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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 2000
REGISTRATION NO. 333-92047
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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EDISON MISSION HOLDINGS CO.
(Exact name of Registrant as specified in its charter)
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CALIFORNIA 4991 33-0826940
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification No.)
incorporation or organization) Classification Code Number)
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18101 VON KARMAN AVENUE, SUITE 1700
IRVINE, CALIFORNIA 92612
(949) 752-5588
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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SEE TABLE OF ADDITIONAL REGISTRANTS
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STEVEN D. EISENBERG, ESQ.
EDISON MISSION HOLDINGS CO.
18101 VON KARMAN AVENUE, SUITE 1700
IRVINE, CALIFORNIA 92612
(949) 752-5588
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:
ROBERT M. CHILSTROM, ESQ.
HAROLD F. MOORE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK 10036
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /______
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /______
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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TABLE OF ADDITIONAL REGISTRANTS
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PRIMARY STANDARD
STATE OF INCORPORATION INDUSTRIAL CLASSIFICATION I.R.S. EMPLOYER
NAME OR ORGANIZATION CODE NUMBER IDENTIFICATION NUMBER
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Edison Mission Finance Co............................ California 4991 33-0839202
18101 Von Karman Avenue, Suite 1700
Irvine, California 92612
(949) 752-5588
Homer City Property Holdings, Inc.................... California 4991 33-0851685
18101 Von Karman Avenue, Suite 1700
Irvine, California 92612
(949) 752-5588
Mission Energy Westside, Inc......................... California 4991 33-0550657
18101 Von Karman Avenue, Suite 1700
Irvine, California 92612
(949) 752-5588
Chestnut Ridge Energy Company........................ California 4991 33-0826590
18101 Von Karman Avenue, Suite 1700
Irvine, California 92612
(949) 752-5588
EME Homer City Generation L.P........................ Pennsylvania 4991 33-0826938
18101 Von Karman Avenue, Suite 1700
Irvine, California 92612
(949) 752-5588
Edison Mission Energy................................ California 4991 95-4031807
18101 Von Karman Avenue, Suite 1700
Irvine, California 92612
(949) 752-5588
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SUBJECT TO COMPLETION, DATED FEBRUARY 8, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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PROSPECTUS
Offer to Exchange $300,000,000 8.137% Senior Secured Bonds due 2019 and
$530,000,000 8.734% Senior Secured Bonds due 2026 for Identical Principal
Amounts of 8.137% Senior Secured Bonds due 2019 and 8.734% Senior Secured Bonds
due 2026, Respectively, Which Have Been Registered Under the Securities Act of
1933, of
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EDISON MISSION
[LOGO] HOLDINGS CO.
An EDISON MISSION ENERGY Company
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 2000, UNLESS EXTENDED.
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Terms of the exchange offer:
- We will exchange all original bonds that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.
- You may withdraw tenders of original bonds at any time prior to the
expiration of the exchange offer.
- We believe that the exchange of original bonds will not be a taxable event
for U.S. federal income tax purposes, but you should see "Material United
States Federal Income Tax Considerations" on page 96 for more information.
- We will not receive any proceeds from the exchange offer.
- The terms of the exchange bonds are substantially identical to the
original bonds, except that the exchange bonds are registered under the
Securities Act and the transfer restrictions and registration rights
applicable to the original bonds do not apply to the exchange bonds.
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SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF THE RISKS THAT
SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR ORIGINAL BONDS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 2000.
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FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events based upon our knowledge of facts as of the date of this
prospectus and our assumptions about future events. These forward-looking
statements are subject to various risks and uncertainties that may be outside of
our control, including, among other things:
- governmental, statutory, regulatory or administrative initiatives
affecting Edison Mission Holdings, our subsidiaries that are guaranteeing
the bonds, the Homer City generating units or the United States
electricity industry generally;
- demand for the electric capacity and energy in the markets served by our
generating units;
- competition from other power plants, including new plants that may be
developed in the future; and
- the cost and availability of fuel and fuel transportation services for our
generating units.
We use words like "believes," "expects," "anticipates," "intends," "may,"
"will," "should," "estimate," "projected" and similar expressions to help
identify forward-looking statements in this prospectus.
For additional factors that could affect the validity of our forward-looking
statements, you should read "Risk Factors" beginning on page 12. In light of
these and other risks, uncertainties and assumptions, the actual events or
results may be very different from those expressed or implied in the
forward-looking statements in this prospectus or may not occur. We have no
obligation to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise.
AVAILABLE INFORMATION
Edison Mission Energy, our parent company, is subject to the informational
requirements of the Securities Exchange Act of 1934 and, in accordance with
these requirements, files reports and information statements and other
information with the Securities and Exchange Commission. In connection with the
exchange offer, we too become subject to those requirements, and we too will
file reports and information statements and other information with the SEC.
These reports and information statements and other information filed by Edison
Mission Energy or us with the SEC can be inspected and copied at the Public
Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may be obtained from
the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington
D.C. 20549, at prescribed rates. The SEC maintains a Web site that contains
reports, proxy and information statements and other materials that are filed
through the SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR)
system. This Web site can be accessed at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by Edison Mission Energy with the SEC are
incorporated by reference into this prospectus:
(i) Edison Mission Energy's Annual Report on Form 10-K for the year ended
December 31, 1998;
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(ii) Edison Mission Energy's Current Reports on Form 8-K dated March 18,
1999, Form 8-K dated July 19, 1999, two Reports on Form 8-K/A dated
July 19, 1999 and Form 8-K dated December 15, 1999; and
(iii) Edison Mission Energy's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999, June 30, 1999 and September 30, 1999.
All reports and other documents Edison Mission Energy subsequently files
pursuant to Sections 13 and 15(d) of the Securities Exchange Act shall be deemed
to be incorporated by reference into this prospectus and to be part of this
prospectus from the date Edison Mission Energy subsequently files these reports
and documents.
Any statement contained in a document incorporated by reference in this
prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus modifies
or supersedes this statement. Any statement so modified or superseded will not
be deemed to constitute a part of this prospectus except as so modified or
superseded.
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NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY
SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY
WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO,
ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. THIS
PROSPECTUS INCLUDES SPECIFIC TERMS OF THE EXCHANGE BONDS WE ARE OFFERING, AS
WELL AS INFORMATION REGARDING OUR BUSINESS AND DETAILED FINANCIAL DATA. WE
ENCOURAGE YOU TO READ THIS PROSPECTUS IN ITS ENTIRETY. ALL CAPITALIZED TERMS
USED AND NOT OTHERWISE DEFINED IN THIS PROSPECTUS HAVE THE MEANINGS GIVEN TO
THOSE TERMS IN THE "GLOSSARY OF DEFINED TERMS" ATTACHED AS APPENDIX A. YOU
SHOULD PAY SPECIAL ATTENTION TO THE "RISK FACTORS" SECTION BEGINNING ON PAGE 12
OF THIS PROSPECTUS.
SUMMARY OF THE EXCHANGE OFFER
On May 27, 1999, we completed the private offering of $300 million aggregate
principal amount of 8.137% Senior Secured Bonds due 2019 and $530 million
aggregate principal amount of 8.734% Senior Secured Bonds due 2026. As part of
that offering, we entered into a registration rights agreement with the initial
purchasers of these original bonds in which we agreed, among other things, to
deliver this prospectus to you and to complete an exchange offer for the
original bonds. Below is a summary of the exchange offer.
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Securities Offered................... Up to $300,000,000 aggregate principal amount of new 8.137%
Senior Secured Bonds due 2019 and up to $530,000,000
aggregate principal amount of new 8.734% Senior Secured
Bonds due 2026, which have been registered under the
Securities Act. The form and terms of these exchange bonds
are identical in all material respects to those of the
original bonds. The exchange bonds, however, will not
contain transfer restrictions and registration rights
applicable to the original bonds.
The Exchange Offer................... We are offering to exchange new $1,000 principal amount of
our 8.137% Senior Secured Bonds due 2019, which have been
registered under the Securities Act, for $1,000 principal
amount of our outstanding 8.137% Senior Secured Bonds due
2019, and to exchange new $1,000 principal amount of our
8.734% Senior Secured Bonds due 2026, which have been
registered under the Securities Act, for $1,000 principal
amount of our outstanding 8.734% Senior Secured Bonds due
2026.
In order to be exchanged, original bonds must be properly
tendered and accepted. All original bonds that are validly
tendered and not withdrawn will be exchanged. As of the date
of this prospectus, there are $830 million principal amount
of original bonds outstanding. We will issue exchange bonds
promptly after the expiration of the exchange offer.
Resales.............................. Based on interpretations by the staff of the SEC, as
detailed in a series of no-action letters issued to third
parties, we believe that the exchange bonds issued in the
exchange offer may be offered for resale, resold or
otherwise transferred by you without compliance with the
registration and prospectus delivery requirements of the
Securities Act as long as:
- you are acquiring the exchange bonds in the ordinary
course of your business;
- you are not participating, do not intend to participate
and have no arrangement or understanding with any person
to participate, in a distribution of the exchange bonds;
and
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- you are not an "affiliate" of ours.
If you are an affiliate of ours, are engaged in or intend to
engage in or have any arrangement or understanding with any
person to participate in the distribution of the exchange
bonds:
(1) you cannot rely on the applicable interpretations of the
staff of the SEC and
(2) you must comply with the registration requirements of
the Securities Act in connection with any resale
transaction.
Each broker or dealer that receives exchange bonds for its
own account in exchange for original bonds that were
acquired as a result of market-making or other trading
activities must acknowledge that it will comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any offer to resell,
resale, or other transfer of the exchange bonds issued in
the exchange offer, including the delivery of a prospectus
that contains information with respect to any selling holder
required by the Securities Act in connection with any resale
of the exchange bonds.
Futhermore, any broker-dealer that acquired any of its
original bonds directly from us:
- may not rely on the applicable interpretation of the staff
of the SEC's position contained in Exxon Capital Holdings
Corp., SEC no-action letter (April 13, 1988), Morgan,
Stanley & Co. Inc., SEC no-action letter (June 5, 1991)
and Shearman & Sterling, SEC no-action letter (July 2,
1983) and
- must also be named as a selling bondholder in connection
with the registration and prospectus delivery requirements
of the Securities Act relating to any resale transaction.
Expiration Date...................... 5:00 p.m., New York City time, on , 2000, unless we
extend the expiration date.
Accrued Interest on the Exchange
Bonds and Original Bonds........... The exchange bonds will bear interest from the most recent
date to which interest has been paid on the original bonds.
If your original bonds are accepted for exchange, then you
will receive interest on the exchange bonds and not on the
original bonds.
Conditions to the Exchange Offer..... The exchange offer is subject to customary conditions. We
may assert or waive these conditions in our sole discretion.
If we materially change the terms of the exchange offer, we
will resolicit tenders of the original bonds. Please read
the section "The Exchange Offer--Conditions to the Exchange
Offer" of this prospectus for more information regarding
conditions to the exchange offer.
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Procedures for Tendering Original
Bonds.............................. If you wish to tender your original bonds, you must
acknowledge that:
- you are acquiring the exchange bonds in the ordinary
course of your business;
- you are not participating, do not intend to participate
and have no arrangement or understanding with any person
to participate, in the distribution of exchange bonds, and
- you are not an "affiliate" of ours.
See "The Exchange Offer--Procedures for Tendering."
Special Procedures for Beneficial
Holders............................ If you are the beneficial holder of original bonds that are
registered in the name of your broker, dealer, commercial
bank, trust company or other nominee, and you wish to tender
in the exchange offer, you should promptly contact the
person in whose name your original bonds are registered and
instruct that person to tender on your behalf. See "The
Exchange Offer--Procedures for Tendering."
Guaranteed Delivery Procedures....... If you wish to tender your original bonds and you cannot
deliver your bonds, the letter of transmittal or any other
required documents to the exchange agent before the
expiration date, you may tender your original bonds by
following the guaranteed delivery procedures under the
heading "The Exchange Offer--Guaranteed Delivery
Procedures."
Withdrawal Rights.................... Tenders may be withdrawn at any time before 5:00 p.m., New
York City time, on the expiration date.
Acceptance of Original Bonds and
Delivery of Exchange Bonds......... Subject to the conditions stated in the section "The
Exchange Offer--Conditions to the Exchange Offer" of this
prospectus, we will accept for exchange any and all original
bonds which are properly tendered in the exchange offer
before 5:00 p.m., New York City time, on the expiration
date. The exchange bonds will be delivered promptly after
the expiration date. See "The Exchange Offer--Terms of the
Exchange Offer."
Material United States Federal Income
Tax Considerations................. We believe that your exchange of original bonds for exchange
bonds to be issued in connection with the exchange offer
will not result in any gain or loss to you for U.S. federal
income tax purposes. See "Material United States Federal
Income Tax Considerations."
Exchange Agent....................... United States Trust Company of New York is serving as
exchange agent in connection with the exchange offer. The
address and telephone number of the exchange agent are
listed in the section "The Exchange Offer--Exchange Agent."
Use of Proceeds...................... We will not receive any proceeds from the issuance of
exchange bonds in the exchange offer. We will pay all
expenses incident to the exchange offer. See "Use of
Proceeds."
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SUMMARY OF TERMS OF THE EXCHANGE BONDS
THE FORM AND TERMS OF THE EXCHANGE BONDS AND THE ORIGINAL BONDS ARE
IDENTICAL IN ALL MATERIAL RESPECTS, EXCEPT THAT TRANSFER RESTRICTIONS AND
REGISTRATION RIGHTS APPLICABLE TO THE ORIGINAL BONDS DO NOT APPLY TO THE
EXCHANGE BONDS. THE EXCHANGE BONDS WILL EVIDENCE THE SAME DEBT AS THE ORIGINAL
BONDS AND WILL BE GOVERNED BY THE SAME INDENTURE. WHERE WE REFER TO "BONDS" IN
THIS DOCUMENT, WE ARE REFERRING TO BOTH SERIES OF ORIGINAL BONDS AND EXCHANGE
BONDS.
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Total Amount of Exchange
Bonds Offered...................... $300 million in aggregate principal amount of 8.137% Senior
Secured Bonds due 2019, which we call the Series A bonds.
$530 million in aggregate principal amount of 8.734% Senior
Secured Bonds due 2026, which we call the Series B bonds.
Maturity............................. Series A bonds: October 1, 2019.
Series B bonds: October 1, 2026.
Issue Price.......................... The issue price of the original bonds was par plus accrued
interest from May 27, 1999.
Payment Dates........................ April 1 and October 1, beginning October 1, 1999.
Amortization......................... Principal of the bonds will be amortized in accordance with
the schedules listed under "Description of the
Bonds--Amortization of the Bonds."
Initial Average Life................. Series A bonds: 13.9 years.
Series B bonds: 20.7 years.
Denominations........................ We will issue the exchange bonds in minimum denominations of
$100,000 or any integral multiple of $1,000 in excess of
$100,000.
Ratings.............................. "Baa3" by Moody's Investors Service, Inc., "BBB-" by
Standard & Poor's Rating Services and "BBB" by Duff & Phelps
Credit Rating Co.
Subsidiary Guarantees................ Each subsidiary guarantor is our wholly-owned subsidiary. If
we cannot make payments on the bonds when they are due, the
subsidiary guarantors must make them instead.
Optional Redemption.................. We may redeem any of the bonds at any time at a redemption
price equal to:
- 100% of the principal amount of the bonds being redeemed,
plus
- accrued interest on the bonds being redeemed, plus
- a yield maintenance premium based on rates of comparable
treasury securities plus 50 basis points.
Mandatory Redemption................. In the event of any damage to our Homer City facilities,
governmental taking or other recovery event at our Homer
City facilities, we must use any proceeds actually received
by us in excess of $5 million that are not used to repair or
replace our Homer City facilities to redeem bonds and prepay
our other senior secured debt. In such event, the redemption
price for the bonds will be 100% of the principal amount of
the bonds being redeemed plus accrued interest.
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Debt Service Reserve Account......... We are required to establish a debt service reserve account
for the benefit of the holders of the bonds. This account
must be funded with enough money to pay the projected debt
service on the bonds due in the succeeding six-month period.
Based on the total number of outstanding bonds, the required
balance of this account is currently approximately
$35 million. We do not have to fund this account with cash
if we provide acceptable debt service credit support, which
may be either an undertaking of our parent company, Edison
Mission Energy, if Edison Mission Energy is rated "Baa1" or
better by Moody's and "BBB+" or better by S&P, or a letter
of credit provided by a bank or trust company rated "A2" or
better by Moody's and "A" or better by S&P. Edison Mission
Energy has provided a guarantee in satisfaction of the debt
service reserve requirement for the bonds up to
$35.3 million. The Collateral Agent will obtain the funds
necessary to pay the debt service due on the bonds from the
proceeds of this guarantee if the debt service due cannot be
satisfied by the amount available under the credit support
guarantee as described below. This debt service reserve
guarantee by Edison Mission Energy may be replaced without
the consent of the holders of the bonds if we elect to
provide another form of acceptable debt service credit
support as outlined above.
Credit Support Guarantee............. If at any time before December 31, 2001 neither we nor the
subsidiary guarantors can make payments on the bonds or our
other senior secured debt, Edison Mission Energy must make
up to $42 million of these payments under the credit support
guarantee. The credit support guarantee is available as
additional cash flow to supplement any shortfalls in cash
from operations which may be used to pay our debt service
obligations on the bonds and our other senior secured debt.
Edison Mission Energy will be required to make payments on
the bonds and on our other senior secured debt in proportion
to their respective obligations, before money in the debt
service reserve account for the bonds or the acceptable
credit support contained in such account is used. This
credit support guarantee terminates on December 31, 2001,
after which time Edison Mission Energy will have no further
obligations under this guarantee.
Ranking of the Bonds................. The bonds:
- are senior secured obligations;
- are equivalent in right of payment to all of our existing
and future senior secured indebtedness; and
- rank senior to all of our existing and future subordinated
indebtedness.
As of September 30, 1999, we had $55 million of senior
secured indebtedness outstanding.
Collateral........................... The bonds and our other senior secured debt are secured by:
- a mortgage on our real property;
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- a security interest in our insurance policies and all of
the money paid to us on those policies;
- a security interest in all of our governmental approvals,
if we are able to assign those approvals;
- a security interest in the reserve account and other
accounts and all money in those accounts; and
- a security interest in all of our other assets, including
our ownership interests in our subsidiaries.
Non-Recourse Obligations............. Only we and the subsidiary guarantors are fully obligated to
make payments on the bonds. Neither Edison Mission Energy
nor any of its other affiliates will guarantee payment of
the bonds or will have any obligation to make payments on
the bonds, other than Edison Mission Energy's obligations
under its credit support guarantee or the guarantee provided
by Edison Mission Energy that we use to satisfy the debt
service reserve requirement for the bonds.
Operating Flow of Funds.............. We will deposit all of our revenues into the revenue account
established for your benefit and for the benefit of the
holders of our other senior secured debt. These revenues
will be used to pay operating expenses, administrative fees
and expenses and debt service and to fund the debt service
reserve accounts for the bonds and our other senior secured
debt. Any money remaining after we make these payments will
be transferred into an equity account in order to make
distributions to us if we satisfy the distribution
conditions described below under "--Distributions."
Distributions........................ We can make distributions only with funds in the equity
account if the following conditions are satisfied on the
quarterly distribution date:
- no default or event of default under the indenture exists
or would result from the distribution;
- we have paid all amounts due on our senior debt and all
reimbursement obligations due in respect of our letters of
credit, if any, and have fully funded or provided
acceptable debt service credit support for our debt
service reserve accounts;
- we certify that the debt service coverage ratio for the
previous four quarters is at least 1.50 to 1.0 for any
period ending on or before December 31, 2001 or 1.70 to
1.0 for any period ending after December 31, 2001; and
- we certify that the projected debt service coverage ratio
for each four-quarter period during the next eight
quarters is at least 1.50 to 1.0 for any period ending on
or before December 31, 2001 or 1.70 to 1.0 for any period
ending after December 31, 2001.
Covenants............................ The terms of the bonds require us to, among other things:
- provide financial statements, default notices and other
notices to the trustee and the rating agencies;
- comply with applicable laws;
- obtain all necessary governmental approvals; and
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- pay taxes and maintain books and records.
The terms of the bonds restrict our ability to, among other
things:
- incur additional debt;
- incur liens on our property;
- sell assets;
- enter into transactions with affiliates; and
- create new subsidiaries.
These limitations are subject to a number of important
qualifications and exceptions which are described in
"Description of Principal Financing Documents--Indenture."
Change of Control.................... It is an event of default under the bonds if Edison Mission
Energy's direct or indirect beneficial ownership in us is
reduced to less than 50% at any time, unless either:
- the bonds are rated at least investment grade by each
rating agency rating the bonds at that time and we receive
a confirmation of the ratings of the bonds; or
- the reduction in Edison Mission Energy's voting interest
is approved by bondholders holding at least 66 2/3% in
aggregate principal amount of the respective outstanding
bonds.
Governing Law........................ The bonds and the other financing documents, other than the
mortgage of our real property, are governed by the laws of
the State of New York. The mortgage of our real property is
governed by the laws of the Commonwealth of Pennsylvania.
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THE COMPANY
EDISON MISSION HOLDINGS CO.
We are a California corporation formed on October 7, 1998 for the purpose of
acquiring, owning and operating, through our subsidiaries, the Homer City
facilities, which are comprised of three coal-fired electric generating units
with an aggregate capacity of 1,884 megawatts, and related facilities. The Homer
City facilities are located near Pittsburgh, Pennsylvania. Edison Mission Energy
is our parent company.
On March 18, 1999, our subsidiary, EME Homer City Generation L.P., completed
its acquisition of 100% of the ownership interests in the Homer City facilities
from wholly-owned subsidiaries of GPU Inc. and Energy East Corporation for
approximately $1.8 billion. We formed five subsidiaries, including EME Homer
City, in order to effect the acquisition, ownership, financing and operation of
the Homer City facilities. Each of these subsidiaries is providing a guarantee
with respect to the bonds and our other senior secured debt as well as a pledge
of substantially all of its assets and cash flow as collateral for the bonds and
our other senior secured debt. The only income available to us to pay principal
of, premium, if any, and interest on the bonds will be repayments of
subordinated loans and equity distributions from our subsidiaries.
The nameplate capacities of the three generating units are Unit 1, with 620
megawatts of capacity, Unit 2, with 614 megawatts of capacity and Unit 3, with
650 megawatts of capacity. We believe the Homer City units are among the lowest
cost fossil-fired generating units in the Northeastern United States. They
benefit from direct transmission access into both the Pennsylvania--New
Jersey--Maryland power market, which is commonly known as the PJM, and the New
York independent system operator, which controls the transmission grid and
energy and capacity markets for the State of New York and is commonly known as
the NYISO. In 1998, the Homer City units had fuel expenses and operating and
7
<PAGE>
maintenance costs of approximately $17 per megawatt-hour and are among the first
fossil-fired units called upon for the dispatch of electric power within both
the PJM and the NYISO.
EDISON MISSION ENERGY
Edison Mission Energy is a leading global power producer as measured by
megawatts. Through its subsidiaries, Edison Mission Energy engages in the
business of developing, acquiring, owning and operating electric power
generation facilities worldwide. Edison International owns Edison Mission Energy
and also owns Southern California Edison Company, one of the largest electric
utilities in the United States. At September 30, 1999, Edison Mission Energy had
consolidated assets of approximately $11 billion and total shareholder's equity
of approximately $2 billion. The bonds are not obligations of Edison Mission
Energy. Only we and our subsidiary guarantors are obligated to make payments on
the bonds. Neither Edison Mission Energy nor any other affiliate of Edison
Mission Energy will guarantee payment of the bonds or will have any obligation
to make payments on the bonds, other than Edison Mission Energy's obligations
under its credit support guarantee or the guarantee provided by Edison Mission
Energy that we use to satisfy the debt service reserve requirement for the
bonds.
EDISON MISSION ENERGY'S STRATEGIC OVERVIEW
Over the past three years, Edison Mission Energy has shifted its primary
focus to the acquisition and operation of competitive generation, both
domestically and internationally. Edison Mission Energy identifies high-quality
generating assets that are strategic to deregulated power markets. Edison
Mission Energy has participated in several auctions in the PJM and NYISO power
markets because of the stable and developed nature of the regions served by
those markets. Edison Mission Energy believes that low-cost, base load assets in
those markets are attractive because they operate all of the time and because
they are difficult to displace in the order in which plants are called upon to
dispatch electric power. The acquisition of the Homer City units represents
Edison Mission Energy's entry into the PJM and NYISO competitive markets.
The Homer City units satisfy Edison Mission Energy's competitive generation
strategy as they:
- are among the first fossil-fired plants to be dispatched in PJM and NYISO;
- have the ability to access two competitive power markets, PJM and NYISO;
- are located near large quantities of low-cost coal reserves;
- are efficiently staffed and have an experienced workforce;
- have a high average equivalent availability and efficient plant heat rate;
and
- provide the opportunity to implement a proactive environmental upgrade
program.
OUR POWER SALES STRATEGY
Our power sales strategy consists of:
- the sale of output from the Homer City units into the PJM and NYISO
competitive markets for capacity and energy as well as possible bilateral
contracts for the sale of capacity and energy to power marketers and load
serving entities within PJM, NYISO and surrounding markets;
- managing our electricity price exposure through a contract with a
marketing affiliate for the sale of energy and capacity produced by the
Homer City units, which enables this marketing affiliate to engage in
forward sales and hedging transactions; and
- transition contracts with Pennsylvania Electric Company and New York State
Electric & Gas Corporation, under which we may exercise a put option to
sell quantities of our capacity to these companies and they may exercise
call options to purchase quantities of our capacity.
8
<PAGE>
OFFERING OF ORIGINAL BONDS
On May 27, 1999, we issued and sold the original bonds. We used the net
proceeds of that offering, which were $830 million, (1) to repay the principal
of the $800 million term loan outstanding under the credit facility for the
acquisition of the Homer City facilities and (2) to repay $30 million of Edison
Mission Energy's equity investment in us in the form of a distribution.
