on the
ownership by J. Makowski Company, Inc. of
interests in JMCS I Investors, L.P., a
general partner and limited partner of the
Partneership.
10.2 Amendment No.3 to the Credit Agreement 19
dated as of July 1, 1997 between Selkirk
Cogen Partners, L.P. (the "Partnership")
and Dresdner Bank, AG, New York Branch
which amends the amount of the working
capital and letter of credit amounts and
extends the expiration for an additional
three years.
27 Financial Data Schedule
(For electronic filing purposes only)
(B) Reports on Form 8-K
On July 18, 1997, the Registrant filed a report on Form 8-K disclosing the
Master Restructuring Agreement entered into between Niagara Mohawk Power
Corporation and 16 Independent Power Prodcers.
Omitted from this Part II are items which are not applicable or to which the
answer is negative for the periods covered.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SELKIRK COGEN PARTNERS, L.P.
Date: August 14, 1997 /s/ JMC SELKIRK, INC.
--------------------------
General Partner
Date: August 14, 1997 /s/ JOHN R. COOPER
--------------------------
Name: John R. Cooper
Title: Senior Vice President and
and Chief Financial Officer
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SELKIRK COGEN FUNDING
CORPORATION
Date: August 14, 1997 /s/ JOHN R. COOPER
--------------------------
Name: John R. Cooper
Title: Senior Vice President and
and Chief Financial Officer
15
EXHIBIT 10.1
------------
16
<PAGE>
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT NO. 2 dated as of April 7, 1995 (this "Amendment") to that certain
Credit Agreement dated as of May 1, 1994 (as amended, restated, supplemented
or otherwise modified, the "Credit Agreement") among SELKIRK COGEN PARTNERS,
L.P., a Delaware limited partnership (the "Borrower"), the lenders party
thereto (the "Lenders"), DRESDNER BANK AG, NEW YORK BRANCH, in its capacity
as LC Issuer thereunder (together with its successors in such capacity, the
"LC Issuer"), and DRESDNER BANK AG, NEW YORK BRANCH, as Agent (together with
its successors in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Section 7.1(o)(ii) of the Credit Agreement imposes certain
restrictions on the ownership by J. Makowski Company, Inc. ("Makowski
Company") of interests in JMCS I Investors, L.P. ("JMCS I Investors"), a
general partner and limited partner of Borrower;
WHEREAS, the parties hereto have agreed to modify such restrictions by
amending the Credit Agreement as provided herein, subject to the terms and
conditions hereof.
NOW, THEREFORE, the parties hereto hereby agreed as follows:
Section 1. Definitions. Capitalized terms used in this Amendment
without being defined herein shall have the meanings ascribed to such terms
in the Credit Agreement.
Section 2. Amendment. Section 7.1(o)(ii) of the Credit Agreement shall
be amended and restated in its entirety to read as follows:
"(ii) Makowski Company shall cease to own directly or
indirectly through its Subsidiaries during the five-year
period beginning on the date of Commercial Operation,
50 percent, and thereafter 33 1/3 percent, of the ownership
and economic interests held by JMCS I Investors in the
Borrower on May 9, 1994."
Section 3. Status of Loan Documents. This Amendment is limited solely
for the purposes and to the extent expressly set forth herein and nothing
herein expressed or implied shall constitute an amendment or waiver of any
17
<PAGE>
other term, provision or condition of the Credit Agreement or any other Loan
Document. Except as expressly amended hereby, the terms and conditions of
the Credit Agreement and the other Loan Documents shall continue in full
force and effect.
Section 4. Counterparts. This Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one Amendment,
and any of the parties hereto may execute this Amendment by signing such a
counterpart.
Section 5. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.
SELKIRK COGEN PARTNERS, L.P.
By: JMC SELKIRK, INC.,
its Managing General Partner
By: /s/ Walter Howard
----------------------------
Name:
Title:
DRESDNER BANK AG, NEW YORK
BRANCH, as Lender, LC Issuer
and Agent
By: /s/ Andrew Schroeder
----------------------------
Name: ANDREW SCHROEDER
Title: ASSISTANT TREASURER
By: /s/ J.A. Di Rocco
----------------------------
Name: JOSEPH A. DI ROCCO
Title: ASSISTANT VICE-PRESIDENT
18
EXHIBIT 10.2
------------
19
<PAGE>
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT NO. 3 dated as of July 1, 1997 (this "Amendment") to that certain
Credit Agreement dated as of May 1, 1994 (as amended, restated, supplemented
or otherwise modified, the "Credit Agreement") among SELKIRK COGEN PARTNERS,
L.P., a Delaware limited partnership (the "Borrower"), the lenders party
thereto (the "Lenders"), DRESDNER BANK AG, NEW YORX BRANCH, in its capacity
as LC Issuer thereunder (together with its successors in such capacity, the
"LC lesuer"), and DRESDNER BANK AG, NEW YORK BRANCH, as Agent (together with
its successors in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the parties hereto have agreed to amend the Credit Agreement as
provided herein, subject to the terms and conditions hereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Definitions. Capitalized terms used in this Amendment
without being defined herein shall have the meanings ascribed to such terms
in the Credit Agreement.