OUR CORPORATE STRUCTURE
Following is a chart illustrating our ownership structure.
[LOGO]
9
<PAGE>
SOURCES AND USES OF FUNDS
FINANCING PLAN
We entered into a Credit Agreement, dated as of March 18, 1999, with 25
banks and other financial institutions. The Credit Agreement provided for (1) a
364-day term loan facility in an amount up to $800 million, (2) a five-year term
loan facility in an amount up to $250 million and (3) a five-year revolving
credit facility in an amount up to $50 million. On March 18, 1999, we borrowed
$800 million of term loans under the Credit Agreement and used the proceeds of
such loans, together with equity contributions from Edison Mission Energy in the
amount of $1.06 billion, to fund the purchase price for the Homer City
facilities.
We used the net proceeds of the sale of the original bonds in the amount of
$830 million to repay the outstanding principal of, and to permanently reduce
the bank commitments associated with, the $800 million term loan, and to repay
$30 million of Edison Mission Energy's equity investment in us in the form of a
distribution. We will use amounts available under the $250 million five-year
term loan facility to fund environmental capital improvements to the Homer City
units. We will use amounts available under the $50 million five-year revolving
credit facility for general working capital purposes. All outstanding amounts
under the $50 million five-year revolving credit facility will be repaid each
year on the anniversary of the issuance of the original bonds. Under specified
conditions, we have access to additional liquidity in a debt service reserve
account, which is currently funded with a guarantee provided by Edison Mission
Energy, and under a credit support guarantee provided by Edison Mission Energy.
TABLE OF SOURCES AND USES OF FUNDS
The following table states the approximate sources and uses of funds in
connection with the acquisition of the Homer City facilities.
<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
SOURCES OF FUNDS:
Equity.................................................... $1,030,000
----------
Debt:
Acquisition Facility.................................... --
Bonds................................................... 830,000
----------
Total Debt(1)............................................. 830,000
----------
TOTAL SOURCES OF FUNDS...................................... $1,860,000
USES OF FUNDS:
Acquisition Costs......................................... $1,801,000
Transaction Expenses, Inventories, Other.................. 59,000
----------
TOTAL USES OF FUNDS......................................... $1,860,000
</TABLE>
- ------------------------
(1) Does not include amounts available for drawing under the $250 million
five-year term loan facility or the $50 million five-year revolving credit
facility.
10
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table includes a summary of our consolidated financial data
for the nine months ended September 30, 1999. Edison Mission Holdings was
incorporated on October 7, 1998 and had no significant activity during 1998. On
March 18, 1999, an indirect subsidiary of Edison Mission Holdings, EME Homer
City, acquired the Homer City facilities for a purchase price of approximately
$1.8 billion. Accordingly, the summary consolidated financial data pertain
primarily to the activities from March 18, 1999 through September 30, 1999. The
summary consolidated financial data were derived from the audited financial
statements of Edison Mission Holdings. The summary consolidated financial data
are qualified in their entirety by the more detailed information and financial
statements, including notes to these financial statements, included or
incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
1999
--------------
(IN
THOUSANDS)
<S> <C>
INCOME STATEMENT DATA:
Operating revenues.......................................... $ 245,788
Operating expenses.......................................... 150,999
----------
Income from operations...................................... 94,789
Interest expense............................................ (35,506)
Interest and other income................................... 834
----------
Income before income taxes.................................. 60,117
Provision for income taxes.................................. 24,939
----------
Income before extraordinary loss............................ 35,178
Extraordinary loss on early extinguishment of debt, net of
income tax benefits....................................... (2,667)
----------
Net income.................................................. $ 32,511
==========
<CAPTION>
SEPTEMBER 30,
1999
--------------
BALANCE SHEET DATA:
<S> <C>
Assets...................................................... $2,055,461
Current liabilities......................................... 69,259
Long-term obligations....................................... 916,773
Shareholder's equity........................................ 1,069,429
</TABLE>
11
<PAGE>
RISK FACTORS
IN ADDITION TO THE INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS, THE
FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED BY EACH PROSPECTIVE
INVESTOR IN EVALUATING THE EXCHANGE OFFER AND AN INVESTMENT IN THE BONDS. THE
FOLLOWING RISK FACTORS, OTHER THAN "YOU MAY HAVE DIFFICULTY SELLING THE BONDS
THAT YOU DO NOT EXCHANGE," GENERALLY APPLY TO THE ORIGINAL BONDS AS WELL AS THE
EXCHANGE BONDS.
YOU MAY HAVE DIFFICULTY SELLING THE BONDS THAT YOU DO NOT EXCHANGE.
If you do not exchange your original bonds for exchange bonds in the
exchange offer, you will continue to be subject to the restrictions on transfer
of your original bonds described in the legend on your original bonds. The
restrictions on transfer of your original bonds arise because we issued the
original bonds under exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, you may only offer or sell the original bonds if they are
registered under the Securities Act and applicable state securities laws, or
offered and sold under an exemption from these requirements. We do not intend to
register the original bonds under the Securities Act. To the extent original
bonds are tendered and accepted in the exchange offer, the trading market, if
any, for the original bonds would be adversely affected. See "The Exchange
Offer-- Consequences of Exchanging or Failing to Exchange Original Bonds."
OUR ABILITY TO MAKE PAYMENTS ON THE BONDS IS DEPENDENT ON THE MARKET CONDITIONS
FOR THE SALE OF CAPACITY AND ENERGY, THE GUARANTEES GIVEN BY OUR SUBSIDIARIES
AND THE LIMITED GUARANTEES PROVIDED BY EDISON MISSION ENERGY.
We are a special purpose finance company and our only significant assets are
our equity interests in our subsidiaries. Our ability to make payments on the
bonds is dependent on our subsidiaries' ability to repay subordinated
intercompany loans and make equity distributions. Our subsidiaries' ability to
repay the intercompany loans and make equity distributions is dependent on
revenues generated by the Homer City facilities, which is dependent on their
performance level and on market conditions for the sale of capacity and energy.
These market conditions are beyond our control.
None of our shareholders, officers, directors, employees or affiliates,
including Edison Mission Energy but not including our subsidiary guarantors,
will be required to make payments on the bonds. The bonds are fully and
unconditionally guaranteed by our subsidiaries. Edison Mission Energy's
obligations to make payments on the bonds are limited to its obligations under
the credit support guarantee, amounts of which are available until December 31,
2001, and any guarantee it provides that we use to satisfy our debt service
reserve requirements.
GENERAL OPERATING RISKS MAY DECREASE OR ELIMINATE THE REVENUES GENERATED BY THE
HOMER CITY FACILITIES OR INCREASE THEIR OPERATING COSTS.
The operation of power generation facilities involves many operating risks,
including:
- performance below expected levels of output or efficiency;
- interruptions in fuel supply;
- disruptions in the transmission of electricity;
- breakdown or failure of equipment or processes;
- violation of permit requirements; and
- operator error or catastrophic events like fires, earthquakes, explosions,
floods or other similar occurrences affecting power generation facilities.
Although we employ experienced operating personnel to operate the Homer City
facilities and will maintain insurance, including business interruption
insurance, to mitigate the effects of the operating
12
<PAGE>
risks described above, we cannot assure you that the occurrence of one or more
of the events listed above would not significantly decrease or eliminate
revenues generated by the Homer City facilities or significantly increase the
costs of operating them. A decrease or elimination in revenues generated by the
Homer City facilities or an increase in the costs of operating them could
decrease or eliminate funds available to us to make payments on the bonds.
THE REVENUES GENERATED BY THE OPERATION OF THE HOMER CITY FACILITIES ARE SUBJECT
TO MARKET DEMAND FOR ENERGY, CAPACITY AND ANCILLARY SERVICES, WHICH IS BEYOND
OUR CONTROL.
We may sell all or a portion of the Homer City units' output into the PJM,
NYISO or other competitive power markets or on a bilateral basis and may also
sell this output to our marketing affiliate, which will in turn sell this output
into the PJM, NYISO or other markets. Participants in PJM and NYISO are not
guaranteed any specified rate of return on their capital investments through
recovery of mandated rates payable by purchasers of electricity. Therefore, with
the exception of revenue generated by the transition contracts with Pennsylvania
Electric Company and New York State Electric & Gas Corporation, which expire in
2001, and from bilateral contracts for the sale of electricity with third-party
load serving entities and power marketers, our revenues and results of
operations will be dependent upon prevailing market prices for energy, capacity
and ancillary services in the PJM, NYISO and other competitive markets.
Among the factors that will influence the market prices for energy, capacity
and ancillary services in PJM and NYISO are:
- prevailing market prices for fuel oil, coal and natural gas and associated
transportation costs;
- the extent of additional supplies of capacity, energy and ancillary
services from current competitors or new market entrants, including the
development of new generation facilities that may be able to produce
electricity less expensively;
- transmission congestion in PJM and/or NYISO;
- the extended operation of nuclear generating plants in PJM and NYISO
beyond their presently expected dates of decommissioning;
- weather conditions prevailing in PJM and NYISO from time to time; and
- the possibility of a reduction in the projected rate of growth in
electricity usage as a result of factors like regional economic conditions
and the implementation of conservation programs.
All of the factors listed above are beyond our control.
WE HAVE BEEN OPERATING THE HOMER CITY FACILITIES FOR ONLY A SHORT PERIOD OF
TIME.
Substantially all of our current business consists of owning and operating
the Homer City facilities. Although the Homer City units had a significant
operating history at the time we acquired them, we have a very limited history
of owning and operating them. In addition, the Homer City units were operated as
integrated parts of regulated utilities prior to our acquisition, and their
output of electricity was sold by New York State Electric & Gas Corporation and
Pennsylvania Electric Company at prices which were based upon rates set by
regulatory authorities. We cannot assure you that we will be successful in
operating the Homer City units in a competitive environment in which electricity
rates will be set by the operation of market forces. We also cannot assure you
that the Homer City units will perform as expected or that the revenues
generated by the Homer City units will support our indebtedness, the cost of
operating them and the capital expenditures needed to maintain them. Our
historical consolidated financial data are not helpful in predicting our future
income because we have not been operating the Homer City facilities for a
significant period of time.
13
<PAGE>
OUR BUSINESS IS SUBJECT TO SUBSTANTIAL REGULATIONS AND PERMITTING REQUIREMENTS,
AND OUR REVENUES MAY DECREASE OR OUR OPERATING COSTS MAY INCREASE BECAUSE OF OUR
INABILITY TO COMPLY WITH EXISTING REGULATIONS OR REQUIREMENTS OR CHANGES IN
APPLICABLE REGULATIONS OR REQUIREMENTS.
Our business is subject to extensive energy and environmental regulation by
federal, state and local authorities. We are required to comply with numerous
laws and regulations, and to obtain numerous governmental permits, in our
operation of the Homer City facilities. We cannot assure you that existing
regulations will not be revised or reinterpreted, that new laws and regulations
will not be adopted or become applicable to us or the Homer City facilities or
that future changes in laws and regulations will not have a detrimental effect
on our business.
One of our strategies for compliance with federal regulations regarding
emissions of sulfur dioxide and federal and state regulations regarding
emissions of nitrogen oxide is the construction of the environmental capital
improvements to the Homer City units. A delay in the completion of these
improvements or the failure of the improvements to perform to their technical
specifications could adversely affect our compliance strategy and require us to
purchase emissions allowances or reduce the expected levels of operation of the
Homer City units. Although our construction contract with ABB Flakt contains
customary performance and completion guarantees, we cannot assure you that the
improvements will be installed when anticipated or whether those systems will
perform at the expected levels.
We believe that we have obtained all material energy-related federal, state
and local approvals currently required to operate the Homer City facilities.
Although not currently required, additional regulatory approvals may be required
in the future due to a change in laws and regulations, a change in our customers
or for other reasons. We cannot assure you that we will be able to obtain all
required regulatory approvals that we do not yet have or that we may require in
the future, or that we will be able to obtain any necessary modifications to
existing regulatory approvals or maintain all required regulatory approvals. If
there is a delay in obtaining any required regulatory approvals or if we fail to
obtain and comply with any required regulatory approvals, the operation of the
Homer City facilities or the sale of electricity to third parties could be
prevented or subject to additional costs.
We are required to comply with numerous statutes, regulations and ordinances
relating to the safety and health of employees and the public, the protection of
the environment and land use. These statutes, regulations and ordinances are
constantly changing. We may incur significant additional costs because of our
compliance with these requirements. If we fail to comply with these
requirements, we could be subject to civil or criminal liability and the
imposition of clean-up liens or fines. In acquiring the Homer City facilities,
we assumed, subject to some limited exceptions, all on-site liabilities
associated with the environmental condition of the Homer City facilities,
regardless of when such liabilities arose and whether known or unknown, and
generally agreed to indemnify the former owners of the Homer City facilities for
these liabilities. We cannot assure you that we will at all times be in
compliance with all applicable environmental laws and regulations or that steps
to bring the Homer City facilities into compliance would not materially and
adversely affect our ability to make payments on the bonds.
THE INSURANCE COVERAGE FOR THE HOMER CITY FACILITIES MAY NOT BE ADEQUATE.
We are required to have insurance for the Homer City facilities, including
all-risk property damage insurance, commercial general public liability
insurance, boiler and machinery coverage and business interruption insurance. We
cannot assure you that the insurance coverage for the Homer City facilities will
be available in the future on commercially reasonable terms. We also cannot
assure you that the insurance proceeds received for any loss of the Homer City
facilities or any damage to the Homer City facilities will be sufficient to
permit us to make any payments on the bonds.
14
<PAGE>
RISKS ASSOCIATED WITH THE YEAR 2000 PROBLEM COULD ADVERSELY EFFECT OUR BUSINESS.
We have implemented successfully systems to address year 2000 issues. We
cannot assure you, however, that our year 2000 compliance will not require
additional expenditures in the future. As of the date of this prospectus, we are
not aware of any Year 2000 problem of our systems and services. In addition, we
have not received any notification from any supplier or systems of any Year
2000-related disruption in their business. However, the success to date of our
Year 2000 efforts and the efforts of our third party suppliers cannot guarantee
that there will not be a material adverse effect on our business should a Year
2000 problem manifest or become apparent in the future.
YOU MAY FIND IT DIFFICULT TO SELL YOUR BONDS BECAUSE THERE IS NO EXISTING
TRADING MARKET FOR THE EXCHANGE BONDS.
You may find it difficult to sell your bonds because an active trading
market for the bonds may not develop. The exchange bonds are being offered to
the holders of the original bonds. The original bonds were issued on May 27,
1999, primarily to a small number of institutional investors and overseas
investors. After the exchange offer, the trading market for the remaining
untendered original bonds could be adversely affected.
There is no existing trading market for the exchange bonds. We do not intend
to apply for listing or quotation of the exchange bonds on any exchange.
Therefore, we do not know the extent to which investor interest will lead to the
development of a trading market or how liquid that market might be. Although the
initial purchasers of the original bonds have informed us that they currently
intend to make a market in the exchange bonds, they are not obligated to do so,
and any market-making may be discontinued at any time without notice. As a
result, the market price of the exchange bonds could be adversely affected.
BROKER-DEALERS MAY BECOME SUBJECT TO THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT.
Any broker-dealer that:
- exchanges its original bonds in the exchange offer for the purpose of
participating in a distribution of the exchange bonds, or
- resells exchange bonds that were received by it for its own account in the
exchange offer,
may be deemed to have received restricted securities and may be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction by that broker-dealer.
Any profit on the resale of the exchange bonds and any commission or concessions
received by a broker-dealer may be deemed to be underwriting compensation under
the Securities Act.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
SUBSIDIARY GUARANTEES AND REQUIRE BONDHOLDERS TO RETURN PAYMENTS RECEIVED FROM
SUBSIDIARY GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, our subsidiaries' guarantees of the bonds could be
voided, or claims under these guarantees could be subordinated to all other
debts of a subsidiary guarantor, if, among other things, this guarantor, at the
time it incurred the indebtedness evidenced by its guarantee:
- received less than fair consideration or reasonably equivalent value for
the guarantee;
- was insolvent or rendered insolvent by reason of this issuance;
- was engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
15
<PAGE>
- intended to incur, or believed that it would incur, debts beyond its
ability to pay the debts as they mature.
In addition, any payment by a subsidiary guarantor under its guarantee could
be voided and required to be returned to this subsidiary guarantor, or to a fund
for the benefit of the creditors of the guarantor. Our subsidiaries' liabilities
under their guarantees are contractually limited to the maximum amount they
could pay without the guarantees being deemed to be fraudulent transfers. We
cannot assure you, however, that this limitation would be effective and, if it
was effective, if the limited amount would be sufficient to pay the bonds in
full.
IT MAY BE DIFFICULT TO REALIZE THE VALUE OF THE COLLATERAL PLEDGED TO SECURE THE
BONDS AND THE PROCEEDS RECEIVED FROM A SALE OF THE COLLATERAL MAY BE
INSUFFICIENT TO REPAY THE BONDS.
Our obligation to make payments on the bonds is secured only by the
collateral described in this prospectus. The Collateral Agent's ability to
foreclose on the collateral on your behalf may be subject to perfection and
priority issues and to practical problems associated with the realization of the
Collateral Agent's security interest in the collateral. For example, the
Collateral Agent may need to obtain the consent of a third party prior to
transferring an asset upon foreclosure. We cannot assure you that the Collateral
Agent will be able to obtain this consent. Further, we cannot assure you that
foreclosure on the collateral would provide sufficient funds to repay all
amounts due on the bonds. In addition, senior debt outstanding under the
existing bank credit facilities and other types of debt that we are permitted to
incur will rank equally with the bonds and share ratably in the collateral which
secures the bonds. This would reduce the benefits of the collateral to you and
your ability to control actions taken with respect to the collateral.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In consideration
for issuing the exchange bonds, we will receive in exchange original bonds of
like principal amount, the terms of which are identical in all material respects
to the exchange bonds. The original bonds surrendered in exchange for exchange
bonds will be retired and canceled and cannot be reissued. Accordingly, issuance
of the exchange bonds will not result in any increase in our indebtedness. We
have agreed to bear the expenses of the exchange offer. No underwriter is being
used in connection with the exchange offer.
On May 27, 1999, we issued and sold the original bonds. We used the net
proceeds of that offering in the amount of $830 million
(1) to repay the $800 million term loan outstanding under the credit facility
for the acquisition of the Homer City facilities and
(2) to repay $30 million of Edison Mission Energy's equity investment in us in
the form of a distribution.
CAPITALIZATION
The following table includes the consolidated capitalization of Edison
Mission Holdings as of September 30, 1999, and reflects the issuance of the
original bonds and the application of the approximate proceeds from the issuance
of these original bonds as described in "Use of Proceeds."
CAPITALIZATION AS OF SEPTEMBER 30, 1999
(UNAUDITED, IN THOUSANDS)
<TABLE>
<S> <C>
Long-Term Indebtedness:
Bonds Payable............................................. $ 885,000
----------
Total Long-Term Indebtedness............................ $ 885,000
Shareholder's Equity........................................ $1,069,429
----------
Total Capitalization.................................... $1,954,429
==========
</TABLE>
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table includes a summary of our consolidated financial data
for the nine months ended September 30, 1999. Edison Mission Holdings was
incorporated on October 7, 1998 and had no significant activity during 1998. On
March 18, 1999, an indirect subsidiary of Edison Mission Holdings, EME Homer
City, acquired the Homer City facilities for a purchase price of approximately
$1.8 billion. Accordingly, the summary consolidated financial data pertain
primarily to the activities from March 18, 1999 through September 30, 1999. The
summary consolidated financial data were derived from the audited financial
statements of Edison Mission Holdings. The summary consolidated financial data
are qualified in their entirety by the more detailed information and financial
statements, including notes to these financial statements, included or
incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
1999
--------------
(IN
THOUSANDS)
<S> <C>
INCOME STATEMENT DATA:
Operating revenues.......................................... $ 245,788
Operating expenses.......................................... 150,999
----------
Income from operations...................................... 94,789
Interest expense............................................ (35,506)
Interest and other income................................... 834
----------
Income before income taxes.................................. 60,117
Provision for income taxes.................................. 24,939
----------
Income before extraordinary loss............................ 35,178
Extraordinary loss on early extinguishment of debt, net of
income tax benefit........................................ (2,667)
----------
Net income.................................................. $ 32,511
==========
<CAPTION>
SEPTEMBER 30,
1999
--------------
BALANCE SHEET DATA:
<S> <C>
Assets...................................................... $2,055,461
Current liabilities......................................... 69,259
Long-term obligations....................................... 916,773
Shareholder's equity........................................ 1,069,429
OTHER DATA:
Ratio of earnings to fixed charges(1)....................... 2.65
</TABLE>
- ------------------------
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
are divided by fixed charges. "Earnings" represent the aggregate of income
before taxes and extraordinary income and fixed charges, net of capitalized
interest. "Fixed charges" represent interest expense, prior to capitalized
interest.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REGARDING
EDISON MISSION HOLDINGS. THESE STATEMENTS ARE BASED ON THE CURRENT PLANS AND
EXPECTATIONS OF EDISON MISSION HOLDINGS AND INVOLVE RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL FUTURE ACTIVITIES AND RESULTS OF OPERATIONS TO BE MATERIALLY
DIFFERENT FROM THOSE PRESENTED IN THE FORWARD-LOOKING STATEMENTS. IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER INCLUDE RISKS LISTED IN "RISK
FACTORS."
GENERAL
Edison Mission Holdings is a special-purpose California corporation formed
on October 7, 1998 for the purpose of facilitating the financing of the
acquisition and, through its wholly-owned subsidiaries, acquiring, making
improvements to and operating its three coal-fired electric generating units and
related facilities. EME Homer City, an indirect subsidiary of Edison Mission
Holdings, acquired the Homer City facilities on March 18, 1999 for a purchase
price of approximately $1.8 billion, with adjustments for changes in the book
value of inventories and prorations related to specified items including but not
limited to taxes, rents and fees under transferred permits.
EME Homer City derives revenue from the sale of energy and capacity into PJM
and NYISO and from bilateral contracts with power marketers and load serving
entities within PJM, NYISO and the surrounding markets. EME Homer City has
entered into a contract with a marketing affiliate for the sale of energy and
capacity produced by the Homer City facilities, which enables this marketing
affiliate to engage in forward sales and hedging. EME Homer City will pay the
marketing affiliate a nominal fee currently set at $0.02/MWh, approximately
$0.1 million for the period.
EME Homer City believes there may also be opportunities to derive revenue
from the sale of installed capacity and ancillary services. Under the terms of
the Pennsylvania Electric Company and New York State Electric & Gas Transition
Contracts, EME Homer City has elected to exercise several options to sell
capacity. These contracts expire mid-year 2001. EME Homer City also has the
option to sell non-contracted capacity in PJM and NYISO. It is believed the
Homer City units should be capable of producing revenues from the sale of
voltage support based on previous utilization of the Homer City units.
RESULTS OF OPERATIONS
Results of operations from March 18, 1999 through September 30, 1999:
OPERATING REVENUES
Revenues for the period from March 18, 1999 through September 30, 1999 were
$245.8 million. Revenues primarily consist of energy revenue of $222.3 million,
capacity revenue of $22.0 million and sale of emission credits of $1.5 million.
These sales were made through a contract with a marketing affiliate, which
enables the affiliate to engage in forward sales and hedging transactions. Due
to warmer weather during the summer months, electric revenues generated from EME
Homer City are substantially higher during the third quarter. The Homer City
facilities generated 6,624 GWhr of electricity since they were acquired and had
an availability factor of 85.4%. The weighted average price for energy during
this period was $33.30/MWh.
OPERATING EXPENSES
Operating expenses consisted of expenses for fuel, plant operations,
depreciation and amortization and administrative and general expenses. Fuel
expense of $84.4 million included $84.0 million of coal for the period at an
average price of $31.04 per ton. The Homer City units benefit from access by
truck to significant native coal reserves located within the western
Pennsylvania portion of the North
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Appalachian region. Up to 95% of the coal used by Units 1 and 2 is supplied
under existing contracts with regional mines which are located within 50 miles
of the facility, while the remainder is purchased on the spot market. The coal
for these units is cleaned by the coal cleaning facility to reduce sulfur
content. Unit 3 utilizes lower sulfur coal which is blended at an on-site coal
blending facility.
Plant operations expense was $40.8 million, which included labor and
overhead of $11.2 million, outside services of $18.8 million, parts and supplies
of $5.6 million, and other administrative costs of $5.2 million.
Depreciation and amortization expenses were $25.3 million. Depreciation
expense primarily relates to the acquisition of the Homer City facilities, which
is being depreciated over thirty-nine years.
Administrative and general expenses of $0.5 million were due to an
allocation of Edison Mission Energy corporate overhead costs.
OTHER INCOME (EXPENSE)
Interest expense was $35.5 million, which included interest on the
$800 million term loan of $9.6 million, retired with proceeds from the bonds,
interest on the $830 million bonds of $24.4 million, amortization of deferred
financing costs of $1.2 million, and Credit Agreement facility fees of
approximately $0.3 million. The average interest rate on outstanding
indebtedness was 8.39% at September 30, 1999.
Interest and other income of $0.8 million was earned on cash and cash
equivalents.
PROVISION FOR INCOME TAXES
We had an effective tax rate before extraordinary item of 41.5%. The
effective tax rate was higher than the federal statutory rate of 35% due to
state income taxes.
EXTRAORDINARY LOSS
The early repayment of the $800 million term loan in May 1999 resulted in an
extraordinary loss of $2.7 million, net of income tax benefit of $2.3 million,
attributable to the write-off of unamortized debt issue costs.
LIQUIDITY AND CAPITAL EXPENDITURES
Net cash flow provided by Operating Activities from March 18, 1999 through
September 30, 1999 was $113.8 million. Net working capital was $132.3 million
which included $102.2 million of cash that was restricted by the trust agreement
associated with our senior secured bonds.
In March 1999, EME Homer City completed the acquisition of the 1,884 MW
Homer City Electric Generating Station and related facilities from GPU, Inc.,
New York State Electric & Gas Corporation and their respective affiliates.
Consideration for the purchase was a cash payment of approximately
$1.8 billion.
In order to finance the acquisition, we entered into a Credit Agreement,
dated as of March 18, 1999 with 25 banks and other financial institutions. The
Credit Agreement provided for:
- a 364-day term loan facility in an amount up to $800 million,
- a five-year term loan facility in an amount up to $250 million and
- a five-year revolving credit facility in an amount up to $50 million.
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On March 18, 1999, Edison Mission Holdings borrowed $800 million of term
loans and used the proceeds of these loans, together with equity contributions
from Edison Mission Energy of approximately $1 billion, to fund the purchase
price for the Homer City facilities.
On May 27, 1999, we completed a private offering of $300 million aggregate
principal amount of the Series A bonds and $530 million aggregate principal
amount of the Series B bonds. The net proceeds of the sale of the bonds were
used to repay the outstanding principal of, and to permanently reduce the bank
commitments associated with the term loans, and to repay a portion of Edison
Mission Energy's equity investment in us in the form of a distribution. We
intend to use amounts available under the $250 million five-year term loan
facility to fund the environmental capital improvements to the Homer City units;
we had drawn $55 million under the facility at September 30, 1999. We may use
amounts available under the $50 million five-year revolving credit facility for
general working capital purposes. All outstanding amounts under the $50 million
five-year revolving credit facility will be repaid each year on the anniversary
of the issuance of the bonds. As of September 30, 1999, there were no
outstanding amounts under the $50 million five-year revolving credit facility.
Under specified conditions, we may have access to additional liquidity in a debt
service reserve account and under a credit support guarantee provided by Edison
Mission Energy.
We intend to invest approximately $258 million for the environmental capital
improvements to the Homer City units, including a selective catalytic reduction
system on all three units and a flue gas desulfurization system on Unit 3, under
a fixed price, turnkey engineering, procurement and construction contract. The
selective catalytic reduction system on Unit 2 is expected to be installed by
September 2000, the selective catalytic reduction systems on Units 1 and 3 are
expected to be installed by May 2001. The flue gas desulfurization system is
expected to be installed by September 2001. Capital expenditures for the
nine-month period ended September 30, 1999 were $74 million, primarily related
to the flue gas desulfurization system. The environmental improvements will
enhance the economics of the Homer City units by reducing fuel costs, nitrogen
oxide allowance purchases and sulfur dioxide allowance purchases. Capital
expenditures for environmental capital improvements to the Homer City facility
were approximately $24 million for the fourth quarter of 1999, and we expect
them to be $116 million for 2000 and $44 million for 2001. These capital
expenditures will be financed through our $250 million five-year term loan
facility. We also have access to the $50 million revolving credit facility that
is available for five years from the date of acquisition.
OTHER COMMITMENTS AND CONTINGENCIES
Our parent, Edison Mission Energy, has entered into the Credit Support
Guarantee, under which specified conditions, it must make up to $42 million in
payments. The Credit Support Guarantee is available until December 31, 2001 as
additional cash flow to supplement any shortfalls in cash from operations which
may be used to pay our debt service obligaitons on the bonds and our other
senior secured debt. Edison Mission Energy has also provided a guarantee to
satisfy our debt service reserve requirement with respect to the bonds. Similar
guarantees have been extended by Edison Mission Energy with respect to the
obligations in the Credit Agreement.
We have entered into several fuel purchase agreements with various third
party suppliers for the purchase of bituminous steam coal. These contracts call
for the purchase of a minimum quantity of coal over the term of the contracts,
which extend from three months to 8.5 years from September 30, 1999, with an
option at our discretion to purchase additional amounts of coal as stated in the
agreements. The minimum quantity of coal to be purchased through these contracts
is 19.9 million tons over the terms of the respective contracts. Pricing is
based on fixed prices per ton with various methods of escalation as defined in
the agreements. The escalation is generally based on market conditions.
Prior to March 18, 1999, we had engaged in no operations since our formation
in October 1998. There are no separate financial statements available with
regard to the Homer City facilities because
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their operations were fully integrated with, and their results of operations
were consolidated into, the former owners of the Homer City facilities. In
addition, the electric output of the Homer City units was sold based on rates
set by regulatory authorities. As a result of the above factors and because
electricity rates will now be set by the operation of market forces, the
historical financial data with respect to the Homer City facilities are not
meaningful or indicative of our future results. Our results of operations in the
future will depend primarily on revenues from the sale of energy, capacity and
other related products, and the level of our operating expenses.
CHANGES IN INTEREST RATES, CHANGES IN ELECTRICITY MARKET PRICING AND OTHER
OPERATING RISKS
Changes in interest rates and changes in electricity pool pricing can have a
significant impact on our results of operations. Interest rate changes affect
the cost of capital needed to operate the Homer City facilities. We have
mitigated the risk of interest rate fluctuations by arranging for fixed rate
financing for the majority of our project financings. We do not believe that
interest rate fluctuations will have a materially adverse effect on our
financial position or results of operations.
With the exception of revenue generated by the Pennsylvania Electric Company
and New York State Electric & Gas Transition Contracts, which expire in 2001,
and from bilateral contracts for the sale of electricity with third-party load
serving entities and power marketers, our revenues and results of operations are
dependent upon prevailing market prices for energy, capacity, ancillary services
in the PJM, NYISO and other competitive markets. Among the factors that will
influence the market prices for energy, capacity and ancillary services in PJM
and NYISO are:
- prevailing market prices for fuel oil, coal and natural gas and associated
transportation costs;
- the extent of additional supplies of capacity, energy and ancillary
services from current competitors or new market entrants, including the
development of new generation facilities that may be able to produce
electricity at a lower cost;
- transmission congestion in PJM and/or NYISO;
- the extended operation of nuclear generating plants in PJM and NYISO
beyond their presently expected dates of decommissioning;
- weather conditions prevailing in PJM and NYISO from time to time; and
- the possibility of a reduction in the projected rate of growth in
electricity usage as a result of factors such as regional economic
conditions and the implementation of conservation programs.
EME Homer City derives revenues from sales of electric energy. Pricing
provisions are individually negotiated with customers by its marketing affiliate
and may include fixed prices or prices based on a daily or monthly market index.
EME Homer City may benefit from forward energy sales contracts entered into by
its marketing affiliate depending on market conditions. As of September 30,
1999, we had sold 82% of the anticipated energy output of Units 1 and 2 for the
remainder of 1999. These forward energy sales average $22.00/MWh, compared to
projections of $19.14/MWh for PJM and $22.30/MWh for NYISO. Also as of
September 30, 1999, we had entered into forward energy sales totaling 856 MW
during on-peak hours in calendar year 2000 at an average price of $40.90/MWh.
The marketing affiliate has sold 99% of the remaining installed capacity over
the transition contract amounts through May 2000 at a weighted average price of
$65.00/MW-day.
We provide credit support for an affiliate that enters into various electric
energy transactions, including futures and swap agreements. At September 30,
1999, we provided guarantees totaling $71 million as credit support for
financial and energy contracts entered into by affiliates. This guarantee
provides that we will perform the obligations of affiliates in the event of
non-performance by them. We could be exposed to the risk of higher electric
energy prices in the event of non-performance by a counterparty. However, we do
not anticipate non-performance by a counterparty and the
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marketing affiliate. Total amounts due at September 30, 1999 from third parties
from sales made by the marketing affiliate were $30.4 million.
ENVIRONMENTAL MATTERS OR REGULATIONS
We are subject to environmental regulation by federal, state and local
authorities in the United States. We believe that we are in substantial
compliance with environmental regulatory requirements and that maintaining
compliance with current requirements will not materially affect its financial
position or results of operations.
In connection with our purchase of the Homer City facilities on March 18,
1999, we acquired the Two Lick Creek Dam and Reservoir. Acid discharges from two
inactive deep mines were being collected and partially treated on the reservoir
property by a mining company before being pumped off the property for additional
treatment at a nearby treatment plant. The mining company, which filed for
bankruptcy, operated the collection and treatment system until May 1999, when
its assets were allegedly depleted.
The Pennsylvania Department of Environmental Protection initially advised us
that we were potentially responsible for treating the discharges by virtue of
our alleged ownership of the property of which the discharges allegedly
emanated. Without any admission of our liability, we voluntarily agreed through
a letter agreement to fund the operation of the treatment plant for an interim
period while the agency continued its investigation. The cost of operating the
treatment plant, which was initially approximately $11,000 per month, increased
to $13,000 per month in 2000. The agency has recently notified us that we are
responsible for treatment of one of the discharges. It has also advised the
owner of the mineral rights and three former operators of the mine that they are
liable and has requested them to cooperatively develop and implement a plan with
us to treat the discharge. We estimate the cost of a passive treatment system to
be approximately $750,000. The cost of operating a passive treatment system
would be considerably less than the cost of operating the current treatment
plant.
YEAR 2000 ISSUE
We, as part of Edison Mission Energy, have a comprehensive program in place
to remediate potential Year 2000 impact on critical systems. Edison Mission
Energy divided its Year 2000 Issue activities into five phases: inventory,
impact assessment, remediation, documentation and certification. A critical
system was defined as those applications and systems, including embedded
processor technology, which if not appropriately remediated might have had a
significant impact on customers, the revenue stream, regulatory compliance, or
the health and safety of personnel.
The other essential component of our Year 2000 readiness program was to
identify and assess vendor products and business partners for Year 2000
readiness. We put a process in place to identify and contact vendors and
business partners to determine their Year 2000 status, and have evaluated the
responses. Our general policy requires that all newly purchased products be Year
2000 ready or otherwise designed to allow us to determine whether such products
present Year 2000 issues.
Plant contingency plans have been developed and reviewed for any significant
issues and to schedule appropriate testing and/or training. These contingency
plans include developing strategies for dealing with Year 2000-related
processing failures or malfunctions due to our internal systems or from external
parties. Our contingency plans evaluate reasonably likely worst case scenarios
or conditions.
As of the date of this prospectus, we are not aware of any Year 2000 problem
of our systems and services. In addition, we have not received any notification
from any supplier or systems of any Year 2000-related disruption in their
business. However, the success to date of our Year 2000 efforts and the efforts
of our third party suppliers cannot guarantee that there will not be a material
adverse effect on our business should a Year 2000 problem manifest or become
apparent in the future.
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STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities", which, as amended, will be effective in January 2001.
The Statement establishes accounting and reporting standards requiring that
every derivative instrument be recorded in the balance sheet as either an asset
or liability measured at its fair value. The Statement requires that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. A derivative's gains and losses for
qualifying hedges offset related results on the hedged item in the income
statement and a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. The impact of
adopting Statement 133 on our financial statements has not been quantified at
this time.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
Upon the terms and conditions listed in this prospectus and in the
accompanying letter of transmittal, which together constitute the exchange
offer, we will accept for exchange original bonds which are properly tendered on
or before the expiration date and not withdrawn as permitted below. As used in
this prospectus, the term "expiration date" means 5:00 p.m., New York City time,
on , 2000. However, if we, in our sole discretion, have extended the
period of time for which the exchange offer is open, the term "expiration date"
means the latest time and date to which we extend the exchange offer. The
exchange offer, however, will not be in effect any longer than 45 business days
from the date of this prospectus.
As of the date of this prospectus, $300 million aggregate principal amount
of the original Series A bonds and $530 million aggregate principal amount of
the original Series B bonds are outstanding. This prospectus, together with the
letter of transmittal, is first being sent on or about , 2000, to all
holders of original bonds known to us. Our obligation to accept original bonds
for exchange in the exchange offer is subject to the conditions described under
"--Conditions to the Exchange Offer."
We reserve the right to extend the period of time during which the exchange
offer is open. We would then delay acceptance for exchange of any original bonds
by giving oral or written notice of an extension to the holders of original
bonds as described below. During any extension period, all original bonds
previously tendered will remain subject to the exchange offer and may be
accepted for exchange by us. Any original bonds not accepted for exchange will
be returned to the tendering holder after the expiration or termination of the
exchange offer.
Original bonds tendered in the exchange offer must be in denominations of
principal amount of $1,000 and any integral multiple of $1,000.
We reserve the right to amend or terminate the exchange offer, and not to
accept for exchange any original bonds not previously accepted for exchange,
upon the occurrence of any of the conditions of the exchange offer specified
below under "--Conditions to the Exchange Offer." We will give oral or written
notice of any extension, amendment, non-acceptance or termination to the holders
of the original bonds as promptly as practicable. If we materially change the
terms of the exchange offer, we will resolicit tenders of the original bonds,
file a post-effective amendment to the prospectus and provide notice to the
bondholders. If the change is made less than five business days before the
expiration of the exchange offer, we will extend the offer so that the
bondholders have at least five business days to tender or withdraw. We will
notify you of any extension by means of a press release or other public
announcement no later than 9:00 a.m., New York City time on that date.
Our acceptance of the tender of original bonds by a tendering holder will
form a binding agreement upon the terms and subject to the conditions provided
in this prospectus and in the accompanying letter of transmittal.
PROCEDURES FOR TENDERING
Except as described below, a tendering holder must, on or prior to the
expiration date:
- transmit a properly completed and duly executed letter of transmittal,
including all other documents required by such letter of transmittal, to
United States Trust Company of New York at the address listed below under
the heading "--Exchange Agent;" or
- if bonds are tendered in accordance with the book-entry procedures listed
below, the tendering holder must transmit an agent's message to the
exchange agent at the address listed below under the heading "--Exchange
Agent."
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In addition:
- the exchange agent must receive, on or before the expiration date,
certificates for the original bonds; or
- a timely confirmation of book-entry transfer of the original bonds into
the exchange agent's account at The Depository Trust Company, the
book-entry transfer facility, along with the letter of transmittal or an
agent's message; or
- the holder must comply with the guaranteed delivery procedures described
below.
The Depository Trust Company will be referred to as DTC in this prospectus.
The term "agent's message" means a message, transmitted to DTC and received
by the exchange agent and forming a part of a book-entry transfer, that states
that DTC has received an express acknowledgement that the tendering holder
agrees to be bound by the letter of transmittal and that we may enforce the
letter of transmittal against this holder.
The method of delivery of original bonds, letters of transmittal and all
other required documents is at your election and risk. If the delivery is by
mail, we recommend that you use registered mail, properly insured, with return
receipt requested. In all cases, you should allow sufficient time to assure
timely delivery. You should not send letters of transmittal or original bonds to
us.
If you are a beneficial owner whose original bonds are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee, and
wish to tender, you should promptly instruct the registered holder to tender on
your behalf. Any registered holder that is a participant in DTC's book-entry
transfer facility system may make book-entry delivery of the original bonds by
causing DTC to transfer the original bonds into the exchange agent's account.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed unless the original bonds surrendered for exchange are tendered:
- by a registered holder of the original bonds who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal, or
- for the account of an "eligible institution."
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantees must be by an "eligible institution."
An "eligible institution" is a financial institution--including most banks,
savings and loan associations and brokerage houses--that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program.
We will determine in our sole discretion all questions as to the validity,
form and eligibility of original bonds tendered for exchange. This discretion
extends to the determination of all questions concerning the timing of receipts
and acceptance of tenders. These determinations will be final and binding.
We reserve the right to reject any particular original bond not properly
tendered or any which acceptance might, in our judgment or our counsel's
judgment, be unlawful. We also reserve the right to waive any defects or
irregularities or conditions of the exchange offer as to any particular original
bond either before or after the expiration date, including the right to waive
the ineligibility of any tendering holder. Our interpretation of the terms and
conditions of the exchange offer as to any particular original bond either
before or after the expiration date, including the letter of transmittal and the
instructions to the letter of transmittal, shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of original bonds must be cured within a reasonable period of time. Neither we,
the exchange agent nor any other person will be under any duty to give
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notification of any defect or irregularity in any tender of original bonds. Nor
will we, the exchange agent or any other person incur any liability for failing
to give notification of any defect or irregularity.
If the letter of transmittal is signed by a person other than the registered
holder of original bonds, the letter of transmittal must be accompanied by a
written instrument of transfer or exchange in satisfactory form duly executed by
the registered holder with the signature guaranteed by an eligible institution.
The original bonds must be endorsed or accompanied by appropriate powers of
attorney. In either case, the original bonds must be signed exactly as the name
of any registered holder appears on the original bonds.
If the letter of transmittal or any original bonds or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, these persons should so indicate when signing. Unless waived by us,
proper evidence satisfactory to us of their authority to so act must be
submitted.
By tendering, each holder will represent to us that, among other things,
- the exchange bonds are being acquired in the ordinary course of business
of the person receiving the exchange bonds, whether or not that person is
the holder and
- neither the holder nor the other person has any arrangement or
understanding with any person to participate in the distribution of the
exchange bonds.
In the case of a holder that is not a broker-dealer, that holder, by
tendering, will also represent to us that the holder is not engaged in and does
not intend to engage in a distribution of the exchange bonds.
If any holder or other person is an "affiliate" of ours, as defined under
Rule 405 of the Securities Act, or is engaged in, or intends to engage in, or
has an arrangement or understanding with any person to participate in, a
distribution of the exchange bonds, that holder or other person can not rely on
the applicable interpretations of the staff of the SEC and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
Each broker-dealer that receives exchange bonds for its own account in
exchange for original bonds, where the original bonds were acquired by it as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus that meets the requirements of the Securities
Act in connection with any resale of the exchange bonds. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. See "Plan of Distribution."
ACCEPTANCE OF ORIGINAL BONDS FOR EXCHANGE; DELIVERY OF EXCHANGE BONDS
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all original bonds properly
tendered. We will issue the exchange bonds promptly after acceptance of the
original bonds. See "--Conditions to the Exchange Offer" below. For purposes of
the exchange offer, we will be deemed to have accepted properly tendered
original bonds for exchange when, as and if we have given oral or written notice
to the exchange agent, with prompt written confirmation of any oral notice.
For each original bond accepted for exchange, the holder of the original
bond will receive an exchange bond having a principal amount equal to that of
the surrendered original bond. The exchange bonds will bear interest from the
most recent date to which interest has been paid on the original bonds.
Accordingly, registered holders of exchange bonds on the relevant record date
for the first interest payment date following the completion of the exchange
offer will receive interest accruing from the most recent date to which interest
has been paid. Original bonds accepted for exchange will cease to accrue
interest from and after the date of completion of the exchange offer. Holders of
original
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bonds whose original bonds are accepted for exchange will not receive any
payment for accrued interest on the original bonds otherwise payable on any
interest payment date the record date for which occurs on or after completion of
the exchange offer and will be deemed to have waived their rights to receive the
accrued interest on the original bonds.
In all cases, issuance of exchange bonds for original bonds will be made
only after timely receipt by the exchange agent of:
- certificates for the original bonds, or a timely book-entry confirmation
of the original bonds, into the exchange agent's account at the book-entry
transfer facility,
- a properly completed and duly executed letter of transmittal and
- all other required documents.
Unaccepted or non-exchanged original bonds will be returned without expense
to the tendering holder of the original bonds. In the case of original bonds
tendered by book-entry transfer in accordance with the book-entry procedures
described below, the non-exchanged original bonds will be credited to an account
maintained with the book-entry transfer facility, as promptly as practicable
after the expiration or termination of the exchange offer.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account at DTC for
purposes of the exchange offer within two business days after the date of this
prospectus. Any financial institution that is a participant in DTC's systems
must make book-entry delivery of original bonds by causing DTC to transfer those
original bonds into the exchange agent's account at DTC in accordance with DTC's
procedure for transfer. This participant should transmit its acceptance to DTC
on or prior to the expiration date or comply with the guaranteed delivery
procedures described below. DTC will verify this acceptance, execute a
book-entry transfer of the tendered original bonds into the exchange agent's
account at DTC and then send to the exchange agent confirmation of this
book-entry transfer. The confirmation of this book-entry transfer will include
an agent's message confirming that DTC has received an express acknowledgement
from this participant that this participant has received and agrees to be bound
by the letter of transmittal and that we may enforce the letter of transmittal
against this participant. Delivery of exchange bonds issued in the exchange
offer may be effected through book-entry transfer at DTC. However, the letter of
transmittal or facsimile of it or an agent's message, with any required
signature guarantees and any other required documents, must:
(1) be transmitted to and received by the exchange agent at the address
listed below under "--Exchange Agent" on or prior to the expiration date;
or
(2) comply with the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of original bonds desires to tender the original
bonds, and the original bonds are not immediately available, or time will not
permit the holder's original bonds or other required documents to reach the
exchange agent before the expiration date, or the procedure for book-entry
transfer described above cannot be completed on a timely basis, a tender may
nonetheless be made if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent received from an eligible
institution a properly completed and duly executed letter of transmittal,
or a facsimile of the letter of transmittal, and notice of guaranteed
delivery, substantially in the form provided by us, by facsimile
transmission, mail or hand delivery,
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(a) stating the name and address of the holder of original bonds and the
amount of original bonds tendered,
(b) stating that the tender is being made and
(c) guaranteeing that within three New York Stock Exchange trading days
after the expiration date, the certificates for all physically tendered
original bonds, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required by
the letter of transmittal will be deposited by the eligible institution
with the exchange agent; and
- the certificates for all physically tendered original bonds, in proper
form for transfer, or a book-entry confirmation, as the case may be, and
all other documents required by the letter of transmittal, are received by
the exchange agent within three New York Stock Exchange trading days after
the expiration date.
WITHDRAWAL RIGHTS
Tenders of original bonds may be withdrawn at any time before 5:00 p.m., New
York City time, on the expiration date.
For a withdrawal to be effective, the exchange agent must receive a written
notice of withdrawal at the address or, in the case of eligible institutions, at
the facsimile number, indicated below under "--Exchange Agent" before
5:00 p.m., New York City time, on the expiration date. Any notice of withdrawal
must:
- specify the name of the person, referred to as the depositor, having
tendered the original bonds to be withdrawn;
- identify the bonds to be withdrawn, including the certificate number or
numbers and principal amount of the original bonds;
- contain a statement that the holder is withdrawing his election to have
the original bonds exchanged; and
- specify the name in which the original bonds are registered, if different
from that of the depositor.
If certificates for original bonds have been delivered or otherwise
identified to the exchange agent, then, prior to the release of these
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution unless this holder is an
eligible institution. If original bonds have been tendered in accordance with
the procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at the book-entry transfer
facility to be credited with the withdrawn original bonds. We will determine all
questions as to the validity, form and eligibility, including time of receipt,
of notices of withdrawal. Any original bonds so withdrawn will be deemed not to
have been validly tendered for exchange. No exchange bonds will be issued unless
the original bonds so withdrawn are validly retendered. Any original bonds that
have been tendered for exchange, but which are not exchanged for any reason,
will be returned to the tendering holder without cost to the holder. In the case
of original bonds tendered by book-entry transfer, the original bonds will be
credited to an account maintained with the book-entry transfer facility for the
original bonds. Properly withdrawn original bonds may be retendered by following
the procedures described under "--Procedures for Tendering" above at any time on
or before 5:00 p.m., New York City time, on the expiration date.
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<PAGE>
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange, or to issue exchange bonds in exchange for, any
original bonds, and may terminate or amend the exchange offer, if at any time
before the acceptance of the original bonds for exchange or the exchange of the
exchange bonds for the original bonds, any of the following events shall occur:
- there shall be threatened, instituted or pending any action or proceeding
before, or any injunction, order or decree shall have been issued by, any
court or governmental agency or other governmental regulatory or
administrative agency or commission:
(1) seeking to restrain or prohibit the making or completion of the
exchange offer or any other transaction contemplated by the exchange
offer, or assessing or seeking any damages as a result of this
transaction,
(2) resulting in a material delay in our ability to accept for exchange or
exchange some or all of the original bonds in the exchange offer; or any
statute, rule, regulation, order or injunction shall be sought,
proposed, introduced, enacted, promulgated or deemed applicable to the
exchange offer or any of the transactions contemplated by the exchange
offer by any governmental authority, domestic or foreign, or
(3) any action shall have been taken, proposed or threatened, by any
governmental authority, domestic or foreign, that in our sole judgment
might directly or indirectly result in any of the consequences referred
to in clauses (1) or (2) above or, in our sole judgment, might result in
the holders of exchange bonds having obligations with respect to resales
and transfers of exchange bonds which are greater than those described
in the interpretation of the SEC referred to above, or would otherwise
make it inadvisable to proceed with the exchange offer; or
- there shall have occurred:
(1) any general suspension of or general limitation on prices for, or
trading in, securities on any national securities exchange or in the
over-the-counter market;
(2) any limitation by a governmental authority which may adversely affect
our ability to complete the transactions contemplated by the exchange
offer;
(3) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation by any
governmental agency or authority which adversely affects the extension
of credit; or
(4) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United
States, or, in the case of any of the preceding events existing at the
time of the commencement of the exchange offer, a material acceleration
or worsening of such calamities; or
- any change, or any development involving a prospective change, shall have
occurred or be threatened in our business, financial condition, operations
or prospects and those of our subsidiaries taken as a whole that is or may
be adverse to us, or we shall have become aware of facts that have or may
have an adverse impact on the value of the original bonds or the exchange
bonds; which in our sole judgment in any case makes it inadvisable to
proceed with the exchange offer and/or with such acceptance for exchange
or with such exchange.
These conditions to the exchange offer are to our sole benefit, and we may
assert them regardless of the circumstances giving rise to any of these
conditions, or we may waive them in whole or in part in our sole discretion. If
we do so, the exchange offer will remain open for at least 5 business days
29
<PAGE>
following any waiver of the preceding conditions. Our failure at any time to
exercise any of the preceding rights will not be deemed a waiver of any right.
In addition, we will not accept for exchange any original bonds tendered,
and no exchange bonds will be issued in exchange for any original bonds, if at
this time any stop order is threatened or in effect relating to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture under the Trust Indenture Act of 1939.