Section 2. Amendment of Credit Agreement. The Credit Agreement is
hereby amended as follows:
(a) Section 2.1(a) of the Credit Agreement is hereby amended by (i)
deleting the amount of "$10,000,000" from the third sentence thereof and
inserting the amount of "$5,000,000" in replacement therefor and (ii)
deleting the amount of "$30,000,000" from the final sentence thereof and
inserting the amount of "$23,471,420" in replacement therefor.
(b) Section 2.2(a) of the Credit Agreement is hereby amended by (i)
deleting the amount of "$26,843,920" from the third sentence thereof and
inserting the amount of "$18,471,420" in replacement therefor, (ii) deleting
the amount of "$30,000,000" from the seventh sentence thereof and inserting
the amount of "$23,471,420" in replacement therefor and (iii) deleting the
date "January 1, 1996" from the final sentence thereof and inserting the date
"January l, 1999" in replacement therefor.
20
<PAGE>
(c) Section 2.2(d) of the Credit Agreement is hereby amended by deleting
the amount of "$30,000,000" from the final sentence thereof and inserting the
amount of "$23,471,420" in replacement therefor.
(d) Section 2.4(c) of the Credit Agreement is hereby amended by deleting
the amount of "$26,843,920" from the first sentence thereof and inserting the
amount of "$18,471,420" in replacement therefor.
(e) The definition of "Final Maturity Date" contained in Annex 1 of the
Credit Agreement is hereby amended by deleting such definition in its
entirety and inserting the following in replacement therefor:
""Final Maturity Date" shall mean August 11, 2000."
(f) Schedule 1 to the Credit Agreement is hereby amended by deleting such
Schedule in its entirety and inserting Schedule 1 attached hereto in
replacement therefor.
Section 3. Status of Loan Documents. This Amendment is limited solely
for the purposes and to the extent expressly set forth herein and nothing
herein expressed or implied shall constitute an amendment or waiver of any
other term, provision or condition of the Credit Agreement or any other Loan
Document. Except as expressly amended hereby, the terms and conditions of
the Credit Agreement and the other Loan Documents shall continue in full
force and effect.
Section 4. Fees and Expenses. The Borrower agreee to pay, promptly on
demand therefor, all fees and expenses of the Agent and the LC Issuer
incurred in connection with this Amendment and the extension of any of the
Letters of Credit including, without limitation, fees and expenses of
Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Agent and the LC
Issuer.
Section 5. Counterparts. This Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one Amendment,
and any of the parties hereto may execute this Amendment by signing such a
counterpart.
21
<PAGE>
Section 6. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OP THE STATE OF NFW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.
SELKIRK COGEN PARTNERS, L.P.
By: JMC SELKIRK, INC.,
--------------------------
its general partner
By: /s/ George J. Grunbeck
-------------------------------
Name: George J. Grunbeck
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH,
as Lender, LC Issuer and Agent
By: /s/ Kenneth McCue
---------------------------
Name: Kenneth McCue
Title: Vice President
By: /s/ Michael E. Terry
---------------------------
Name: Michael E. Terry
Title: Assistant Vice President
23
<PAGE>
SCHEDULE 1
----------
WORKING CAPITAL LETTER OF CREDIT
LENDER LOAN COMMITMENT LOAN COMMITMENT
- ------ --------------- ----------------
DRESDNER BANG AG, $5,000,000.00 $18,471,420.00
NEW YORK BRANCH
24
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000929540
<NAME> SELKIRK COGEN PARTNERS, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Jun-30-1997
<CASH> 5773
<SECURITIES> 0
<RECEIVABLES> 15934
<ALLOWANCES> 0
<INVENTORY> 4687
<CURRENT-ASSETS> 27028
<PP&E> 371267
<DEPRECIATION> 43406
<TOTAL-ASSETS> 389023
<CURRENT-LIABILITIES> 17450
<BONDS> 387372
0
0
<COMMON> 0
<OTHER-SE> (28900)
<TOTAL-LIABILITY-AND-EQUITY> 389023
<SALES> 84775
<TOTAL-REVENUES> 84775
<CGS> 60415
<TOTAL-COSTS> 60415
<OTHER-EXPENSES> 3144
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16386
<INCOME-PRETAX> 4830
<INCOME-TAX> 0
<INCOME-CONTINUING> 4830
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4830
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