EXCHANGE AGENT
We have appointed United States Trust Company of New York as the exchange
agent for the exchange offer. You should direct all executed letters of
transmittal to the exchange agent at the address indicated below. You should
direct questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery to the exchange agent addressed as follows:
DELIVERY TO: United States Trust Company of New York, EXCHANGE AGENT
<TABLE>
<S> <C>
BY HAND BEFORE 4:30 P.M.: BY REGISTERED OR CERTIFIED MAIL:
United States Trust Company of New York United States Trust Company of New York
111 Broadway P.O. Box 848 Cooper Station
New York, NY 10006 New York, NY 10276
Attention: Lower Level Corporate Trust Window Attention: Corporate Trust Services
</TABLE>
BY HAND OR OVERNIGHT DELIVERY AFTER
4:30 P.M. ON THE EXPIRATION DATE:
United States Trust Company of New York
770 Broadway, 13(th) Floor
New York, NY 10003
FOR INFORMATION CALL:
(800) 548-6565
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(212) 420-6211
Attention: Customer Service
CONFIRM BY TELEPHONE:
(800) 548-6565
IF YOU DELIVER THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN ANY
ADDRESS INDICATED ABOVE OR TRANSMIT INSTRUCTIONS VIA FACSIMILE OTHER THAN ANY
FACSIMILE NUMBER INDICATED ABOVE, THEN YOUR DELIVERY OR TRANSMISSION WILL NOT
CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others soliciting
acceptances of the exchange offer. The estimated cash expenses to be incurred in
connection with the exchange offer will be paid by us. We estimate these
expenses in the aggregate to be approximately $500,000.
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<PAGE>
ACCOUNTING TREATMENT
We will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer. We will amortize the expense of the exchange
offer over the term of the exchange bonds under generally accepted accounting
principles.
TRANSFER TAXES
Holders who tender their original bonds for exchange will not be obligated
to pay any related transfer taxes, except that holders who instruct us to
register exchange bonds in the name of, or request that original bonds not
tendered or not accepted in the exchange offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer taxes.
CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE ORIGINAL BONDS
Holders of original bonds who do not exchange their original bonds for
exchange bonds in the exchange offer will continue to be subject to the
provisions in the indenture regarding transfer and exchange of the original
bonds and the restrictions on transfer of the original bonds as described in the
legend on the bonds as a consequence of the issuance of the original bonds under
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the original bonds may not be offered or sold, unless registered under
the Securities Act, except under an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. As
discussed in "Exchange Offer; Registration Rights," we do not currently
anticipate that we will register original bonds under the Securities Act.
Based on interpretations by the staff of the SEC, as described in no-action
letters issued to third parties, we believe that exchange bonds issued in the
exchange offer in exchange for original bonds may be offered for resale, resold
or otherwise transferred by holders of the original bonds, other than any holder
which is an "affiliate" of ours within the meaning of Rule 405 under the
Securities Act, without compliance with the registration and prospectus delivery
provisions of the Securities Act, if the exchange bonds are acquired in the
ordinary course of the holders' business and the holders have no arrangement or
understanding with any person to participate in the distribution of the exchange
bonds. However, the SEC has not considered the exchange offer in the context of
a no-action letter. We cannot assure you that the staff of the SEC would make a
similar determination with respect to the exchange offer as in the other
circumstances. Each holder, other than a broker-dealer, must acknowledge that it
is not engaged in, and does not intend to engage in, a distribution of exchange
bonds and has no arrangement or understanding to participate in a distribution
of exchange bonds. If any holder is an affiliate of ours, is engaged in or
intends to engage in or has any arrangement or understanding with any person to
participate in the distribution of the exchange bonds to be acquired in the
exchange offer, that holder:
(1) could not rely on the applicable interpretations of the staff of the
SEC, and
(2) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives exchange bonds for its own account in
exchange for original bonds must acknowledge that the original bonds were
acquired by the broker-dealer as a result of market-making activities or other
trading activities and that it will will comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, including the delivery of a prospectus that contains
information with respect to any selling holder required by the Securities Act in
connection with any resale of the exchange bonds.
Futhermore, any broker-dealer that acquired any of its outstanding bonds
directly from us:
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<PAGE>
- may not rely on the applicable interpretation of the staff of the SEC's
position contained in Exxon Capital Holdings Corp., SEC no-action letter
(April 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter
(June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2,
1983) and
- must also be named as a selling bondholder in connection with the
registration and prospectus delivery requirements of the Securities Act
relating to any resale transaction. See "Plan of Distribution."
In addition, to comply with state securities laws, the exchange bonds may
not be offered or sold in any state unless they have been registered or
qualified for sale in such state or an exemption from registration or
qualification, with which there has been compliance, is available. The offer and
sale of the exchange bonds to "qualified institutional buyers," as defined under
Rule 144A of the Securities Act, is generally exempt from registration or
qualification under the state securities laws. We currently do not intend to
register or qualify the sale of exchange bonds in any state where an exemption
from registration or qualification is required and not available.
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<PAGE>
EDISON MISSION HOLDINGS AND EDISON MISSION ENERGY
EDISON MISSION HOLDINGS
We are a special-purpose California corporation formed on October 7, 1998 to
facilitate the financing of the acquisition of the Homer City facilities. The
indenture limits our business activities to the ownership and operation of the
Homer City facilities, any expansion or improvements of the facilities, and
matters reasonably incidental to these activities. See "Description of Principal
Financing Documents--Indenture--Negative Covenants--Limitation on Business
Activities." The only income available to us to pay principal of, premium, if
any, and interest on the bonds will be repayments of subordinated loans and
equity distributions from our subsidiaries.
As of the date of this prospectus, our authorized capital stock consists of
10,000 shares of common stock, no par value, of which 100 shares are issued and
outstanding. There is no public trading market for our common stock. All of such
common stock is owned by Edison Mission Energy. The address of our principal
executive offices is 18101 Von Karman Avenue, Suite 1700, Irvine, California
92612-1046, telephone (949) 752-5588.
EDISON MISSION ENERGY
Edison Mission Energy is a leading global power producer measured in
megawatts. Through its subsidiaries, Edison Mission Energy engages in the
business of developing, acquiring, owning and operating electric power
generation facilities worldwide. Edison International owns Edison Mission Energy
and also owns Southern California Edison Company, one of the largest electric
utilities in the United States. At September 30, 1999, Edison Mission Energy had
consolidated assets of approximately $11 billion and total shareholders' equity
of approximately $2 billion. The bonds are not obligations of Edison Mission
Energy. Only we and our subsidiary guarantors are obligated to make payments on
the bonds. Neither Edison Mission Energy nor any other affiliate of Edison
Mission Energy will guarantee payment of the bonds or will have any obligation
to make payments on the bonds, other than Edison Mission Energy's obligations
under the Credit Support Guarantee or the guarantee provided by Edison Mission
Energy that we use to satisfy the debt service reserve requirement for the
bonds.
Edison Mission Energy was formed in 1986 with two domestic operating
projects. Edison Mission Energy's business has evolved from the development of
contract-based domestic power projects to the development of contract-based
international power projects and the acquisition of operating generating assets
within developed and deregulating power markets. Currently, Edison Mission
Energy owns interests in 72 domestic and international operating power stations
with an aggregate generating capacity of 26,649 megawatts, of which Edison
Mission Energy's share is approximately 22,056 MW. In addition, Edison Mission
Energy owns interests in one domestic and three international projects which are
under construction. The capacity of these projects is expected to total 1,797
MW, of which Edison Mission Energy's anticipated share is approximately 714 MW.
Edison Mission Energy's business goal is to be one of the leading owners and
operators of electric generating assets in the world. Edison Mission Energy will
play an active role, as a long-term owner, in all phases of power generation,
from planning and development through construction and commercial operation.
Edison Mission Energy believes that this involvement allows it to better ensure,
with its experienced personnel, that its projects are well-planned, structured
and managed, thus maximizing value creation.
In the United States, long-term contracts are likely to be the exception
rather than the rule. Edison Mission Energy's strategy focuses primarily on
three areas with respect to uncontracted plants: valuation, trading and
regulation. First, Edison Mission Energy continuously improves its valuation
tools, enabling it to bid effectively and competitively on assets that will be
sold over the next five years. Second, Edison Mission Energy strives to develop
its trading skills to enhance the returns of its
33
<PAGE>
generating assets. Third, Edison Mission Energy's principal customers continue
to be regulated utilities; therefore, understanding the regulatory and economic
environment in which these utilities operate allows Edison Mission Energy to
better react to what they will do.
In December 1999, Edison Mission Energy acquired 100% of the fossil-fuel
generating assets of ComEd, totaling approximately 9,510 MW of generating
assets. Edison Mission Energy will operate the plants, which are located in the
Midwest region of the United States. In July 1999, Edison Mission Energy
acquired two power plants in the United Kingdom with a total generating capacity
of 3,886 MW from PowerGen UK plc. These plants, which are in the mid-range of
the order in which plants are called upon to dispatch electric power, will
complement the pumped-storage hydroelectric power plants Edison Mission Energy
already owns in the United Kingdom and sell power to the electricity trading
market there. On May 14, 1999, Edison Mission Energy acquired 40% of Contact
Energy from the government of New Zealand. Contact Energy owns nine
hydroelectric, geothermal and natural gas-fired power generating plants in New
Zealand, including one that is under construction and owns an interest in one
operating gas fired plant in Australia. The total aggregate capacity of these
plants is 2,726 MW, of which Edison Mission Energy's share is 949 MW. Contact
Energy also supplies gas and electricity to customers in New Zealand and has a
minority interest in a power project currently under construction in Australia.
Edison Mission Energy's current investments have an aggregate generating
capacity of 26,649 MW, of which its share is approximately 22,056 MW.
OUR SUBSIDIARIES
Our direct and indirect wholly-owned subsidiaries consist of EME Homer City,
Edison Mission Financing Co., Homer City Property Holdings, Inc., Mission Energy
Westside, Inc. and Chestnut Ridge Energy Company. Our subsidiary guarantors will
guarantee our obligations in respect of the exchange bonds. EME Homer City is a
Pennsylvania limited partnership and each of FinanceCo, PropertyCo, ME Westside
and Chestnut Ridge is a California corporation. The indenture and the financing
documents entered into in connection with the Homer City acquisition limit the
subsidiary guarantors' activities to the ownership and operation of the Homer
City facilities, any expansion or improvements of these facilities, and matters
reasonably incidental to these activities. See "Description of Principal
Financing Documents--Indenture--Negative Covenants--Limitation on Business
Activities."
34
<PAGE>
BUSINESS
INDUSTRY OVERVIEW
The United States electric industry, including companies engaged in
providing generation, transmission, distribution and ancillary services, has
undergone significant change over the last several years, leading to significant
deregulation and increased competition. The Federal Energy Regulatory
Commission, under Order No. 888 and Order No. 889, which are referred to as the
Open Access Rules, requires the owners and operators of electric transmission
facilities to make those facilities available for transmission on a
non-discriminatory basis to all wholesale generators, sellers and buyers of
electricity. In addition to this wholesale transmission, or wheeling, throughout
the United States, there has been an increasing number of proposals at the state
level to allow retail customers to choose their electricity suppliers, with
incumbent utilities required to deliver that electricity over their transmission
and distribution systems. Numerous electric utilities nationwide are in the
process of divesting all or a portion of their electricity generation business
or are expected to commence this process in the foreseeable future, as
legislative and regulatory developments drive the industry to disaggregate.
Edison Mission Energy, through Edison Mission Holdings and its other
subsidiaries, is among a group of companies actively pursuing opportunities
created by the deregulating domestic electric markets to operate as competitive
electric generation and wholesale supply companies in a deregulated marketplace.
POWER MARKETS
PJM. PJM is the largest centrally-dispatched electric control area in North
America and the third largest in the world, consisting of over 530 generating
units with a total installed capacity of 56,709 MW. PJM serves 8.7% of the
United States population and covers portions of Pennsylvania, New Jersey,
Maryland, Delaware, the District of Columbia and Virginia. PJM was recently
restructured as a competitive, non-discriminatory market in response to the Open
Access Rules and includes bid-based energy and capacity markets. The independent
system operator for the PJM operates the spot energy market and determines the
market-clearing price for each hour based on bids submitted by participating
generators which indicate the minimum prices a bidder is willing to accept to be
dispatched at various incremental generation levels. A transmission charge based
on the location of the energy purchaser is added to the energy price if the
transmission system becomes constrained and generators with higher bids are
dispatched prior to those with lower bids. PJM has a day-ahead installed
capacity market and monthly installed capacity markets extending twelve months
in the future. Each installed capacity market has a single market-clearing price
for each day during which the market is in operation.
NYISO. NYISO includes 34,881 MW of installed capacity and serves over 99%
of New York State's electric power requirements. The NYISO was recently
established as a competitive, non-discriminatory market in response to the Open
Access Rules and includes bid-based electricity and transmission usage markets.
The market-clearing price for NYISO's day-ahead and real-time energy markets is
set by supplier generation bids and customer demand bids.
We can transmit 1,884 MW from the Homer City units into NYISO through two
345 kilovolts high voltage transmission lines and can transmit 1,884 MW into PJM
through two 230 kV lines. We will not incur any access or wheeling charges for
any energy delivered into PJM. A 13-mile 230 kV line from the Homer City units
also provides an indirect interconnection to the East Central Area Reliability
market.
THE ACQUISITION
On March 18, 1999, EME Homer City acquired ownership of the Homer City
facilities for a purchase price of approximately $1.8 billion under an Asset
Purchase Agreement dated August 1, 1998
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<PAGE>
with Pennsylvania Electric Corporation, New York State Electric & Gas and NGE
Generation, Inc. See "Description of Principal Contracts--Asset Purchase
Agreement." Pennsylvania Electric Corporation is a wholly-owned subsidiary of
GPU Inc., and New York State Electric & Gas and NGE Generation, Inc. are
wholly-owned subsidiaries of Energy East Corporation. Prior to the sale,
Pennsylvania Electric Corporation and NGE Generation, Inc. each owned 50% of the
beneficial ownership interests in the Homer City facilities. In addition to this
agreement, EME Homer City has entered into Transition Contracts with
Pennsylvania Electric Corporation and New York State Electric & Gas and an
Interconnection Agreement and an Easement Agreement with the sellers. See
"Description of Principal Contracts--Transition Contracts," "--Interconnection
Agreement" and "--Easement Agreement."
FACILITY OVERVIEW
The Homer City facilities are among the lowest cost generating facilities in
the Northeast region. In 1998, these units had fuel expenses and operating and
maintenance costs of approximately $17/MWh, and are among the first coal-fired
units to be called upon for the dispatch of electric power within both PJM and
the NYISO. The Homer City facilities are located on a 2,413-acre site
approximately 45 miles northeast of Pittsburgh within Indiana County,
Pennsylvania. The Homer City facilities consist of the Homer City units, a coal
cleaning facility, the Two Lick Dam and associated support facilities. The Homer
City units benefit from direct transmission access to both PJM and NYISO through
four high voltage lines which interconnect through a switchyard located on the
site.
The Homer City units are coal-fired boiler and steam generating units. Units
1 and 2, which are essentially identical to one another, were constructed as
positive pressure units, which utilize boilers with internal air pressure
slightly higher than atmospheric pressure, and placed into commercial operation
in 1969. Units 1 and 2 were converted to balanced draft units, which utilize
boilers with internal air pressure balanced at approximately atmospheric
pressure, in 1976 and 1977, respectively. Unit 1 has an installed capacity of
620 MW and Unit 2 has an installed capacity of 614 MW. The steam turbines and
generators for Units 1 and 2 were manufactured by Westinghouse Electric
Corporation, and the boilers for these units were manufactured by Foster Wheeler
Energy Corporation. The Unit 1 and 2 boilers have been retrofitted with Foster
Wheeler dual air register and internal flame staging low nitrogen oxide burners
to meet Phase I nitrogen oxide Clean Air Act standards. In addition, both
boilers have supplemental over-fired air systems to further reduce nitrogen
oxide emissions to satisfy Pennsylvania Title I (ozone) requirements.
Unit 3 commenced commercial operation in 1977 and has an installed capacity
of 650 MW. The steam turbine and generator for Unit 3 were manufactured by
General Electric Corporation, and the Unit 3 boiler was manufactured by
Babcock & Wilcox. The boiler for Unit 3 was originally constructed with
Babcock & Wilcox low nitrogen oxide burners which satisfied Phase I nitrogen
oxide Clean Air Act standards, and a supplemental over-fired air system was
installed in 1995 at Unit 3 to further reduce nitrogen oxide emissions.
The following table summarizes specific design details for the three units.
<TABLE>
<CAPTION>
UNIT 1 UNIT 2 UNIT 3
-------------------------- -------------------------- -------------------
<S> <C> <C> <C>
CAPACITY (MW) 620 614 650
COMMERCIAL OPERATION 1969 1969 1977
BOILER MANUFACTURER Foster Wheeler Foster Wheeler Babcock & Wilcox
BOILER TYPE Once thru Supercritical Once thru Supercritical Natural Circulation
STEAM FLOW (LBS/HOUR) 4,613,000 4,613,000 4,750,000
OPERATING PRESSURE (PSI) 3,600 3,600 2,600
TURBINE MANUFACTURER Westinghouse Westinghouse General Electric
THROTTLE PRESSURE (PSI) 3,500 3,500 2,400
STEAM TEMPERATURE
( DEG.F) 1,000 1,000 1,000
</TABLE>
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<PAGE>
SALES STRATEGY
EME Homer City sells capacity, energy and voltage support from the Homer
City units into PJM's and NYISO's centralized power markets. The Homer City
units comprise the second largest coal-fired facility within PJM and the largest
coal-fired facility servicing NYISO. EME Homer City may also enter into
bilateral contracts for the sale of capacity and energy to power marketers and
load serving entities within PJM, NYISO and surrounding markets.
MARKETING AND TRADING. EME Homer City has entered into a contract with a
marketing affiliate for the sale of energy and capacity produced by the Homer
City units, which enables this marketing affiliate to engage in forward sales
and hedging transactions to manage EME Homer City's electricity price exposure.
The terms of the Financing Documents do not permit EME Homer City to take
speculative futures positions by selling capacity and energy in excess of its
anticipated output. It is the policy of the marketing affiliate to make sales
only to entities which have an investment grade rating or whose obligations are
guaranteed by an entity with an investment grade rating. The forward sales and
trading positions taken by the marketing affiliate relating to the Homer City
units have the benefit of credit support from Edison Mission Holdings.
The marketing organization is divided into front-, middle- and back-office
segments, with some duties segregated for control purposes. The risk management
personnel have a high level of knowledge of utility operations, fuels
procurement, energy marketing and futures and options trading. The marketing
affiliate has systems in place which monitor real-time spot and forward pricing
and perform option valuations and has a wholesale power scheduling group that
operates on a 24-hour basis. EME Homer City pays the marketing affiliate a fee
of $0.02/MWh, approximately $300,000 per year, and all revenue from the physical
sales transactions executed by the marketing affiliate will be deposited into
the revenue account established for the benefit of the bondholders and the
holders of other Senior Debt.
As of September 30, 1999, we had sold 82% of the anticipated output of Units
1 and 2 for the remainder of 1999. These forward energy sales average
$22.00/MWh, compared to projections of $19.14/MWh for PJM and $22.30/MWh for
NYISO. Also as of September 30, 1999, we had entered into forward energy sales
totaling 856 MW during on-peak hours in 2000 at an average price of $40.90/MWh.
The marketing affiliate has also sold 99% of the remaining installed capacity
over the transition contract amounts through May 2000 at a weighted average
price of $65.00/MW-day.
TRANSITION CONTRACTS. New York State Electric & Gas and Pennsylvania
Electric Corporation have entered into separate Transition Contracts with EME
Homer City, under which EME Homer City has a put option to sell quantities of
capacity to those companies, and those companies have call options to purchase
quantities of capacity from EME Homer City. The term of the contract with New
York State Electric & Gas continues until April 30, 2001, and the term of the
contract with Pennsylvania Electric Corporation continues until May 31, 2001.
EME Homer City has exercised its put option to sell 942 MW of capacity to
Pennsylvania Electric Corporation for the first and second contract years for a
price of $49.90/MW-day for the first contract year and $59.90/MW-day for the
second contract year. EME Homer City entered into a letter agreement with New
York State Electric & Gas to adjust the contract periods under the New York
State Electric & Gas Transition Contract to conform to the PJM capacity planning
cycle. EME Homer City also entered into contractual arrangements with New York
State Electric & Gas to sell 942 MW of capacity to this customer for the period
from March 18, 1999 to May 31, 1999 for a price of $55.00/MW-day and to sell
500 MW of capacity during the period from June 1, 1999 through May 31, 2000 for
a price of $60.00/MW-day. The amount of capacity covered by these Transition
Contracts with respect to which a put or call option has not yet been exercised
may be reduced in the event that there is a decrease in the amount by which
Pennsylvania Electric Corporation's and New York State Electric & Gas' projected
load supply obligations exceed the
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<PAGE>
capacity available to be provided by their remaining owned generation and
existing power purchase entitlements. See "Description of Principal
Contracts--Transition Contracts."
FUEL SUPPLY
UNITS 1 AND 2. Units 1 and 2 typically consume approximately 4,200,000 tons
of mid-range sulfur coal per year. Approximately 90% to 95% of this coal is
obtained under contracts with local suppliers within approximately 50 miles of
the Homer City facilities, and the remainder is purchased in the spot market.
All this coal is delivered to the site by truck. The existing coal supply
contracts for Units 1 and 2 currently provide for the supply of a minimum of
approximately 348,000 tons of coal per month at prices ranging from $19.00/ton
to $26.75/ton. See "Description of Principal Contracts--Fuel Agreements--Coal
Supply Agreements."
The coal purchased for consumption by Units 1 and 2 is cleaned in our coal
cleaning facility, which has the capacity to clean up to 5,000,000 tons of coal
per year. Our coal cleaning facility utilizes heavy media cyclones, froth
floatation and spiral separators to reduce the ash and sulfur content of the raw
coal to meet both combustion and environmental requirements. Our coal cleaning
facility is operated by Homer City Coal Processing Corporation under a Coal
Cleaning Agreement dated August 8, 1990, which is scheduled to expire on
August 31, 2002. See "Description of Principal Contracts--Fuel Agreements--Coal
Cleaning Agreement."
UNIT 3. Unit 3 typically consumes approximately 1,600,000 tons of
compliance coal per year. EME Homer City purchases approximately 75% of this
coal from Tanoma Coal Sales, Inc. at approximately $37.00/ton (FOB
Unit 3) under a coal sales agreement expiring on December 31, 2002, and this
coal is blended by Tanoma at the coal blending facility under an Operating
Agreement dated March 1, 1997 which is coterminous with the Tanoma coal sales
agreement. EME Homer City obtains the remainder of the coal needed for Unit 3 in
the spot market. All coal purchased for Unit 3 is delivered to the site by
truck. See "Description of Principal Contracts--Fuel Agreements--Coal Supply
Agreements." Upon completion of the flue gas desulfurization system system for
Unit 3, this unit is expected to be able to burn less expensive, higher sulfur
coal.
ENVIRONMENTAL CAPITAL IMPROVEMENTS
EME Homer City has contracted with a division of ABB Flakt to make
environmental capital improvements to the Homer City units. ABB Flakt will
construct a limestone-based, wet scrubber flue gas desulfurization system at
Unit 3 and a selective catalytic reduction system at each of the three units.
These improvements are expected to enable the Homer City units to comply with
Phase II of Title IV of the Clean Air Act regarding sulfur oxide emissions, the
Pennsylvania nitrogen oxide allowance regulations and Pennsylvania's response to
the Environmental Protection Agency's State Implementation Plan Call regarding
nitrogen oxide emissions. These improvements are estimated to cost approximately
$258 million, which includes a fixed price, turnkey engineering, procurement and
construction contract, project management costs and other project costs, and are
scheduled to be installed during 2000-2001. These improvements will be funded
with loans under an existing credit facility. See "Description of Principal
Contracts--EPC Contract."
OPERATING PERFORMANCE
The Homer City units have historically had high equivalent availability,
which is the ratio, expressed as a percentage, of the amount of production that
each unit was able to produce during a given time period divided by the amount
of production that each unit would have produced if operated at its full
capacity during that given time period. The Homer City units have also
historically had
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<PAGE>
efficient heat rates and low costs. The following charts indicate selected
historical operating data for the Homer City units as a whole and for each unit
individually.
<TABLE>
<CAPTION>
FUEL AND
EQUIVALENT NET HEAT RATE O&M COSTS
AVAILABILITY FACTOR (%) (BTU/KWH) ($/MWH)
----------------------- ------------- -----------------------
<S> <C> <C> <C>
Homer City units--1,884 MW
1998 89.79 9,793 17.12
1997 85.83 9,804 18.17
1996 85.04 9,718 18.00
1995 80.12 9,644 19.87
1994 76.41 9,653 21.37
5-Year Average 83.44 9,722 18.79
Unit 1--620 MW
1998 85.01 9,902 17.17
1997 92.05 9,963 18.44
1996 72.27 9,764 18.05
1995 88.68 9,644 20.08
1994 57.87 9,671 21.88
5-Year Average 79.18 9,789 18.97
Unit 2--614 MW
1998 91.15 9,607 17.17
1997 74.63 9,618 18.44
1996 90.21 9,621 18.05
1995 66.95 9,590 20.08
1994 85.42 9,575 21.88
5-Year Average 81.67 9,602 18.97
Unit 3--650 MW
1998 93.07 9,882 17.01
1997 90.47 9,794 17.65
1996 92.33 9,777 17.92
1995 84.42 9,689 19.47
1994 85.57 9,725 20.45
5-Year Average 89.17 9,773 18.44
</TABLE>
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OPERATION AND MAINTENANCE
The Homer City facilities are operated by employees of EME Homer City who
were recruited and selected in accordance with the Asset Purchase Agreement and
are former employees of GPU Generation, Inc. EME Homer City employs a skilled
and disciplined workforce that is well prepared to operate within a competitive
and deregulated environment. We believe that our staffing levels are comparable
with benchmark standards for facilities of a similar size and type. Employee
headcount has been reduced by nearly 30% over the past five years, while, at the
same time, high standards for equivalent availability and safety have been
consistently maintained. The majority of the technical staff at the Homer City
facilities has been retained after completing the acquisition, thus providing us
with a knowledgeable and experienced base of employees which average over 22
years of experience in the operation of the Homer City units and similar
facilities.
EME Homer City's workforce is employed under a collective bargaining
agreement which was restructured in 1994. The collective bargaining agreement
provides EME Homer City with a measure of labor cost certainty through 2002. The
collective bargaining agreement enables us to manage our workforce and to
establish flexible work rules going forward. EME Homer City's plans to
cross-train its employees to perform different functions, thus minimizing the
use of more expensive or less efficient subcontractors.
EME Homer City's operating and maintenance plan, as well as several planned
overhauls of major equipment and controls, are consistent with EME Homer City's
goal of extending the remaining life of the units for an additional 39 years.
EME Homer City utilizes a state-of-the-art computerized maintenance system to
plan and schedule all maintenance activities. EME Homer City also employs a
preventative maintenance program complemented by new predictive maintenance
technologies such as ferrography, thermography, vibration analysis and acoustic
analysis. Reliability-centered maintenance techniques are currently being
developed for critical systems to better define condition monitoring parameters
and redefine maintenance strategies.
The EME Homer City employees provide engineering, maintenance, operation and
facility management services and will receive functional direction from, and are
held to the operating standards and guidelines of, Edison Mission Energy's
operation and maintenance organization, which, together with Edison Mission
Energy's operating affiliates, provide operation and maintenance services at 50
operating plants in Australia, Indonesia, Turkey, Spain, the United Kingdom and
the United States. Edison Mission Energy and its operating affiliates manage
operating plants producing nearly 18,000 MW per year.
TRANSMISSION AND INTERCONNECTION
Existing transmission lines leaving the Homer City units are interconnected
with both PJM and NYISO. EME Homer City is able to transmit into PJM full plant
output of up to 1,884 MW through a 126-mile 345 kV line and a 19-mile and
15-mile 230 kV lines owned by Pennsylvania Electric Company. EME Homer City has
the right to transmit into NYISO full plant output of up to 1,884 MW through
175-mile and 207-mile 345 kV lines owned by New York State Electric & Gas. In
addition, a 13-mile 230 kV line from the Homer City units provides an indirect
interconnection to the East Central Area reliability market.
The points of interconnection with the Homer City units include:
(1) the 230 kV circuit from the Unit 1 main power transformer,
(2) the 345 kV circuit from the Unit 2 main power transformer,
(3) the 345 kV circuit from the Unit 3 main power transformer,
(4) the 345/230/23 kV north and south autotransformers and
(5) substation services No. 1 and No. 2.
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The ownership of the transmission and distribution assets for the Homer City
facilities, including the site switchyard, substation and support equipment,
remained with Pennsylvania Electric Company and New York State Electric & Gas
following the acquisition. These companies have agreed to provide EME Homer City
with all services necessary to interconnect the Homer City units with their
transmission systems, other than services provided under existing tariffs, under
the Interconnection Agreement. See "Description of Principal
Contracts--Interconnection Agreement."
WATER SUPPLY AND OTHER SUPPORT FACILITIES
The Homer City units receive their water supply from Two Lick Creek. The
water supply to Two Lick Creek is regulated by releases from Two Lick Dam, which
is located approximately eight miles upstream of the Homer City units and is
owned, operated and maintained by EME Homer City in accordance with a dam safety
permit and a drought management plan and related consent order and agreement
with the Pennsylvania Department of Environmental Protection. Each of the Homer
City units has a natural draft cooling tower. A portion of the waste heat in the
water leaving the units' condensers is diverted from these towers to a
fourteen-acre polyethylene roofed greenhouse complex located adjacent to the
Homer City units. After the water passes through this greenhouse complex, it is
returned to the basin of the cooling towers for reuse.
Other support facilities located on the site include an ash disposal area, a
coal refuse disposal area, coal receiving and storage facilities and water
treatment and pumping facilities.
PROPERTIES
EME Homer City owns a fee interest in the 2,413-acre site on which the Homer
City units, Two Lick Dam and the other facilities are located. The site is
approximately 45 miles northeast of Pittsburgh, Pennsylvania in Indiana County.
EME Homer City leases portions of the site to third parties, which leases are
described below.
EME Homer City leases the surface of an approximately 14-acre parcel to
Tanoma Coal Sales upon which the coal blending facility is located. In lieu of
rental payments, Tanoma blends the first 30,000 tons of coal per month in the
coal blending facility at no charge. EME Homer City also leases an office
building located on the site to Tanoma, which Tanoma uses for administrative
activities associated with the coal blending facility. Each of the Tanoma leases
expires on December 31, 2002.
EME Homer City has granted Cabot Oil & Gas Corporation the right to operate
and produce gas from existing wells located on the site, provided that gas is
found in paying quantities. EME Homer City receives 16% of the market value of
the gas at the well head as royalties and also receives gas of 250,000 cubic
feet at no charge from each well per annum. Cabot currently purchases such gas
from EME Homer City at the market value at the well head.
Homer City Property Holdings, Inc. leases a 34.15-acre parcel upon which the
greenhouse complex was constructed to Green Leaf Enterprises, Inc. The
greenhouse complex produces wholesale perennials, bedding and starter plants in
addition to special holiday crops for sale to other greenhouses in the eastern
United States.
COMPETITION
FEDERAL. The Energy Policy Act of 1992 laid the groundwork for a
competitive wholesale market for electricity. Among other things, the Energy
Policy Act expanded the Federal Energy Regulatory Commission's authority to
order electric utilities to transmit, or wheel, third-party electricity over
their transmission lines, thus allowing qualifying facilities under the Public
Utility Regulatory Policies Act of 1978, power marketers and those qualifying as
exempt wholesale generators under the Public Utility Holding Company Act of 1935
to more effectively compete in the wholesale market.
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In April 1996, the Federal Energy Regulatory Commission issued the Open
Access Rules, which require utilities to offer eligible wholesale transmission
customers non-discriminatory open access on utility transmission lines on a
comparable basis to the utilities' own use of the lines. In addition, the Open
Access Rules directed the regional power pools, including PJM and NYISO, that
control the major electric transmission networks to file uniform,
non-discriminatory open access tariffs. The Open Access Rules have been the
subject of rehearing at the Federal Energy Regulatory Commission and now is
undergoing judicial review.
Over the past few years, Congress and the Clinton Administration have
considered various pieces of legislation to restructure the electric industry
that would require, among other things, customer choice, repeal of the Public
Utility Holding Company Act and of the Public Utility Regulatory Policies Act.
The debate is likely to continue, and perhaps intensify. The effect of enacting
such legislation cannot be predicted with any degree of certainty.
STATE. The Energy Policy Act did not preempt state authority to regulate
retail electric service. Historically, in most states, competition for retail
customers is limited by statutes or regulations granting existing electric
utilities exclusive retail franchises and service territories. Since the passage
of the Energy Policy Act, the advisability of retail competition has been the
subject of intense debate in federal and state legislative and regulatory
forums. Many states have taken steps to facilitate retail competition as a means
to stimulate competitive generation rates. Retail competition commenced in New
York in 1998. Retail competition in Pennsylvania commenced on January 1, 1999,
and full retail competition is expected to be implemented by January 2001.
INSURANCE
EME Homer City maintains insurance coverages consistent with those normally
carried by companies engaged in similar businesses and owning similar
properties. The insurance program includes all-risk insurance and covers
commercial general public liability, replacement value of all real and personal
property, including losses from boiler and machinery breakdowns, and the perils
of earthquake and flood, subject to certain sublimits. EME Homer City also
carries general liability insurance covering liabilities to third parties for
bodily injury or property damage resulting from operations, automobile liability
insurance and excess liability insurance. Further, EME Homer City has the
benefit of title insurance and business interruption insurance. Limits and
deductibles in respect of these insurance policies are comparable to those
carried by other electric generating facilities of similar size.
LEGAL PROCEEDINGS
No material legal proceedings are presently pending against Edison Mission
Holdings or any of the subsidiary guarantors.
ENVIRONMENTAL MATTERS
ENVIRONMENTAL AND LAND USE PERMIT AND APPROVAL STATUS
As of the date of this prospectus, all material environmental and land use
permits required in order to own and operate the Homer City facilities as they
are currently operated have been transferred or reissued to EME Homer City and
all permits required to begin construction of the environmental capital
improvements have been issued by the Pennsylvania Department of Environmental
Protection.
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ENVIRONMENTAL CONDITIONS AND COMPLIANCE
GENERAL
Under various federal, state and local environmental laws and regulations, a
current or previous owner or operator of any facility, including an electric
generating facility, may be required to investigate and remediate releases or
threatened releases of hazardous or toxic substances or petroleum products
located at that facility, and may be held liable to a governmental entity or to
third parties for property damage, personal injury and investigation and
remediation costs incurred by these parties in connection with these releases or
threatened releases. Many of these laws, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, impose liability
without regard to whether the owner knew of or caused the presence of the
hazardous substances, and courts have interpreted liability under these laws to
be strict and joint and several. The cost of investigation, remediation or
removal of these substances may be substantial. In connection with its ownership
and operation of the Homer City facilities, EME Homer City may be liable for
these costs.
EME Homer City, in the course of operating the Homer City facilities, must
comply with all applicable environmental laws and regulations, including
numerous federal and state statutes and regulations. These requirements include,
but are not limited to, the federal Clean Water Act, the Clean Air Act, the
Resources Conservation and Recovery Act and similar state requirements.
In addition, persons who arrange for the disposal or treatment of hazardous
or toxic substances at a disposal or treatment facility may be liable for the
costs of removal or remediation of a release or threatened release of hazardous
or toxic substances at that disposal or treatment facility, whether or not that
facility is owned or operated by that person. Some environmental laws and
regulations create a lien on a contaminated site in favor of the government for
damages and costs it incurs in connection with the contamination. The owner of a
contaminated site and persons who arrange for the disposal of hazardous
substances at that site also may be subject to common law claims by third
parties based on damages and costs resulting from environmental contamination
emanating from that site. In connection with its ownership and operation of the
Homer City facilities, EME Homer City may be liable for these costs.
Several federal, state and local laws, regulations and ordinances also
govern the removal, encapsulation or disturbance of asbestos-containing
materials when these materials are in poor condition or in the event of
construction, remodeling, renovation or demolition of a building. Those laws and
regulations may impose liability for release of asbestos-containing
materials and may provide for the ability of third parties to seek recovery from
owners or operators of these properties for personal injury associated with
asbestos-containing materials. In connection with its ownership and operation of
the Homer City facilities, EME Homer City may be liable for these costs.
AIR QUALITY
GENERAL. EME Homer City believes that the Homer City facilities are in
material compliance with applicable state and federal air quality requirements.
Further reductions in the Homer City units' emissions may be required for the
achievement and maintenance of National Ambient Air Quality Standards for ozone,
fine particulate matter and regional haze. In August 1995, the sellers of the
Homer City facilities submitted a Title V operating permit application to the
Pennsylvania Department of Environmental Protection for review. EME Homer City
expects this permit to be issued by mid-2000. A continuous emissions monitoring
system was installed at the Homer City units in 1993 for measuring sulfur
dioxide, nitrogen oxide, carbon dioxide, and exhaust gas flow on a real-time
basis, in order to comply with regulatory requirements.
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NITROGEN OXIDES. All three units must comply with Reasonably Available
Control Technology requirements for NO(x) that result in a limit of
0.5 lbs/MMBtu on a 30-day rolling average. In order to comply with these
requirements and reduce NO(x) emissions the sellers installed low NO(x) burners
and supplemental over-fired air systems on Units 1 and 2 and a supplemental
over-fired air system on Unit 3. Low NO(x) burners were installed on Unit 3 when
it was first constructed. The three units have routinely operated below the 0.5
lbs/MMBtu limit.
The Homer City units' current NO(x) emission rates are 0.47 lbs/MMBtu for
Unit 1, 0.44 lbs/MMBtu for Unit 2 and 0.41 lbs/MMBtu for Unit 3. Under the Ozone
Transport Commission Memorandum of Understanding, the Pennsylvania Department of
Environmental Protection has allocated 10,085 tons of ozone season NO(x)
allowances to the Homer City units each year from 1999 through 2002. At
projected capacity factors, the Homer City units will generate 13,500 tons of
NO(x) during the 1999 ozone season and 10,200 tons of NO(x) during the 2000
ozone season. EME Homer City expects to install a selective catalytic reduction
system on each of the three units, which will reduce NO(x) emissions to
0.1 lbs/ MMBtu per unit. The selective catalytic reduction system for Unit 2 is
expected to be in service during the 2000 ozone season, and the selective
catalytic reduction systems for Units 1 and 3 are expected to be in service for
the 2001 ozone season. NO(x) production during the 2001 and 2002 ozone seasons
will average 3,110 tons and if that average is achieved the units will have a
surplus of 6,975 tons of NO(x) allowances to sell. In 2003, the Homer City
units' NO(x) allowance is reduced to 4,740 tons per ozone season. From and after
2003, average production is anticipated to be 3,080 tons per ozone season,
resulting in a projected surplus of 1,660 tons to sell each year. EME Homer City
currently has 2,365 tons of banked NO(x) allowances from 1997 and 1998 which
will offset purchases of NO(x) allowances in 1999.
The sellers of the Homer City facilities obtained Environmental Protection
Agency approval for the Clean Air Act Amendment Title IV Early Election Program
for NO(x) with an annual average NO(x) emission limit of 0.5 lbs/MMBtu through
2007. In 2008, the units become subject to Phase II emission rate limitations
under Title IV for wall-fired dry bottom boilers of 0.46 lbs/MMBtu on an annual
average basis. The Homer City units' annual average NO(x) emissions for 1997
were well below the current Title IV requirements.
SULFUR DIOXIDE. Unit 3 is subject to New Source Performance Standards and,
therefore, has an SO(2) emission limit of 1.2 lbs/MMBtu on a three-hour and a
24-hour average. Units 1 and 2 are "existing" boilers with a Pennsylvania
Department of Environmental Protection SO(2) emission limit of 3.7 lbs/MMBtu on
a 30-day rolling average, a daily average limit of 4.0 lbs/MMBtu, up to two
exceedances per 30 days, and a not-to-be-exceeded limit of 4.8 lbs/MMBtu. To
control SO(2) emissions, EME Homer City relies on its coal cleaning facility to
manage the sulfur content of a significant amount of the coal feedstock for
Units 1 and 2. Unit 3 relies on the use of low-sulfur coal. In 1997, the annual
average SO(2) emissions were 2.73 lbs/MMBtu for Unit 1, 2.72 lbs/MMBtu for
Unit 2 and 1.13 lbs/MMBtu for Unit 3.
All three units are Phase II Acid Rain Program-affected units. Accordingly,
beginning in 2000, all of the units will be required to obtain sufficient SO(2)
allowances to account for the total SO(2) emissions from the units. EME Homer
City believes that it will be able to obtain these SO(2) allowances for the
Homer City units at a reasonable cost prior to the time required. In addition,
EME Homer City will install a system on Unit 3 which will reduce SO(2) emissions
to 0.4 lbs/MMBtu. The system is expected to be installed by September 2001.
EMISSION REDUCTION CREDITS. The Homer City units have a number of Emission
Reduction Credits that were generated through the retirement of dryers A and B
at our coal cleaning facility. These credits are pending Pennsylvania Department
of Environmental Protection approval, and EME Homer City believes that once
approved they will not expire until 2006.
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PARTICULATE MATTER. Particulate matter is regulated through two separate
and distinct methods: mass emissions and visual opacity. The Homer City units'
recent particulate matter stack tests show that emissions are well below
regulatory limits. All three units control particulate matter through the use of
electrostatic precipitators; Units 1 and 2 also utilize an SO(2) flue gas
injection conditioning system. To improve precipitator performance, capital
improvements were made in 1997 and 1998 for Units 1 and 2. Recent modifications
to our coal cleaning facility have also resulted in reduced particulate
emissions from Units 1 and 2.
WATER QUALITY
The Homer City facilities are subject to regulations regarding the quality
of surface water, ground water and drinking water. To protect surface water
quality, the Homer City facilities rely on an industrial wastewater treatment
system, on-site sewage treatment and a number of settling ponds and
impoundments. The Homer City facilities' surface water discharges are governed
by two, five-year National Pollutant Discharge Elimination System permits issued
in 1994 and 1995. Modeling results indicate that the Pennsylvania Department of
Environmental Protection may impose more stringent discharge limits for some
contaminants at the time of renewal of these permits, which may require upgrade
of the Homer City facilities' wastewater treatment systems with such approaches
as reverse osmosis, ozonation, dechlorination and/or recycling of water.
EME Homer City conducts ground water monitoring in a number of areas
throughout the site, including active and former ash disposal sites, wastewater
and runoff settling and drainage ponds, coal refuse disposal sites, the coal
pile and present and former underground storage tank locations. A pump-and-treat
ground water treatment system is in operation for the industrial wastewater flow
ponds. To date, the Pennsylvania Department of Environmental Protection has not
requested that any additional remediation actions be performed at the site. The
Homer City facilities have a drinking water treatment system designed to meet
applicable potable water standards. Recent tests indicate that the Homer City
facilities' drinking water supply meets these standards.
SOLID AND HAZARDOUS WASTE
Both ash from the Homer City facilities and coal refuse from our coal
cleaning facility are disposed of on-site in separate, permitted disposal areas.
EME Homer City has entered into a joint services agreement with Helvetia Mining
Company for the treatment and disposal of leachate and runoff water from EME
Homer City's coal refuse disposal facility. Approximately 600,000 tons of ash
and 1,000,000 tons of coal refuse are disposed of annually. In 1997, the
Pennsylvania Department of Environmental Protection issued a 10-year permit for
operation of the ash disposal site. A five-year permit for the operation of the
coal refuse disposal site was issued by the Pennsylvania Bureau of Mining and
Reclamation in 1994. For the past several years, the Homer City facilities have
undergone a program for the removal of equipment with polychlorinated biphenyl
levels of over 500 ppm. As of spring of 1998, all PCB transformers had been
removed.
MINING ACTIVITIES
HELVETIA DISCHARGES. The Homer City units were originally constructed as a
mine-mouth generating station, where coal produced from two adjacent deep mines
was delivered directly to the units by coal conveyors. The two adjacent deep
mines were owned by Helen Mining Company, a subsidiary of the Quaker State
Corporation, and Helvetia, a subsidiary of the Rochester and Pittsburgh Coal
Company. Both Helen and Helvetia developed mine refuse sites, water treatment
facilities and other mine related facilities on the site. The Helen mine was
closed in the early 1990s, and the mine surface operations and maintenance shop
areas were restored before Helen left the site. Helen has continuing mine water
and refuse site leachate treatment obligations and remains obligated to perform
any clean-up required with respect to its refuse site. Helvetia's on-site mine
was closed in 1995. As a
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result of the cessation of its on-site mining activities, Helvetia has
continuing mine discharge and refuse site leachate discharge treatment
obligations which it performs using water treatment facilities owned by Helvetia
and located on the site. Bonds posted by Helvetia may not be sufficient to fund
Helvetia's obligations in the event of Helvetia's failure to comply with its
mine-related permits at the site. Current annual operating costs for Helvetia's
treatment systems are estimated to be approximately $372,500. Should Helvetia
default on its treatment obligations, the government may look to EME Homer City
to fund these commitments.
TWO LICK CREEK RESERVOIR DEEP MINE DISCHARGES. In connection with our
purchase of the Homer City facilities on March 18, 1999, we acquired the Two
Lick Creek Dam and Reservoir. Acid discharges from two inactive deep mines were
being collected and partially treated on the reservoir property by a mining
company before being pumped off the property for additional treatment at a
nearby treatment plant. The mining company, which filed for bankruptcy, operated
the collection and treatment system until May 1999, when its assets were
allegedly depleted.
The Pennsylvania Department of Environmental Protection initially advised us
that we were potentially responsible for treating the discharges by virtue of
our alleged ownership of the property of which the discharges allegedly
emanated. Without any admission of our liability, we voluntarily agreed through
a letter agreement to fund the operation of the treatment plant for an interim
period while the agency continued its investigation. The cost of operating the
treatment plant, which was initially approximately $11,000 per month, increased
to $13,000 per month in 2000. The agency has recently notified us that we are
responsible for treatment of one of the discharges. It has also advised the
owner of the mineral rights and three former operators of the mine that they are
liable and has requested them to cooperatively develop and implement a plan with
us to treat the discharge. We estimate the cost of a passive treatment system to
be approximately $750,000. The cost of operating a passive treatment system
would be considerably less than the cost of operating the current treatment
plant.
REGULATION
STATE LAW
PENNSYLVANIA. Under the Pennsylvania Public Utility Law, the Pennsylvania
Public Utility Commission regulates all "public utilities" operating in
Pennsylvania. A "public utility" under this law includes any entity which owns
or operates equipment or facilities for the production, generation, transmission
or distribution of gas, electricity or steam for the production of light, heat
or power to the public for consumption. The Pennsylvania Public Utility Law does
not specifically address the utility status of entities selling electricity at
wholesale within Pennsylvania. Because of EME Homer City's status as such an
entity which sells electricity exclusively in the wholesale market and does not
hold itself out to the public generally as a supplier of utility service, it is
not likely to be regulated as a public utility under the Pennsylvania Public
Utility Law. If, however, EME Homer City were deemed to be a Pennsylvania public
utility, the Pennsylvania Public Utility Commission could retroactively apply
several provisions of the Pennsylvania Public Utility Law to the Homer City
units. One of those provisions requires every public utility to obtain a
certificate of public convenience and necessity from the Pennsylvania Public
Utility Commission prior to rendering service as a public utility. If the
Pennsylvania Public Utility Commission were to require EME Homer City to obtain
a certificate of public convenience and necessity, EME Homer City might be
required to discontinue operation of the Homer City units pending application
for, and receipt of, this certificate. Another provision requires every public
utility to obtain Pennsylvania Public Utility Commission approval before it
issues or guarantees securities. If EME Homer City were found to be a public
utility, its failure to have obtained this approval could call into question the
validity of EME Homer City's obligations under the Guarantee and Collateral
Agreement. In addition, EME Homer City would be subject to other laws and
regulations, other than rate regulation, applicable to Pennsylvania public
utilities. EME Homer
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City's rates, however, would remain subject to the jurisdiction of the Federal
Energy Regulatory Commission.
NEW YORK. Under the New York Public Service Law, the New York Public
Service Commission regulates all "public utility companies" or "utility
companies" operating in New York. A "public utility company" or "utility
company" under the New York Public Service Law includes, among other things, any
entity engaged in the production, transmission or distribution of electricity to
the public for light, heat or power purposes. EME Homer City, as an exempt
wholesale generator, will not provide electricity directly to the public and
plans to sell only to power marketers and energy service companies. Although the
New York Public Service Law is silent with respect to the utility status of
electric corporations selling wholesale within New York, EME Homer City will not
likely be subject to regulation as a New York public utility. If, however, EME
Homer City were deemed to be a public utility under the New York Public Service
Law, the New York Public Service Commission could retroactively apply specified
provisions of the statute to the Homer City units. EME Homer City would also be
subject to other laws and regulations, other than rate regulation, applicable to
New York public utility companies. EME Homer City's rates, however, would remain
subject to the jurisdiction of the Federal Energy Regulatory Commission.
FEDERAL LAW
FEDERAL POWER ACT. The Federal Power Act gives the Federal Energy
Regulatory Commission exclusive rate-making jurisdiction over wholesale sales of
electricity and the transmission of electricity in interstate commerce. Under
the Federal Power Act, all public utilities subject to the Federal Energy
Regulatory Commission's jurisdiction are required to file rate schedules with
the Federal Energy Regulatory Commission prior to commencement of wholesale
sales or transmission of electricity. Because it will be selling power in the
wholesale market, EME Homer City is deemed to be a public utility for purposes
of the Federal Power Act. In November 1998, EME Homer City filed a rate schedule
with the Federal Energy Regulatory Commission requesting authority to sell power
and ancillary services at market-based rates. On January 13, 1999, the Federal
Energy Regulatory Commission accepted the rate schedule for filing with respect
to sales of power, thereby authorizing EME Homer City to make sales of power at
market-based rates. The Federal Energy Regulatory Commission deferred
consideration of EME Homer City's request to sell anciliary services at market-
based rates. The Federal Energy Regulatory Commission also granted EME Homer
City waivers of several of the accounting, record-keeping and reporting
requirements that are imposed on utilities with cost-based rate schedules.
In addition, the Federal Energy Regulatory Commission's order, as is
customary with market-based rate schedules, reserved the right to revoke EME
Homer City's market-based rate authority on a prospective basis if it is
subsequently determined that EME Homer City or any of its Affiliates possesses
excessive market power. If the Federal Energy Regulatory Commission were to
revoke EME Homer City's market-based rate authority, it would be necessary for
EME Homer City to file, and obtain Federal Energy Regulatory Commission
acceptance of, its rate schedule as a cost-of-service rate schedule. In
addition, the loss of market-based rate authority would subject EME Homer City
to the accounting, record-keeping and reporting requirements that are imposed on
utilities with cost-based rate schedules.
PUBLIC UTILITY HOLDING COMPANY ACT. The Public Utility Holding Company Act
provides that any corporation, partnership or other entity or organized group
that owns, controls or holds power to vote 10% or more of the outstanding voting
securities of a "public utility company" or a company that is a "holding
company" of a public utility company is subject to pervasive regulation under
this act as a registered holding company, unless an exemption is established or
an order is issued by the Securities and Exchange Commission declaring it not to
be a holding company. Registered holding companies
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under this act are required to limit their utility operations to a single
integrated utility system and to divest any other operations not functionally
related to the operation of the utility system. In addition, a public utility
company that is a subsidiary of a registered holding company under this act is
subject to financial and organization regulation, including approval by the
Securities and Exchange Commission of many of its financing transactions.
However, under the Energy Policy Act, a company engaged exclusively in the
business of owning and/or operating a facility used for the generation of
electric energy exclusively for sale at wholesale may be exempted from
regulation under the Public Utility Holding Company Act as an exempt wholesale
generator. On March 12, 1999, the General Counsel of the Federal Energy
Regulatory Commission issued a letter determining that, based on the facts
stated in its application, EME Homer City is an exempt wholesale generator.
If there occurs a "material change" in facts which might affect EME Homer
City's continued eligibility for exempt wholesale generator status, within
60 days of this material change EME Homer City must:
- file a written explanation of why the material change does not affect its
exempt wholesale generator status,
- file a new application for exempt wholesale generator status or
- notify the Federal Energy Regulatory Commission that it no longer wishes
to maintain exempt wholesale generator status.
If EME Homer City were to lose its exempt wholesale generator status, it and
its affiliates would be subject to regulation under the Public Utility Holding
Company Act that would be difficult to comply with absent a restructuring.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The members of our current board of directors are elected by, and serve
until their successors are elected by, our sole stockholder. All officers are
elected from time to time by our board of directors and hold office at its
discretion. Our board of directors currently contains five members. The board of
directors or our sole stockholder may elect to appoint additional directors from
time to time.
Listed below are our current directors and executive officers and their
positions.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
James V. Iaco, Jr.................... 55 Director and President
Kevin M. Smith....................... 41 Director, Senior Vice President, Chief Financial Officer
and Treasurer
Martha A. Spikes..................... 45 Director, Vice President and Secretary
Raymond W. Vickers................... 57 Director
Paul R. Gillespie.................... 52 Director and Vice President
Mark E. Irwin........................ 40 Vice President
Steven D. Eisenberg.................. 41 Vice President and General Counsel
Mary Ellen Olson..................... 44 Vice President and Assistant General Counsel
John K. Deshong...................... 46 Vice President
</TABLE>
Described below are the principal occupations and business activities of our
directors and executive officers for the past five years, in addition to their
positions indicated above.
JAMES V. IACO, JR. has been Senior Vice President and Division President of
Edison Mission Energy's Americas region since May 1998. Mr. Iaco served as Chief
Financial Officer of Edison Mission Energy from January 1994 to May 1999.
KEVIN M. SMITH has been Senior Vice President and Chief Financial Officer of
Edison Mission Energy since May 1999 and Regional Vice President--Finance of
Edison Mission Energy's Americas region since March 1998. Mr. Smith has served
as Treasurer of Edison Mission Energy since September 1992.
MARTHA A. SPIKES has been Corporate Secretary of Edison Mission Energy since
July 1996. Ms. Spikes has served as corporate and project counsel to Edison
Mission Energy since 1991.
RAYMOND W. VICKERS has been Senior Vice President and General Counsel of
Edison Mission Energy since March 1, 1999. Prior to joining Edison Mission
Energy, Mr. Vickers was a partner with the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP since 1989.
PAUL R. GILLESPIE has been Vice President--Tax of Edison Mission Energy
since May 1996. Prior to joining Edison Mission Energy, Mr. Gillespie was Senior
Tax Counsel for Mobil Corporation from January 1996 to May 1996 and Manager, Tax
Planning of Mobil Corporation since July 1991.
MARK E. IRWIN has been Vice President--Business Management of Edison Mission
Energy's Americas region since July 1995. Mr. Irwin has served as Vice President
of Edison Mission Energy since July 1995.
STEVEN D. EISENBERG has been Vice President and Associate General Counsel of
Edison Mission Energy and Regional Vice President--Legal of Edison Mission
Energy's Americas region since January 1999. Prior to joining Edison Mission
Energy, Mr. Eisenberg was a partner with the law firm of Morgan, Lewis & Bockius
from September 1997 to December 1998. Prior to that, Mr. Eisenberg was Vice
President and General Counsel of Diamond Energy, Inc. from January 1995 to
September 1997
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and Vice President and Associate General Counsel of Diamond Energy, Inc. from
September 1992 to January 1995.
MARY ELLEN OLSON has been Vice President and Assistant General Counsel of
Edison Mission Energy and Regional Vice President--Legal of Edison Mission
Energy's Americas region since December 1997. Ms. Olson served as Regional Vice
President and Assistant General Counsel of Edison Mission Energy since
February 1997. Ms. Olson has served as corporate and project counsel to Edison
Mission Energy since 1988.
JOHN K. DESHONG has been Regional Vice President--Tax of Edison Mission
Energy's Americas region since November, 1998. Mr. Deshong has served as
Director, Tax Planning & Special Projects to Edison Mission Energy since 1997.
Prior to joining Edison Mission Energy, Mr. Deshong was Director of Tax at
United States Enrichment Corporation from December 1995 to April 1997. Prior to
that, Mr. Deshong was Senior Tax Advisor at Mobil Corporation from April 1993 to
December 1995.
EXECUTIVE COMPENSATION
Our officers receive compensation from Edison Mission Energy and receive no
compensation from us. For information concerning the compensation of the Chief
Executive Officer and four most highly paid executive officers, other than the
Chief Executive Officer, of Edison Mission Energy, see Edison Mission Energy's
Form 10-K for the year ended December 31, 1998, which is incorporated by
reference in this prospectus. For information concerning the benefit plans
maintained by Edison Mission Energy for our officers and employees, see Edison
Mission Energy's Form 10-K for the year ended December 31, 1998, which is
incorporated by reference in this prospectus.
DIRECTORS COMPENSATION
Our directors receive no compensation for their service as directors.
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INTERCOMPANY RELATIONSHIPS AND RELATED TRANSACTIONS
THE FOLLOWING IS A SUMMARY OF THE INTERCOMPANY RELATIONSHIPS AND RELATED
TRANSACTIONS. THE TERMS OF THESE TRANSACTIONS ARE NO MORE FAVORABLE THAN THOSE
THAT WOULD HAVE BEEN AGREED UPON BY THIRD PARTIES ON AN ARM'S LENGTH BASIS.
ENERGY SALES AGREEMENT
EME Homer City has entered into a contract with a marketing affiliate for
the sale of energy and capacity produced by the Homer City units, which enables
this marketing affiliate to engage in forward sales and hedging transactions.
EME Homer City pays the marketing affiliate a nominal fee currently set at
$0.02/MWh, which results in payments of approximately $300,000 per year. All
revenue from physical sales transactions executed by the marketing affiliate
will be deposited into the Revenue Account. Edison Mission Holdings provides
credit support for Edison Mission Marketing & Trading Co. related to various
electric energy transactions, including futures and swap agreements. At
September 30, 1999, Edison Mission Holdings provided guarantees totaling
$71 million in support of contracts entered into by affiliates. See "Description
of Principal Contracts--Energy Sales Agreement."
INTERCOMPANY LOANS
We have entered into an intercompany loan agreement with Edison Mission
Finance Co. under which we have agreed to make loans to FinanceCo from time to
time with the proceeds of loans made to us under the Credit Agreement. FinanceCo
has entered into a corresponding intercompany loan agreement with EME Homer City
under which it has agreed to make loans to EME Homer City from time to time with
the proceeds of loans made to FinanceCo by us. The loans described in this
paragraph, and all other obligations owed by a subsidiary guarantor to another
subsidiary guarantor or to us, are subordinated to all of our subsidiary
guarantors' obligations under the Financing Documents. See "Description of
Principal Financing Documents--Subordination Agreement."
RELATIONSHIP OF EDISON MISSION HOLDINGS AND THE GUARANTORS TO EDISON MISSION
ENERGY
Each of Edison Mission Holdings and each subsidiary guarantor has been
organized and operated as a legal entity separate and apart from Edison Mission
Energy, Edison International and any other affiliates of Edison Mission Energy
or Edison International, and, accordingly, our assets and the assets of our
subsidiary guarantors will not be generally available to satisfy the obligations
of Edison Mission Energy, Edison International or any other affiliates of Edison
Mission Energy or Edison International. However, our unrestricted cash and that
of our subsidiary guarantors or other assets which are available for
distribution may, subject to applicable law and the terms of financing
arrangements of these parties, be advanced, loaned, paid as dividends or
otherwise distributed or contributed to Edison International, Edison Mission
Energy or any of their affiliates. Edison Mission Energy and Edison
International are not obligated to make any payments under the bonds, except for
the Credit Support Guarantee and the guarantee provided by Edison Mission Energy
that we use to satisfy the debt service reserve requirements for the bonds
discussed above. See "Description of the Bonds--Nature of Recourse" and
"Description of the Bonds--The Guarantees."
SERVICES AGREEMENTS
Administrative services such as payroll, employee benefit programs and
information technology, all performed by Edison International or Edison Mission
Energy, are shared among all affiliates of Edison International, and the costs
of these corporate support services are allocated to all affiliates, including
us. Costs are allocated based on one of the following formulas: percentage of
time worked, equity in investment and advances, number of employees, or
multi-factor, including operating revenues, operating
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expenses, total assets and number of employees. In addition, services of Edison
International or Edison Mission Energy are sometimes directly requested by us,
and those services are performed for our benefit. Labor and expenses of these
directly requested services are specifically identified and billed at cost. We
believe the allocation methodologies utilized are reasonable. We made
reimbursements for the cost of these programs and other services, which amounted
to $520,000 for the period ended September 30, 1999.
We pay our trading affiliate a two-cent per megawatt hour commission fee for
all power sold under power marketing arrangements. For the period ended
September 30, 1999, these commission fees totaled $131,000.
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DESCRIPTION OF PRINCIPAL CONTRACTS
THE FOLLOWING IS A SUMMARY OF MATERIAL FEATURES OF THE HOMER CITY FACILITIES
AND SELECTED PROVISIONS OF THE PRINCIPAL AGREEMENTS RELATED TO THE HOMER CITY
FACILITIES AND OUR BUSINESS AND THE BUSINESS OF OUR SUBSIDIARY GUARANTORS, AND
IS NOT CONSIDERED TO BE A FULL STATEMENT OF THE TERMS OF THESE AGREEMENTS.
ACCORDINGLY, THE FOLLOWING SUMMARIES OF ALL THESE AGREEMENTS ARE QUALIFIED BY
REFERENCE TO EACH AGREEMENT AND ARE SUBJECT TO THE TERMS OF THE FULL TEXT OF
EACH AGREEMENT. UNLESS OTHERWISE STATED, ANY REFERENCE IN THIS PROSPECTUS TO ANY
AGREEMENT SHALL MEAN THAT AGREEMENT AND ALL SCHEDULES, EXHIBITS AND ATTACHMENTS
TO THAT AGREEMENT AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED AND IN EFFECT
AS OF THE DATE OF THIS PROSPECTUS. COPIES OF ALL THESE AGREEMENTS HAVE BEEN
FILED AS EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS FORMS A
PART. SEE "AVAILABLE INFORMATION."
SUMMARY
EME Homer City is party to various agreements related to the operation of
the Homer City units. EME Homer City purchased the Homer City facilities from
the sellers on March 18, 1999 under the Asset Purchase Agreement. In connection
with the acquisition, New York State Electric & Gas and Pennsylvania Electric
Company entered into the Transition Contracts, the Interconnection Agreement and
the Easement Agreement with ME Westside, and ME Westside subsequently assigned
these contracts to EME Homer City. The Transition Contracts provide New York
State Electric & Gas and Pennsylvania Electric Company with an option to buy,
and EME Homer City with an option to sell, specified quantities of capacity from
the units. Under the Interconnection Agreement, New York State Electric & Gas
and Pennsylvania Electric Company have agreed to provide the services necessary
to interconnect the Homer City units with their transmission systems. The
Easement Agreement is intended to provide the use and access rights to EME Homer
City, New York State Electric & Gas and Pennsylvania Electric Company for the
performance of their respective obligations under the Interconnection Agreement.
EME Homer City has also entered into the Energy Sales Agreement with one of its
affiliates, under which this affiliate will purchase capacity and energy
produced by the Homer City units for sale to third parties.
New York State Electric & Gas and Pennsylvania Electric Company entered into
several fuel supply agreements to obtain the coal requirements for the Homer
City units. NGE Generation, Inc. and GPU Generation Inc. entered into the Coal
Cleaning Agreement to provide for the operation and maintenance of our coal
cleaning facility, and New York State Electric & Gas and Pennsylvania Electric
Company entered into the Operating Agreement to provide for the blending of coal
for Unit 3. All of these agreements were assigned to EME Homer City in
connection with the acquisition.
EME Homer City has also entered into an agreement with ABB Flakt for the
provision of all engineering, procurement and construction services necessary to
complete the environmental capital improvements to the Homer City units.
Unless otherwise indicated in this prospectus, each of the agreements
described below contains the following customary indemnification, force majeure
and assignment provisions:
- an agreement by each party to indemnify the other party and such other
party's affiliates, successors, officers, directors, employees and agents
for all claims, losses, damages and expenses for damage to property or
injury to or death of any person to the extent caused by an act or
omission of the indemnifying party or its officers, directors, employees
or agents in connection with the contract;
- a force majeure clause excusing a party's performance under the contract
if performance is prevented by a cause beyond the reasonable control of
the party which is unable to perform; and
- a provision stating that a party may not assign its rights or obligations
under the contract without the prior consent of the other party.
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ASSET PURCHASE AGREEMENT
ME Westside entered into the Asset Purchase Agreement with the sellers on
August 1, 1998 and assigned the contract to EME Homer City on November 6, 1998.
Under the Asset Purchase Agreement, EME Homer City purchased the assets
constituting the Homer City facilities on March 18, 1999, including, but not
limited to, specified real property, inventories of raw materials and fuels,
machinery and equipment, real property leases, agreements, permits, easements
and emission reduction credits, and excluding the related electrical
transmission and distribution facilities. The purchase price was $1,801 million
with adjustments for some differences in book value of inventories.
ASSUMPTION OF LIABILITIES.
Under the Asset Purchase Agreement, and subject to several exceptions, EME
Homer City agreed to assume and discharge many of the sellers' liabilities and
obligations, including all liabilities and obligations to be paid or performed
on or after March 18, 1999 under the following:
(1) the contracts, agreements, licenses and leases relating to the
ownership, operation and maintenance of the Homer City facilities which
were assigned to EME Homer City;
(2) the leases, contracts and other agreements entered into by the sellers
with respect to the purchased assets after the execution of the Asset
Purchase Agreement;
(3) those permits which are transferable from the sellers to EME Homer City;
(4) all liabilities and obligations with respect to transferred employees;
(5) taxes incurred in connection with the acquisition; and
(6) subject to several exceptions, any liability related to violations of
environmental laws, tort claims and remediation procedures with respect
to the ownership or operation of the purchased assets.
REPRESENTATIONS AND WARRANTIES. Each seller made customary representations
and warranties to EME Homer City in the Asset Purchase Agreement. The majority
of these provisions terminated on March 18, 1999. The following representations
and warranties of the sellers survive for a period of 18 months after March 18,
1999:
(1) each seller is duly incorporated, existing and in good standing;
(2) each seller had the full power and authority to enter into the Asset
Purchase Agreement and that it is enforceable in accordance with its
terms; and
(3) subject to obtaining the sellers' required regulatory approvals, no
consent or approval was necessary for the execution of the Asset Purchase
Agreement other than those filings or consents which if not obtained
would not prevent each seller from performing its material obligations
under the Asset Purchase Agreement.
COVENANTS. Each seller entered into covenants in the Asset Purchase
Agreement. The majority of these provisions terminated on March 18, 1999. The
covenants, which survive for a period of 18 months after March 18, 1999, relate
to: (1) the conduct of the sellers' business during the period from August 1,
1998 to March 18, 1999 and (2) tax filings in jurisdictions in which applicable
tax law would require a portion of the purchase price to be withheld or would
subject EME Homer City to liability for the sellers' tax liabilities.
INDEMNIFICATION. Under the Asset Purchase Agreement, the sellers and EME
Homer City agreed to customary indemnification provisions. The agreement
contains limitations on the seller's indemnity obligations, including a release
from liability for any environmental condition or violation of
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environmental law related to the purchased assets other than liabilities not
assumed by EME Homer City under the agreement.
ENERGY SALES AGREEMENT
EME Homer City entered into the Energy Sales Agreement dated as of March 18,
1999 with Edison Mission Marketing & Trading Co. The Energy Sales Agreement
provides for the sale by EME Homer City and the purchase by Edison Mission
Marketing & Trading of capacity and energy produced by the Homer City units up
to the capacity of the Homer City units. The transactions executed under the
Energy Sales Agreement may not be for speculative purposes.
TERM. The Energy Sales Agreement will remain in effect unless terminated by
either party upon 90 days' prior written notice to the other party.
PAYMENTS. Edison Mission Marketing & Trading will make payments to EME
Homer City for capacity and energy delivered to the PJM transmission system at
the Homer City units at a price equal to (1) the price which a third-party
purchaser of the capacity or energy has agreed to pay to Edison Mission
Marketing & Trading less (2) $0.02 per MWh of capacity or energy. If EME Homer
City fails to deliver capacity or energy to Edison Mission Marketing & Trading
as agreed, EME Homer City will be required to pay Edison Mission Marketing &
Trading an amount equal to (1) $0.02 per MWh of capacity or energy purchased by
Edison Mission Marketing & Trading to replace the capacity or energy that EME
Homer City failed to deliver plus (2) the price at which Edison Mission
Marketing & Trading, acting in a commercially reasonable manner, purchases
replacement capacity or energy or, if Edison Mission Marketing & Trading does
not purchase replacement capacity or energy, the market price for replacement
capacity or energy as determined by Edison Mission Marketing & Trading in a
commercially reasonable manner.
TRANSITION CONTRACTS
NEW YORK STATE ELECTRIC & GAS TRANSITION CONTRACT
ME Westside entered into the New York State Electric & Gas Transition
Contract on August 1, 1998, and subsequently assigned this contract to EME Homer
City on November 6, 1998. This contract provides New York State Electric & Gas
with a call option to buy, and EME Homer City with a put option to sell,
specified quantities of electric generating capacity from the Homer City units.
TERM. This contract will expire on April 30, 2001 unless terminated earlier
in accordance with its terms. New York State Electric & Gas may terminate the
contract prior to its stated expiration date by providing 25 days notice to EME
Homer City upon an event of default of EME Homer City under the contract.
LETTER AGREEMENTS. EME Homer City entered into a letter agreement with New
York State Electric & Gas to adjust the contract periods under the contract to
conform to the PJM capacity planning cycle. EME Homer City also entered into
contractual arrangements with New York State Electric & Gas to sell 942 MW of
capacity to this customer for the period from March 18, 1999 to May 31, 1999 for
a price of $55/MW-day and to sell 500 MW of capacity to New York State Electric
& Gas during the period from June 1, 1999 through May 31, 2000 for a price of
$60/MW-day.
OPTIONS. New York State Electric & Gas and EME Homer City may exercise
their options to purchase and sell capacity during the periods from June 1, 2000
through October 31, 2000 and from November 1, 2000 to April 30, 2001. EME Homer
City may exercise its put option to sell to New York State Electric & Gas up to
an amount of an option capacity equal to the lesser of (1) 942 MW and (2) one
half of New York State Electric & Gas's projected load supply obligations to
NYISO less the capacity available to be provided by its remaining owned
generation and existing power purchase
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entitlements. New York State Electric & Gas may exercise its call option to
purchase from EME Homer City up to an amount of capacity equal to (1) the New
York State Electric & Gas option capacity described above less (2) the amount of
capacity which EME Homer City has elected to sell to New York State Electric &
Gas under its put option.
PAYMENTS. If either EME Homer City or New York State Electric & Gas
exercises its option, New York State Electric & Gas will make monthly payments
to EME Homer City equal to the sum of:
(1) (A)$72.30 per MW of capacity for the period from June 1, 2000 through
October 31, 2000, or
(B)$77.20 per MW of capacity for the period from November 1, 2000 to
April 30, 2001, in each case sold EME Homer City's put option, multiplied
by the number of days in the month or portion of this month; and
(2) (A)$91.70 per MW of capacity for the period from June 1, 2000 through
October 31, 2000, or
(B)$103.00 per MW of capacity for the period from November 1, 2000 to
April 30, 2001, in each case sold under New York State Electric & Gas'
call option, multiplied by the number of days in the month or portion of
this month.
PENNSYLVANIA ELECTRIC COMPANY TRANSITION CONTRACT
ME Westside entered into the Transition Contract on August 1, 1998, and
subsequently assigned this contract to EME Homer City on November 6, 1998. This
contract provides Pennsylvania Electric Company with a call option to buy, and
EME Homer City with a put option to sell, quantities of electric generating
capacity from the Homer City units.
TERM. This contract will expire on May 31, 2001 unless terminated earlier
in accordance with its terms.
OPTIONS. EME Homer City exercised its put option to sell 942 MW of capacity
to Pennsylvania Electric Company during the period which commenced on March 18,
1999 and ended on May 31, 1999 and during the period which commenced on June 1,
1999 and ends on May 31, 2000. Pennsylvania Electric Company and EME Homer City
may exercise their remaining options to purchase and sell capacity during the
period from June 1, 2000 to May 31, 2001. EME Homer City may exercise its put
option to sell to Pennsylvania Electric Company up to an amount of an option
capacity equal to the lesser of (1) 942 MW and (2) GPU's projected load supply
obligations to PJM less the capacity available to be provided by its remaining
owned generation and existing power purchase entitlements. Pennsylvania Electric
Company may exercise its call option to purchase from EME Homer City up to an
amount of capacity equal to (1) the Pennsylvania Electric Company option
capacity described above less (2) the amount of capacity which EME Homer City
has elected to sell to Pennsylvania Electric Company under its put option.
PAYMENTS.
During the period from June 1, 1999 to May 31, 2000, Pennsylvania Electric
Company will make monthly payments to EME Homer City equal to the product of:
- $56,425.80,
- the number of days in the relevant month or portion of this month, and
- a fraction, not greater than 1, the numerator of which is the "unforced
capacity" attributable to the installed capacity provided by EME Homer
City and the denominator of which is 91% of such installed capacity.
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"Unforced capacity" means the installed capacity rated at summer conditions
that is not on average experiencing an outage or not able to operate at full
rated capacity due to an unplanned event. If either EME Homer City or
Pennsylvania Electric Company exercises its option for the period from June 1,
2000 to May 31, 2001, Pennsylvania Electric Company will make monthly payments
to EME Homer City equal to the product of:
- $77.40 per MW of capacity sold as part of EME Homer City's put option plus
$100.90 per MW of capacity sold under Pennsylvania Electric Company's call
option,
- the number of days in the month or portion of this month, and
- a fraction, not greater than 1, the numerator of which is the "unforced
capacity" attributable to the installed capacity provided by EME Homer
City and the denominator of which is 91% of such installed capacity.
INDEMNIFICATION. The indemnification obligations of EME Homer City and
Pennsylvania Electric Company under the Transition Contract arise only upon the
negligence or willful misconduct of the indemnifying party.
EPC CONTRACT
EME Homer City entered into the Turnkey Engineering, Procurement and
Construction Contract dated as of April 7, 1999 with ABB Environmental Systems,
a division of ABB Flakt. ABB Environmental has agreed to complete the work
necessary to add selective catalytic reduction systems to each of the Homer City
units and to add a limestone based, wet scrubber flue gas desulfurization system
to Unit 3.
ABB ENVIRONMENTAL'S DUTIES.
The EPC Contract requires ABB Environmental to, among other things:
(1) procure all labor, materials, tools, equipment, insurance, security,
supplies, manufacturing and related services and certain permits
necessary for the completion of the work,
(2) provide monthly progress reports, damage reports and other reports to
EME Homer City,
(3) coordinate the procurement of spare parts for this project,
(4) train EME Homer City's personnel in the operation of this project and
supervise start-up and testing activities and
(5) perform all guaranteed performance tests specified in the EPC Contract.
CONTRACT PRICE. The contract price for completion of the work is
$233,849,804, which is to be paid by EME Homer City in installments upon
completion of certain milestones to ABB Environmental. EME Homer City is
entitled to retain 10% of the contract price as security until ABB Environmental
has performed all of its obligations under the EPC Contract.
GUARANTEED MECHANICAL COMPLETION DATES. The guaranteed mechanical
completion dates under the EPC Contract are as follows: (1) June 1, 2000 for
installation of the selective catalytic reduction system at Unit 2; (2) May 1,
2001 for installation of the selective catalytic reduction systems at Units 1
and 3; and (3) September 20, 2001 for installation of the flue gas
desulfurization system at Unit 3. The guaranteed mechanical completion dates are
subject to extension under the terms of the EPC Contract.
PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES. ABB Environmental is
required to pay EME Homer City liquidated damages for failure of the project to
meet certain performance guarantees and for excess outages at the Homer City
units and delay in completion of the project. Liquidated damages
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for failure to satisfy the performance guarantees are limited to 15% of the
contract price, and liquidated damages for excess outages and delay in
completion are limited to 15% of the contract price. The total amount of
performance, excess outage and delay liquidated damages cannot exceed 25% of the
contract price.
PERFORMANCE SECURITY. The EPC Contract requires ABB Environmental to
provide a performance and payment bond in the full amount of the contract price
in order to secure ABB Environmental's obligations under the EPC Contract. To
satisfy this requirement, ABB Environmental has provided performance and payment
bonds from Federal Insurance Company and American Home Assurance Company.
FUEL AGREEMENTS
COAL SUPPLY AGREEMENTS
New York State Electric & Gas and Pennsylvania Electric Company entered into
several coal supply agreements with local suppliers to obtain the coal
requirements for the Homer City units. These agreements were assigned to EME
Homer City in connection with the acquisition. Following is a table summarizing
the key terms of the existing coal supply agreements. All of the coal supply
agreements other than the Tanoma agreement terminating on December 31, 2002 are
for Units 1 and 2 as of September 30, 1999.
<TABLE>
<CAPTION>
MINIMUM QUANTITY MAXIMUM QUANTITY BASE PRICE
SUPPLIER TERMINATION DATE (TONS PER MONTH) (TONS) ($/TON)
- -------- ---------------- ---------------- ----------------------- ----------
<S> <C> <C> <C> <C>
Canterbury Coal Company..... 12/31/03 28,000 40,000/month 21.33(1)
Mears Enterprises, Inc...... 12/31/00 30,000 35,000/month 21.41
Rosebud Mining Company...... 12/31/00 25,000 1,050,000/contract term 21.42
Helvetia Coal Company....... (2) 1,800,000/year None 26.75(3)
Unionvale Coal Company...... 12/31/07 (4) (5) (6)
Tanoma Coal Sales, Inc...... 12/31/04 25,000 (7) (8)
12/31/99 10,000 25,000 (9)
12/31/99 15,000 None 21.40
12/31/02 85,000 95,000/month 37.00(10)
Kajon Materials, Inc........ 5/31/00 10,000 360,000/contract term 20.37
DLR Coal Company............ 12/31/04 20,000 1,500,000/contract term 19.00
Britt Resources, Inc........ 4/30/03 15,000 65,000/month (11)
</TABLE>
- ------------------------
(1) The base price per ton under the Canterbury Coal Company agreement
increased to $22.05 on January 1, 2000 and will be increased to $22.30 on
January 1, 2002.
(2) The Helvetia agreement will terminate when 16 million tons of raw coal have
been delivered under this agreement. At current delivery rates, the
contract will expire in 2002.
(3) The base price for coal delivered under the Helvetia agreement was $26.75
per ton as of January 1995 and is adjusted quarterly in accordance with a
cost index and a market index.
(4) The minimum monthly quantities under the Unionvale Coal Company agreement
are as follows: (1) from August 1, 1999 through December 31, 2000, 35,000
tons; (2) from January 1, 2001 through December 31, 2001, 45,000 tons; and
(3) from January 1, 2002 through December 31, 2007, 60,000 tons.
(5) The maximum monthly quantities under the Unionvale Coal Company agreement
are as follows: (1) from August 1, 1999 through December 31, 2000, 50,000
tons; (2) from January 1, 2001 through December 31, 2001, 60,000 tons; and
(3) from January 1, 2002 through December 31, 2007, 67,500 tons.
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(6) The price paid for coal under the Unionvale Coal Company agreement is as
follows: (1) through December 31, 2000, $21.50/ton; (2) from January 1, 2001
through December 31, 2001, $21.93/ton; (3) from January 1, 2002 through
December 31, 2002, $22.37/ton; (4) from January 1, 2003 through
December 31, 2005, as determined in good faith between the parties to the
agreement, not to exceed the price specified in clause (3) plus 5%;
(5) from January 1, 2006 through December 31, 2006, the price specified in
clause (4) plus 2% of this price; and (6) from January 1, 2007 through
December 31, 2007, the price specified in clause (5) plus 2% of this price.
(7) Under the Tanoma agreement terminating on December 31, 2004, EME Homer City
can receive up to 35,000 tons of coal per month on and after July 1, 1999 if
it notifies Tanoma by February 1, 1999, and can receive up to 45,000 tons of
coal per month on and after October 1, 2000 if it notifies Tanoma by May 1,
2000.
(8) The price paid for coal under the Tanoma agreement terminating on
December 31, 2004 is as follows: (1) through December 31, 2000, $21.30/ton;
and (2) from January 1, 2001 through December 31, 2004, as determined in
accordance with a combination of (a) good faith negotiations between the
parties, (b) changes in the prices under other coal supply agreements for
the Homer City facilities and (c) changes in the economic dispatch rates for
Units 1 and 2.
(9) The price paid for coal under the Tanoma agreement terminating on
December 31, 1999 is as follows: (1) for the first 10,000 tons, $22.05/ton;
(2) for the next 10,000 tons, $22.89/ton; and (3) for the final 5,000 tons,
$22.47/ton
(10) The price paid for coal under the Tanoma agreement terminating on
December 31, 2002 is subject to adjustment for several factors, including
the economic dispatch rate for Unit 3 and the market price of similar low
sulfur coal.
(11) The price paid for coal under the Britt Resources agreement is as follows:
(1) up to 25,000 tons, $21.00/ton; (2) from 25,001 to 40,000 tons,
$22.00/ton; and (3) from 40,001 to 65,000 tons, $23.00/ton.
PRICE ADJUSTMENTS. The base price paid for coal under EME Homer City's coal
supply agreements will be increased if the heat content of the coal delivered
under these agreements is greater than the applicable guaranteed heat content
and will be decreased if the heat content of the coal delivered is less than the
applicable guaranteed heat rate. The base price under the EME Homer City's coal
supply agreements will also be decreased if the sulfur content of the coal
delivered is in excess of the levels specified in such agreements.
DELIVERY. All coal procured under the coal supply agreements for the Homer
City units is obtained from mines designated by EME Homer City and is delivered
to the units on the suppliers' trucks. All coal deliveries are FOB the Homer
City units, freight prepaid and allowed.
INDEMNIFICATION. The indemnification obligations under the coal supply
agreements run only from the suppliers to EME Homer City.
COAL CLEANING AGREEMENT
NGE Generation, Inc. and GPU Generation Inc. entered into the Coal Cleaning
Agreement with Homer City Coal on August 8, 1990. NGE Generation, Inc. and GPU
Generation, Inc. assigned their rights and obligations under the Coal Cleaning
Agreement to EME Homer City in connection with the acquisition. The Coal
Cleaning Agreement provides for the operation and maintenance of the coal
cleaning facility by Homer City Coal.
TERM. The Coal Cleaning Agreement will expire on August 31, 2002 unless
terminated earlier in accordance with its terms. Either EME Homer City or Homer
City Coal may terminate the Coal Cleaning Agreement prior to the contract's
stated expiration date upon prior notice to the other party.
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OPERATION AND MAINTENANCE SERVICES. Homer City Coal is obligated to operate
and maintain the coal cleaning facility in accordance with the Operating
Specification dated January 4, 1990 and reissued as Revision 2 on January 28,
1998. The operation and maintenance services provided by Homer City Coal include
the completion of periodic performance tests, the provision of administrative
support staff, the monitoring of inventory, the preparation of an annual budget
for proposed capital expenditures and operating expenses for our coal cleaning
facility and the procurement of materials required for operation and maintenance
of our coal cleaning facility up to $25,000.
PAYMENTS. EME Homer City is required to reimburse Homer City Coal for the
actual costs incurred in the operation and maintenance of our coal cleaning
facility. EME Homer City is also required to pay to Homer City Coal (1) an
annual fixed general and administrative services fee of $260,200 ($173,467 in
2002), payable monthly, and (2) an operating fee ranging from $0.20 to $0.35 per
ton of coal cleaned depending on the level of tonnage.
OPERATING AGREEMENT
New York State Electric & Gas and Pennsylvania Electric Company entered into
the Operating Agreement with Tanoma on March 1, 1997 and assigned the contract
to EME Homer City in connection with the acquisition. The Operating Agreement
provides for the blending of coal for Unit 3 at the coal blending facility.
TERM. Unless terminated earlier in accordance with its terms, the Operating
Agreement will terminate upon termination of the coal supply agreement under
which Tanoma supplies coal for Unit 3. This coal supply agreement is currently
scheduled to expire on December 31, 2002. See "--Coal Supply Agreements" above.
COAL BLENDING SERVICES. Tanoma is required to store, blend, crush and
process raw coal at the coal blending facility in an amount sufficient to
satisfy its delivery obligations under this agreement and any other agreement
between Tanoma and EME Homer City for the supply of coal for Unit 3. The
Operating Agreement requires EME Homer City to provide power, filtered water,
storm water treatment and fugitive dust control services for the coal blending
facility.
PAYMENTS. EME Homer City is obligated to reimburse Tanoma for the actual
cost of transporting coal to the Homer City facilities coal storage area. EME
Homer City also pays a fee of $1.00 per ton of coal in excess of 30,000 tons per
month. The first 30,000 tons per month of coal is deemed consideration for the
lease of the coal blending facility site to Tanoma. See "Business--Properties."
INTERCONNECTION AGREEMENT
ME Westside entered into the Interconnection Agreement with New York State
Electric & Gas and Pennsylvania Electric Company on August 1, 1998, and
subsequently assigned the Interconnection Agreement to EME Homer City on
November 6, 1998. Under the Interconnection Agreement, New York State Electric &
Gas and Pennsylvania Electric Company have agreed to provide the services
necessary to interconnect the Homer City units with their transmission systems.
TERM. Unless terminated earlier in accordance with its terms, the
Interconnection Agreement will terminate on a date mutually agreed to by EME
Homer City, New York State Electric & Gas and Pennsylvania Electric Company not
to exceed the retirement date for the Homer City units.
REGULATORY AMENDMENTS. Upon changes in the regulatory environment affecting
Pennsylvania Electric Company's or New York State Electric & Gas' ability to
perform under the Interconnection Agreement, New York State Electric & Gas,
Pennsylvania Electric Company and EME Homer City are required to negotiate in
good faith any amendments to the Interconnection Agreement required to adapt its
terms to these changes. If the parties to the Interconnection Agreement are
unable to reach agreement on these amendments, New York State Electric & Gas and
Pennsylvania Electric Company
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have the right to make a unilateral filing with the Federal Energy Regulatory
Commission to modify the Interconnection Agreement as appropriate. EME Homer
City has the right to oppose any filing and to participate fully in any related
Federal Energy Regulatory Commission proceeding.
INTERCONNECTION SERVICES. New York State Electric & Gas and Pennsylvania
Electric Company have agreed to provide EME Homer City with interconnection
services at the Homer City units' interconnection points in order to
interconnect the units, and any addition to or upgrade or repowering of the
units, with New York State Electric & Gas' and Pennsylvania Electric Company's
transmission systems. EME Homer City is required to compensate New York State
Electric & Gas and Pennsylvania Electric Company for all reasonable costs
associated with any modifications, additions or replacements made to New York
State Electric & Gas' and Pennsylvania Electric Company's interconnection
facilities or transmission systems in connection with any addition to or upgrade
or repowering of the Homer City units. The interconnection services may be
interrupted or discontinued if, in the reasonable judgment of New York State
Electric & Gas, Pennsylvania Electric Company or the transmission operator
designated by them, the operation of the Homer City units would have an adverse
impact on the quality of service rendered by them, including transmission or
distribution services and services provided to end users or interfere with the
safe and reliable operation of their transmission systems. This right of
interruption or discontinuation exists until the condition has been corrected.
PAYMENTS. EME Homer City is required to compensate New York State Electric
& Gas and Pennsylvania Electric Company for all reasonable costs and fees
incurred by the sellers in the provision of interconnection services to EME
Homer City, including, without limitation, any tax liabilities, any costs of
acquiring land necessary for their interconnection facilities and the costs and
fees of all permits, licenses, franchises and regulatory or other approvals
necessary for the construction, maintenance and operation of their
interconnection facilities. Reimbursement payments are made on a monthly basis.
STEP-IN RIGHTS.
New York State Electric & Gas and Pennsylvania Electric Company have a right
to assume operational control of several of EME Homer City's communication
facilities, metering facilities, transformers, building facilities and other
facilities necessary for New York State Electric & Gas' and Pennsylvania
Electric Company's maintenance of their transmission systems in the event of:
- a voluntary or involuntary bankruptcy or insolvency of EME Homer City;
- a cessation of operations by EME Homer City for more than 30 days; or
- a failure of EME Homer City to perform its material obligations under the
Interconnection Agreement for more than two days if this failure adversely
affects their transmission systems.
New York State Electric & Gas and Pennsylvania Electric Company are required to
return control of these facilities to EME Homer City after the event permitting
the exercise of step-in rights has ceased or has been cured.
LOCAL SERVICES.
New York State Electric & Gas and Pennsylvania Electric Company have also
agreed to provide EME Homer City with the following local services:
- at no charge, secondary system, below 600 volts, substation service power
to the extent provided immediately prior to March 18, 1999;
- at no charge, heating, ventilation, air conditioning, lighting and other
building services to the extent provided immediately prior to March 18,
1999;
- at no charge, a security system for the substation control building, as in
existence immediately prior to March 18, 1999; and
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- for the reimbursement of reasonable costs, metering services.
EME Homer City has agreed to provide New York State Electric & Gas and
Pennsylvania Electric Company with the following local services:
- at no charge, secondary system, below 600 volts, substation service power
to the extent provided from the Homer City units immediately prior to
March 18, 1999;
- at no charge, building services, potable water for their substation
control building, treatment for the sewage released from their substation
and a plant paging system in their substation, in each case to the extent
provided immediately prior to March 18, 1999;
- at mutually agreed upon costs, substation operating and maintenance
services; and
- at no charge, office and storage space at the locations in place
immediately prior to March 18, 1999.
ASSIGNMENT. EME Homer City may assign its rights and obligations under the
Interconnection Agreement to any of its majority-owned subsidiaries and may
assign its rights and interests under the Interconnection Agreement to any
party, or trustee of this party, providing financing for the Homer City
facilities.
LIMITATION ON LIABILITY. New York State Electric & Gas and Pennsylvania
Electric Company will not be liable to EME Homer City under the Interconnection
Agreement for damages exceeding $5 million in any 12-month period, whether this
liability arises out of negligence, gross negligence, willful misconduct, breach
of warranty, strict liability or breach of contract.
EASEMENT AGREEMENT
EME Homer City entered into the Easement, License and Attachment Agreement
with New York State Electric & Gas and Pennsylvania Electric Company on
March 18, 1999. The Easement Agreement is intended to provide the use and access
rights to EME Homer City, New York State Electric & Gas and Pennsylvania
Electric Company necessary for the performance of their respective obligations
under the Interconnection Agreement.
EASEMENTS.
EME Homer City has granted to New York State Electric & Gas and Pennsylvania
Electric Company the following easements, among others, on its property:
- an easement permitting all electrical substations, communications
equipment, drainage pipes and systems, transmission facilities, revenue
meters, remote terminal units and distribution facilities owned by them,
either jointly or individually, to remain in place and permitting them to
operate, upgrade, replace or otherwise use such structures;
- an easement for all purposes necessary for them to exercise their rights
and perform their obligations under the Interconnection Agreement;
- an easement to use the existing railroad siding located on EME Homer
City's property;
- an easement to install supporting structures, cables, wires and other
equipment within the main substation area at the site; and
- an easement of access to EME Homer City's property for the purposes of
exercising any of their rights under the Easement Agreement.
EME Homer City has retained the right to keep the portion of its property
located in the main substation area at the site in its present location and to
use this property in the manner described in the Interconnection Agreement.
ASSIGNMENT. The parties to the Easement Agreement may assign all or any
part of their rights under this agreement, if for so long as the Interconnection
Agreement is in effect, this assignment, other than with respect to rights
relating to distribution facilities and communication equipment, may be made
only in connection with an assignment of rights and obligations under the
Interconnection Agreement in accordance with its terms.
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DESCRIPTION OF THE BONDS
THE FORM AND TERMS OF THE EXCHANGE BONDS AND THE ORIGINAL BONDS ARE
IDENTICAL IN ALL MATERIAL RESPECTS, EXCEPT THAT TRANSFER RESTRICTIONS AND
REGISTRATION RIGHTS APPLICABLE TO THE ORIGINAL BONDS DO NOT APPLY TO THE
EXCHANGE BONDS. THE FOLLOWING IS A DESCRIPTION OF MATERIAL PROVISIONS OF THE
BONDS OFFERED IN THIS PROSPECTUS. THE FOLLOWING INFORMATION IS NOT A COMPLETE
DESCRIPTION OF THE BONDS AND IS SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY,
REFERENCE TO THE BONDS AND THE INDENTURE, INCLUDING THE DEFINITIONS OF TERMS
USED IN THE BONDS AND THE INDENTURE, SOME OF WHICH ARE LISTED IN THE GLOSSARY OF
DEFINED TERMS BELOW. UNLESS OTHERWISE SPECIFIED, THE FOLLOWING DESCRIPTION
APPLIES TO ALL OF THE BONDS.
GENERAL
The original bonds were issued, and the exchange notes will be issued, under
an indenture by and between Edison Mission Holdings and the trustee, dated as of
May 27, 1999. References to the bonds include the exchange bonds unless the
context otherwise requires. The terms of the bonds include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. The bonds, together with all other secured Senior Debt,
are senior secured obligations of Edison Mission Holdings and rank equally in
right of payment with all other existing and future Senior Debt of Edison
Mission Holdings, and senior in right of payment to all existing and future
Indebtedness of Edison Mission Holdings that is designated as subordinate or
junior in right of payment to the bonds. The bonds, together with all other
secured Senior Debt, are fully and unconditionally guaranteed by each subsidiary
guarantor. If at any time before December 31, 2001, neither we nor our
subsidiary guarantors can make payments on the bonds and our other senior
Secured Debt, Edison Mission Energy, our parent company, will be required to
make payments on the bonds or our other senior Secured Debt, in proportion to
their respective obligations, of up to $42 million under the Credit Support
Guarantee. If the debt service on the bonds cannot be satisfied under the Credit
Support Guarantee, Edison Mission Energy will have to make payments on the bonds
under the debt service reserve guarantee provided to satisfy the debt service
requirements on the bonds of up to $35.3 million. See "Description of Principal
Financing Documents--Indenture." For purposes of this summary, references to
"Edison Mission Holdings" do not include the subsidiary guarantors.
PRINCIPAL, MATURITY AND INTEREST
The Series A bonds were issued in aggregate principal amount of
$300 million and will mature on October 1, 2019. The Series B bonds were issued
in aggregate principal amount of $530 million and will mature on October 1,
2026. Interest on the bonds is payable semiannually in arrears on each April 1
and October 1, commencing on October 1, 1999. Interest will accrue on the basis
of a 360-day year consisting of 12 months of 30 days each at a rate of 8.137% in
the case of the Series A bonds and 8.734% in the case of the Series B bonds.
Principal, premium, if any, and interest on the bonds will be payable at our
office or agency maintained for this purpose within the City and State of New
York or, at our option, payment of interest may be made by check mailed to the
bondholders at their respective addresses listed in the register of bondholders.
All payments of principal, premium, if any, and interest with respect to bonds
for which bondholders have given wire transfer instructions to us will be
required to be made by wire transfer of immediately available funds to the
accounts specified by the relevant bondholders. Until otherwise designated by
us, our office or agency in New York will be the office of the trustee
maintained for such purpose. The original bonds are, and the exchange bonds will
be, issued in denominations of $100,000 or any multiple of $1,000 in excess of
$100,000.
AMORTIZATION OF THE BONDS
Principal of the bonds is payable in semiannual installments on each
April 1 and October 1 occurring on or after April 1, 2004 to the registered
holder of the bonds on the immediately preceding Regular Record Date, so that
the weighted average life of the Series A bonds is 13.9 years and the weighted
average life of the Series B bonds is 20.7 years. The following table shows the
percentage of principal of the bonds which is payable on each semiannual
Principal Payment Date.
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<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
PRINCIPAL PRINCIPAL PRINCIPAL
PAYMENT AMOUNT PAYABLE AMOUNT PAYABLE
DATES ON SERIES A BONDS ON SERIES B BONDS
- --------- ----------------- -----------------
<S> <C> <C>
April 1 and October 1, 2004................................. 1.000% 0.055%
April 1 and October 1, 2005................................. 2.000% 0.480%
April 1 and October 1, 2006................................. 2.000% 0.590%
April 1 and October 1, 2007................................. 2.500% 0.375%
April 1 and October 1, 2008................................. 3.000% 0.375%
April 1 and October 1, 2009................................. 3.000% 0.415%
April 1 and October 1, 2010................................. 3.000% 1.000%
April 1 and October 1, 2011................................. 3.000% 1.750%
April 1 and October 1, 2012................................. 3.000% 2.000%
April 1 and October 1, 2013................................. 3.000% 1.250%
April 1 and October 1, 2014................................. 3.000% 1.500%
April 1 and October 1, 2015................................. 4.000% 2.000%
April 1 and October 1, 2016................................. 4.000% 2.000%
April 1 and October 1, 2017................................. 5.000% 2.000%
April 1 and October 1, 2018................................. 5.000% 2.000%
April 1 and October 1, 2019................................. 3.500% 2.500%
April 1 and October 1, 2020................................. -- 3.500%
April 1 and October 1, 2021................................. -- 3.500%
April 1 and October 1, 2022................................. -- 3.500%
April 1 and October 1, 2023................................. -- 4.000%
April 1 and October 1, 2024................................. -- 4.000%
April 1 and October 1, 2025................................. -- 5.000%
April 1 and October 1, 2026................................. -- 6.210%
</TABLE>
THE GUARANTEES
SUBSIDIARY GUARANTEES
The bonds are guaranteed by our following direct and indirect subsidiaries under
the Guarantee and Collateral Agreement:
- EME Homer City Generation L.P.;
- Edison Mission Finance Co.;
- Homer City Property Holdings, Inc.;
- Mission Energy Westside, Inc.; and
- Chestnut Ridge Energy Company.
The subsidiary guarantors fully and unconditionally guarantee all of our
obligations under the bonds and the Senior Debt, including our obligations to
pay principal, premium, if any, and interest with respect to the bonds and the
Senior Debt. Any future subsidiary of Edison Mission Holdings will become an
additional subsidiary guarantor of the bonds. See "Description of Principal
Financing Documents--Other Security Documents--Guarantee and Collateral
Agreement."
CREDIT SUPPORT GUARANTEE
Edison Mission Energy, our parent company, unconditionally and irrevocably
guarantees to the bondholders and the Collateral Agent for the benefit of the
Secured Parties, the prompt and complete
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payment and performance by us when due of all of our Obligations under the bonds
and the Senior Debt up to an amount of $42 million. The Credit Support Guarantee
will be utilized for payments on the bonds and Senior Debt prior to amounts
available in the Debt Service Reserve Accounts. Amounts under the Credit Support
Guarantee will be available until December 31, 2001 after which date, Edison
Mission Energy will have no further obligations under this guarantee. See
"Description of Principal Financing Documents--Security Deposit Agreement" and
"Description of Principal Financing Documents--Other Security Documents--Credit
Support Guarantee."
BOND DEBT SERVICE RESERVE ACCOUNT
A Bond Debt Service Reserve Account has been established with the Collateral
Agent for the benefit of the bondholders. Amounts on deposit in the Bond Debt
Service Reserve Account will be used to pay our scheduled installments of
principal and interest on the bonds in the event that our cash flow from
operations is inadequate for such payment. The required balance of the Bond Debt
Service Reserve Account on any date of determination will be 100% of the
projected debt service on the bonds for the succeeding six-month period.
The Bond Debt Service Reserve Requirement may be satisfied by one or a
combination of the following:
(1) cash;
(2) a letter of credit that constitutes Acceptable Credit Support; or
(3) a guarantee of our obligations with respect to the Bond Debt Service Reserve
Requirement, in the form stated in the indenture, made by Edison Mission
Energy in favor of the Collateral Agent for the benefit of the bondholders,
so long as such guarantee constitutes Acceptable Credit Support.
Edison Mission Energy has provided a guarantee in satisfaction of the debt
service reserve requirement for the bonds up to $35.3 million. The Collateral
Agent will obtain the funds necessary to pay the debt service due on the bonds
from the proceeds of this guarantee if the debt service due cannot be satisfied
by the amount available under the Credit Support Guarantee. This debt service
reserve guarantee by Edison Mission Energy may be replaced without the consent
of the holders of the bonds if we elect to provide another form of acceptable
debt service credit support as outlined above.
See "Description of Principal Financing Documents--Security Deposit Agreement"
and "Description of Principal Financing Documents--Other Security
Documents--Bond Debt Service Reserve Account."
NATURE OF RECOURSE
Recourse for payment or performance of any of our obligations in respect of
the bonds will be limited solely to us and the subsidiary guarantors. Neither
any of our affiliates, other than the subsidiary guarantors, nor any of the
officers, directors or stockholders of Edison Mission Holdings or any of our
affiliates, will be liable for the payment of the principal of, premium, if any,
or interest on the bonds. Bondholders will have no claim against or recourse to,
whether by operation of law or otherwise these entities or persons or their
affiliates, other than with respect to the Credit Support Guarantee and any
guarantee by Edison Mission Energy issued to satisfy the Bond Debt Service
Reserve Requirement. See "Description of Principal Financing Documents--Other
Security Documents."
RATINGS
Moody's has assigned the bonds a long-term senior secured debt rating of
"Baa3," S&P has assigned the bonds a long-term senior secured debt rating of
"BBB-" and Duff & Phelps has assigned the bonds a long-term senior secured debt
rating of "BBB". These expectations reflect only the views
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of Moody's, S&P and Duff & Phelps, respectively, at the time the rating is
issued, and any explanation of the significance of these ratings may be obtained
only from the rating agency. There is no assurance that these ratings will
remain in effect for any given period of time or that these ratings will not be
lowered, suspended or withdrawn entirely by Moody's, S&P or Duff & Phelps, if,
in their judgment, circumstances so warrant. Any lowering, suspension or
withdrawal of these ratings may have an adverse effect on the market price or
marketability of the bonds.
REDEMPTION AND REPURCHASE
MANDATORY REDEMPTION
The bonds will be subject to mandatory redemption, ratably with all other
Senior Debt in existence at that time, upon the occurrence of a Recovery Event
with respect to the Homer City facilities. This mandatory redemption shall not
apply with respect to amounts received by us and the subsidiary guarantors in
connection with a Recovery Event for which we elect to restore or replace the
asset or assets in respect of which a Recovery Event occurred and a Reinvestment
Notice is provided within 45 days of a Recovery Event. With respect to any
Recovery Event of $50 million or more, the Independent Engineer must have
certified as to the reasonableness of our repair and replacement plans in our
Reinvestment Notice relating to this Recovery Event. Any mandatory redemption of
the bonds will be without premium or penalty at a Redemption Price equal to the
unpaid principal amount of the bonds plus accrued and unpaid interest on this
amount to the Redemption Date.
OPTIONAL REDEMPTION
The bonds are subject to optional redemption at any time at a Redemption
Price equal to the outstanding principal amount of the bonds to be redeemed plus
all accrued and unpaid interest on the bonds to the Redemption Date, plus the
Yield Maintenance Premium, if any.
SELECTION AND NOTICE
If less than all of the bonds are to be redeemed at any time, selection of
bonds for redemption will be made by the trustee on a proportional basis, by lot
or by such method as the trustee shall deem fair and appropriate. No less than
$1,000 of any bonds shall be redeemed in part. Notices of redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
Redemption Date to each bondholder at its registered address. Notices of
redemption may not be conditional. If any bond is to be redeemed in part only,
the notice of redemption that relates to that bond shall state the portion of
the principal amount of the bond to be redeemed. A new bond in principal amount
equal to the unredeemed portion of the bond will be issued in the name of the
holder of the bond upon cancellation of the original bond. Bonds called for
redemption become due on the date fixed for redemption. On and after the
Redemption Date, interest ceases to accrue on bonds or portions of them called
for redemption.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the exchange bonds will be issued in fully
registered form. Except as described below, the exchange bonds initially will be
represented by one or more global bonds, in definitive, fully registered form
without interest coupons. The global bonds will be deposited with the trustee as
custodian for DTC and registered in the name of Cede & Co. or another nominee as
DTC may designate.
DTC has advised us as follows:
- DTC is a limited purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New
York Banking Law, a member of the
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Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Exchange Act.
- DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thus eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and other organizations.
Indirect access to the DTC system is available to others, including banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
- Upon the issuance of the global bonds, DTC or its custodian will credit,
on its internal system, the respective principal amounts of the exchange
bonds represented by the global bonds to the accounts of persons who have
accounts with DTC. Ownership of beneficial interests in the global bonds
will be limited to persons who have accounts with DTC or persons who hold
interests through the persons who have accounts with DTC. Persons who have
accounts with DTC are referred to as "participants." Ownership of
beneficial interests in the global bonds will be shown on, and the
transfer of that ownership will be effected only through, records
maintained by DTC or its nominee, with respect to interests of
participants, and the records of participants, with respect to interests
of persons other than participants.
So long as DTC or its nominee is the registered owner or holder of the
global bonds, DTC or the nominee, as the case may be, will be considered the
sole record owner or holder of the exchange bonds represented by the global
bonds for all purposes under the indenture and the exchange bonds. No beneficial
owners of an interest in the global bonds will be able to transfer that interest
except according to DTC's applicable procedures, in addition to those provided
for under the indenture.
Owners of beneficial interests in the global bonds will not:
- be entitled to have the exchange bonds represented by the global bonds
registered in their names,
- receive or be entitled to receive physical delivery of certificated bonds
in definitive form, and
- be considered to be the owners or holders of any exchange bonds under the
global bonds.
Accordingly, each person owning a beneficial interest in the global bonds
must rely on the procedures of DTC and, if a person is not a participant, on the
procedures of the participant through which that person owns its interests, to
exercise any right of a holder of exchange bonds under the global bonds. We
understand that under existing industry practice, in the event an owner of a
beneficial interest in the global bonds desires to take any action that DTC, as
the holder of the global bonds, is entitled to take, DTC would authorize the
participants to take that action, and that the participants would authorize
beneficial owners owning through the participants to take that action or would
otherwise act upon the instructions of beneficial owners owning through them.
Payments of the principal of, premium, if any, and interest on the exchange
bonds represented by the global bonds will be made to DTC or its nominee, as the
case may be, as the registered owner of the global bonds. Neither we, the
trustee, nor any paying agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global bonds or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
of, premium, if any, or interest on the global bonds will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
ownership interests in the principal amount of the global
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bonds, as shown on the records of DTC or its nominee. We also expect that
payments by participants to owners of beneficial interests in the global bonds
held through these participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in the names of nominees for these customers. These
payments will be the responsibility of these participants.
Transfer between participants in DTC will be effected in the ordinary way in
accordance with DTC rules. If a holder requires physical delivery of bonds in
certificated form for any reason, including to sell bonds to persons in states
which require the delivery of the bonds or to pledge the bonds, a holder must
transfer its interest in the global bonds in accordance with the normal
procedures of DTC and the procedures described in the indenture.
Unless and until they are exchanged in whole or in part for certificated
exchange bonds in definitive form, the global bonds may not be transferred
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC.
Beneficial owners of exchange bonds registered in the name of DTC or its
nominee will be entitled to be issued, upon request, exchange bonds in
definitive certificated form.
DTC has advised us that DTC will take any action permitted to be taken by a
holder of bonds, including the presentation of bonds for exchange as described
below, only at the direction of one or more participants to whose account the
DTC interests in the global bonds are credited. Further, DTC will take any
action permitted to be taken by a holder of bonds only in respect of that
portion of the aggregate principal amount of bonds as to which the participant
or participants has or have given that direction.
Although DTC has agreed to these procedures in order to facilitate transfers
of interests in the global bonds among participants of DTC, it is under no
obligation to perform these procedures, and may discontinue them at any time.
Neither we nor the trustee will have any responsibility for the performance by
DTC or its participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
Subject to specified conditions, any person having a beneficial interest in
the global bonds may, upon request to the trustee, exchange the beneficial
interest for exchange bonds in the form of certificated bonds. Upon any issuance
of certificated bonds, the trustee is required to register the certificated
bonds in the name of, and cause the same to be delivered to, the person or
persons, or the nominee of these persons. In addition, if DTC is at any time
unwilling or unable to continue as a depositary for the global bonds, and a
successor depositary is not appointed by us within 90 days, we will issue
certificated bonds in exchange for the global bonds.
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DESCRIPTION OF PRINCIPAL FINANCING DOCUMENTS
THE FOLLOWING SUMMARIES OF MATERIAL PROVISIONS OF THE FINANCING DOCUMENTS DO
NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND ARE QUALIFIED IN THEIR
ENTIRETY BY REFERENCE TO, ALL OF THE PROVISIONS OF THE FINANCING DOCUMENTS,
INCLUDING THE DEFINITIONS OF TERMS USED IN THE FINANCING DOCUMENTS, SOME OF
WHICH ARE LISTED IN THE GLOSSARY OF DEFINED TERMS BELOW. COPIES OF THE FINANCING
DOCUMENTS HAVE BEEN FILED AS EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH
THIS PROSPECTUS FORMS A PART. SEE "AVAILABLE INFORMATION." CAPITALIZED TERMS
USED IN THIS SECTION AND NOT OTHERWISE DEFINED IN THIS PROSPECTUS HAVE THE
MEANINGS ASCRIBED TO THESE TERMS IN THE FINANCING DOCUMENTS.
INDENTURE
GENERAL
The bonds will be issued under the indenture and, together with all other
secured Senior Debt, will be senior secured obligations of Edison Mission
Holdings and will rank equally in right of payment with all other existing and
future Senior Debt of Edison Mission Holdings, and senior in right of payment to
all existing and future Indebtedness of Edison Mission Holdings that is
designated as subordinate or junior in right of payment to the bonds. The bonds,
together with all other secured Senior Debt, will be fully and unconditionally
guaranteed by each subsidiary guarantor and secured by, among other things, a
mortgage and first priority lien on all of our and the subsidiary guarantors'
tangible and intangible assets. As a result, the bonds will effectively rank
equally with all secured Senior Debt of Edison Mission Holdings and the
subsidiary guarantors and senior to all other Indebtedness except Indebtedness
permitted to be incurred under the indenture and secured by Permitted Liens. Our
right to receive assets of any of the subsidiary guarantors upon the latter's
liquidation or reorganization, and the consequent right of the bondholders and
the other Secured Parties to participate in the receipt of those assets, will be
effectively senior to the claims of that subsidiary guarantor's creditors,
except with respect to Permitted Liens.
AFFIRMATIVE COVENANTS
Following is a description of material affirmative covenants in favor of the
trustee and the bondholders with which we will be obligated to comply under the
indenture so long as any bonds remain outstanding.
INFORMATION REQUIREMENTS
Upon written request, which may be a single continuing request, we shall
furnish or cause to be furnished to the trustee, each of the Rating Agencies
and, with respect to clauses (1) and (2) below, any bondholder or beneficial
owner or prospective bondholder or beneficial owner:
(1) as soon as available and in any event within 60 days after the end
of our first, second and third fiscal quarters of each fiscal year, our
unaudited financial statements as of the end of that fiscal quarter,
together with an Officer's Certificate of Edison Mission Holdings stating
that these financial statements fairly present our financial condition and
results of operations on the dates and for the periods indicated in
accordance with GAAP;
(2) as soon as available and in any event within 120 days after the end
of each fiscal year of Edison Mission Holdings, our audited financial
statements, together with an Officer's Certificate of Edison Mission
Holdings stating that no Default or Event of Default has occurred and is
continuing, or that if a Default or an Event of Default has occurred and is
continuing, a statement as to the nature of this event;
(3) within 10 days after an authorized officer of Edison Mission
Holdings obtains actual knowledge of any event or condition which
constitutes a Default or an Event of Default, written notice of its
occurrence specifically stating that this event or condition has occurred
and describing it and any action being or proposed to be taken with respect
to it;
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(4) within 15 days after an authorized officer of Edison Mission
Holdings has actual knowledge of any pending or threatened material
litigation which has or could reasonably be expected to have a Material
Adverse Effect, written notice of this litigation; and
(5) at any time when we are subject to the reporting requirements of
Section 13 or Section 15(d) of the Securities Exchange Act, copies of any
filing made with the Securities and Exchange Commission under Section 13 or
Section 15(d) of the Securities Exchange Act, within five days after this
filing is made.
We shall also provide to the trustee and the Rating Agencies:
- annual operational and construction reports,
- updated Power Market Consultant reports,
- any Officer's Certificates provided by us relating to the incurrence of
Indebtedness under clause (6) or (7) under "--Negative
Covenants--Limitation on Incurrence of Indebtedness" below, at least
30 days' prior to the incurrence of this Indebtedness under those clauses,
and
- notice of any transfers of assets permitted by clause (1) under
"--Negative Covenants--Limitation on Sale of Assets" below.
MAINTENANCE OF EXISTENCE; COMPLIANCE WITH LAWS
We shall, and shall cause each of the subsidiary guarantors to, at all times
(1) maintain their respective existence in good standing under the laws of their
respective jurisdictions of organization and (2) maintain and renew all of their
respective rights, powers, privileges and franchises except where the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
We shall, and shall cause each of the subsidiary guarantors to, comply with
all applicable laws, acts, rules, regulations, permits, orders and requirements
of any legislative, executive, administrative or judicial body relating to
Edison Mission Holdings and the subsidiary guarantors, except where:
(1) the failure to do so could not reasonably be expected to have a
Material Adverse Effect; or
(2) we are disputing in good faith any such law, act, rule, regulation,
permit, order or requirement and (A) we have established or accrued adequate
cash reserves in accordance with GAAP or provided other appropriate
assurances against any liabilities arising from this dispute and (B) our
action to dispute this law, act, rule, regulation, permit, order or
requirement could not reasonably be expected to have a Material Adverse
Effect.
GOVERNMENT APPROVALS
We shall, and shall cause each of the subsidiary guarantors to, obtain and
maintain in full force and effect all governmental approvals required under
applicable laws to be obtained by or on behalf of Edison Mission Holdings and
the subsidiary guarantors to conduct their respective businesses in accordance
with and perform their obligations under the Financing Documents to which each
of them is a party, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
MAINTENANCE OF PROPERTY; INSURANCE
We shall cause EME Homer City to (1) keep and maintain all property useful
and necessary in its business in good working order and condition consistent
with Prudent Industry Practice and (2) maintain good and valid title to its
properties and assets, subject to no Liens other than Permitted Liens, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
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We shall cause EME Homer City to maintain with financially sound and
reputable insurance companies, insurance for the amounts against the risks,
loss, damage and liability as are customarily insured against by other
enterprises of like size and type as that of the Homer City facilities, subject
to the availability of this coverage on commercially reasonable terms. This
insurance shall be on terms and conditions which are in accordance with Prudent
Industry Practice.
OTHER AFFIRMATIVE COVENANTS
The indenture also contains other covenants of Edison Mission Holdings,
including the obligations to, and to cause each of the subsidiary guarantors to:
(1) make all payments on the bonds;
(2) pay all taxes and claims;
(3) maintain books and records;
(4) maintain a paying agent office with respect to the bonds; and
(5) maintain the perfection of the security interests created by the
Security Documents.
NEGATIVE COVENANTS
Following is a description of the principal negative covenants in favor of
the trustee and the bondholders with which Edison Mission Holdings will be
obligated to comply under the indenture so long as any bonds remain outstanding.
LIMITATION ON INCURRENCE OF INDEBTEDNESS
Edison Mission Holdings will not, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to any Indebtedness other than Permitted
Indebtedness.
"Permitted Indebtedness" shall mean any of the following items of
Indebtedness:
(1) Indebtedness incurred in respect of the original bonds and the
exchange bonds;
(2) Indebtedness outstanding on May 27, 1999;
(3) Indebtedness incurred under the Credit Agreement;
(4) Capital Lease Obligations and purchase money indebtedness entered
into in the ordinary course of business in an amount not to exceed
$10 million outstanding at any one time;
(5) Indebtedness to any wholly-owned Subsidiary of Edison Mission
Holdings, so long as that Indebtedness is held by that Subsidiary;
(6) Indebtedness in respect of Required Capital Improvements, if,
(a) Edison Mission Holdings delivers to the trustee an Officer's
Certificate stating that the Indebtedness is being incurred to fund a
Required Capital Improvement and (b) after giving effect to the
incurrence of that Indebtedness, either (1) the average projected
Debt Service Coverage Ratio through the final maturity date of the
respective bonds shall not be less than 1.75 to 1.0 and the minimum
projected Debt Service Coverage Ratio for any four quarters through
the final maturity date of the respective bonds, taken as one
accounting period, shall not be less than 1.50 to 1.0 or (2) a
Ratings Reaffirmation is obtained;
(7) Indebtedness so long as, after giving effect to the incurrence of
that Indebtedness, Edison Mission Holdings delivers to the trustee an
Officer's Certificate stating that (a) the average projected Debt
Service Coverage Ratio through the final maturity date of the bonds
shall not be less than 2.50 to 1.0 and the minimum projected Debt
Service Coverage Ratio for any four quarters through the final
maturity date of the bonds, taken as one accounting period, shall not
be less than 2.00 to 1.0, provided that if the proceeds
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of that Indebtedness are to be applied to construct a new facility,
the bonds must be rated Investment Grade after giving effect to the
incurrence of that Indebtedness, or (b) the bonds are rated at least
Investment Grade by each Rating Agency then rating the bonds;
(8) Indebtedness incurred for working capital purposes only and not in
excess of $50 million at any one time outstanding, with this amount
to be escalated annually in accordance with increases in the Consumer
Price Index, provided that the outstanding principal amount of this
Indebtedness on each anniversary of May 27, 1999 shall be $0;
(9) Indebtedness represented by Interest Rate Hedging Obligations, so
long as these Interest Rate Hedging Obligations relate to
Indebtedness otherwise permitted to be incurred by Edison Mission
Holdings;
(10) Reimbursement obligations or other Indebtedness relating to
reimbursement under any letter of credit issued to satisfy any Debt
Service Reserve Requirement;
(11) Subordinated Indebtedness to Affiliates of Edison Mission Holdings,
provided that the incurrence of this subordinated Indebtedness
satisfies the covenant described below under "--Limitation on
Restricted Payments";
(12) Indebtedness in the form of guarantees entered into by Edison
Mission Holdings in the ordinary course of business in connection
with fuel procurement or sales, purchases or exchanges by Affiliates
of Edison Mission Holdings related to physical or financial capacity,
energy and emissions credits related to the Homer City facilities, so
long as these activities are not for speculative purposes;
(13) Indebtedness in respect of letters of credit, surety bonds or
performance bonds issued in the ordinary course of Edison Mission
Holdings' business;
(14) Indebtedness incurred in exchange for, or the net proceeds of which
are used to refund, refinance or replace, indebtedness of Edison
Mission Holdings' incurred under clause (3) above, provided that
(a) the principal amount, net of expenses, of such new Indebtedness
shall not exceed the principal amount of the old Indebtedness and
(b) either (1) the average life of the new Indebtedness shall not be
shorter than the remaining average life of the respective bonds or
(2) the new Indebtedness shall be rated at least Investment Grade by
each Rating Agency then rating the new Indebtedness; and
(15) other senior Indebtedness not to exceed $20 million at any one time
outstanding.
For purposes of incurring Indebtedness under clauses (6), (7) and
(14) above, the Power Market Consultant will provide updated electricity price
projections to allow Edison Mission Holdings to provide the requisite
certification.
For purposes of determining compliance with this covenant, in the event that
an item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (1) through
(15) above as of the date of the item's incurrence, Edison Mission Holdings
shall, in its sole discretion, be entitled to classify or reclassify this item
of Indebtedness in any manner that complies with this covenant. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
LIMITATION ON INCURRENCE OF SUBSIDIARY GUARANTOR INDEBTEDNESS
Edison Mission Holdings will not permit any subsidiary guarantor to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
any Indebtedness other than:
(1) Subordinated Indebtedness or
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(2) Indebtedness in respect of letters of credit, surety bonds or
performance bonds issued, or purchase money or trade indebtedness
incurred, in the ordinary course of business and in an aggregate amount
not to exceed $15 million at any one time outstanding.
LIMITATION ON RESTRICTED PAYMENTS
Edison Mission Holdings will not, and will not permit any of the subsidiary
guarantors to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of the Edison Mission Holdings or any of the subsidiary
guarantors' Equity Interests, including, without limitation, any payment
in connection with any merger or consolidation involving Edison Mission
Holdings or any subsidiary guarantor, or to the direct or indirect
holders of Edison Mission Holdings or any of the subsidiary guarantors'
Equity Interests in their capacity as holders, other than:
(A) dividends or distributions payable in Equity Interests of Edison
Mission Holdings,
(B) dividends or distributions payable to Edison Mission Holdings or
another Subsidiary of Edison Mission Holdings or
(C) dividends payable to Edison Mission Energy with respect to the equity
distribution described above under "Use of Proceeds";
(2) purchase, redeem or otherwise acquire or retire for value, including
without limitation, in connection with any merger or consolidation
involving Edison Mission Holdings or any subsidiary guarantor, any Equity
Interests of Edison Mission Holdings or any direct or indirect parent of
Edison Mission Holdings or other Affiliate of Edison Mission Holdings;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Subordinated Indebtedness,
except a payment of interest or principal at Stated Maturity, or a
payment of interest made through the issuance of additional Indebtedness
of the same kind as the Indebtedness on which this interest shall have
accrued; or
(4) make any Restricted Investment.
All these payments and other actions described in clauses (1) through (4) above
are collectively referred to as "Restricted Payments". The indenture does not
prohibit Restricted Payments if, at the time of and after giving effect to this
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence of this Restricted Payment; and
(b) the amount on deposit in each Accrued Interest Account and in each
Principal Account shall be equal to or greater than the amount then required
to be on deposit in this Accrued Interest Account or Principal Account, as
the case may be, in accordance with priority Third or Fourth, as the case
may be, under "--Security Deposit Agreement--Priority of Payments";
(c) the Debt Service Reserve Accounts are each fully funded;
(d) the Debt Service Coverage Ratio for the preceding four quarters,
taken as one accounting period, is equal to or greater than 1.50 to 1.0 in
the case of any period ending on or prior to December 31, 2001 or 1.70 to
1.0 in the case of any period ending after December 31, 2001, as described
in an Officer's Certificate; and
(e) the projected Debt Service Coverage Ratio for each four-quarter
period, taken as one accounting period, during the next eight quarters is
equal to or greater than 1.50 to 1.0 in the case of any period ending on or
prior to December 31, 2001 or 1.70 to 1.0 in the case of any such period
ending after December 31, 2001, as described in an Officer's Certificate.
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At intervals not to exceed every three years, the Power Market Consultant
will provide updated electricity price projections to allow Edison Mission
Holdings certification for purposes of making Restricted Payments.
LIMITATION ON LIENS
Edison Mission Holdings will not, and will not permit any of the subsidiary
guarantors to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind upon any of their property or assets, now
owned or hereafter acquired, other than Permitted Liens.
The provisions of the first paragraph of this covenant shall not apply to
the incurrence of any of the following types of Permitted Liens:
(1) Liens existing on May 27, 1999;
(2) Liens created under the Security Documents;
(3) carriers', warehousemen's, mechanics', landlords' materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations not yet due and payable or which
are being contested in good faith by appropriate proceedings promptly
instituted and diligently prosecuted; provided that any reserve or
other appropriate provision as shall be required to conform with GAAP
shall have been made for these Liens;
(4) Liens for taxes, assessments or governmental charges or levies that
are not yet delinquent and remain payable without penalty or that are
being contested in good faith by appropriate proceedings promptly
instituted and diligently prosecuted; provided that any reserve or
other appropriate provision as shall be required to conform with GAAP
shall have been made for these Liens;
(5) Liens that are incidental to the business of Edison Mission Holdings
and the subsidiary guarantors, are not for borrowing money and are
not material, taken as a whole, to the business of Edison Mission
Holdings and the subsidiary guarantors; and
(6) Liens to secure Indebtedness permitted under clauses (3), (4), (6),
(7), (8), (9), (10), (14) and (15) of the covenant described above
under "--Limitation on Incurrence of Indebtedness."
LIMITATION ON SUBSIDIARIES AND INVESTMENTS
Edison Mission Holdings shall not create or acquire any Subsidiary unless
(1) this Subsidiary shall become an additional subsidiary guarantor under the
Security Documents, and (2) at the time of the creation or acquisition of this
Subsidiary, this Subsidiary shall have no Indebtedness outstanding other than
Indebtedness permitted under the Financing Documents. Edison Mission Holdings
will retain 100% direct or indirect beneficial ownership in its Subsidiaries for
so long as the bonds remain outstanding. Edison Mission Holdings will not, nor
will it permit any of the subsidiary guarantors to, make any investment other
than Permitted Investments.
LIMITATION ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY ALL ASSETS
Edison Mission Holdings will not, directly or indirectly, consolidate or
merge with or into any other person, whether or not Edison Mission Holdings is
the surviving corporation, or sell, assign, convey, lease, transfer or otherwise
dispose of, all or substantially all of its properties or assets in one or a
series of transactions, to any Person or Persons. However, Edison Mission
Holdings may consolidate with or merge into any other Person so long as
(1) Edison Mission Holdings is the surviving corporation and (2) both
immediately before and after giving effect to this transaction, no Default or
Event of Default shall have occurred and be continuing.
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Notwithstanding the preceding provision, Edison Mission Holdings may merge
or consolidate with or transfer substantially all of its assets to an Affiliate
that has no significant assets or liabilities and was formed solely for the
purpose of changing the jurisdiction of organization of Edison Mission Holdings
or the form of organization of Edison Mission Holdings; if the amount of
Indebtedness of Edison Mission Holdings and the subsidiary guarantors is not
increased by this merger, consolidation or transfer; and if the successor
assumes all obligations of Edison Mission Holdings under the indenture and the
registration rights agreement. Upon any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the properties or assets of Edison Mission Holdings in
accordance with the immediately preceding sentence, the successor corporation
formed by this consolidation or into or with which Edison Mission Holdings is
merged or to which this sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for and may exercise
every right and power of Edison Mission Holdings under the indenture with the
same effect as if such successor had been named as the "Company" in the
indenture. From and after the date of this consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of the indenture referring to
the "Company" shall refer instead to the successor corporation and not to Edison
Mission Holdings. This successor may exercise every right and power of Edison
Mission Holdings under the indenture with the same effect as if this successor
had been named as the "Company" in the indenture. However, Edison Mission
Holdings shall not be relieved from the obligation to pay the principal of and
interest on the bonds except in the case of a sale, assignment, transfer,
conveyance or other disposition of all or substantially all of the properties or
assets of Edison Mission Holdings on a combined basis that meets the
requirements of this paragraph.
Edison Mission Holdings will not permit any of the subsidiary guarantors to,
directly or indirectly, consolidate or merge with or into any other person,
whether or not or the subsidiary guarantor is the surviving corporation, or
sell, assign, convey, lease, transfer or otherwise dispose of, all or
substantially all of its properties or assets in one or a series of
transactions, to any person or persons, other than a merger with or into the
Edison Mission Holdings. In the case of any wholly-owned Subsidiary, Edison
Mission Holdings will permit a merger with or into any other wholly-owned
Subsidiary, a merger of any other wholly-owned Subsidiary into a wholly-owned
Subsidiary or a transfer or disposition of substantially all of its properties
or assets to Edison Mission Holdings or any other wholly-owned Subsidiary.
LIMITATION ON SALE OF ASSETS
Except in connection with a merger, consolidation or sale of substantially
all of its properties or assets, which is covered by the covenant described
above under "--Limitation on Merger, Consolidation and Sale of Substantially All
Assets," Edison Mission Holdings will not, and will not permit any of the
subsidiary guarantors to, sell or otherwise dispose of any assets or enter into
Sale-Leaseback Transactions, including by way of the issue or sale by Edison
Mission Holdings or any of the subsidiary guarantors of Equity Interests in
these subsidiary guarantors, other than:
(1) transfers of assets among Edison Mission Holdings and the subsidiary
guarantors, so long as a Ratings Reaffirmation is obtained,
(2) sales and dispositions in the ordinary course of business not in
excess of $10 million in any fiscal year,
(3) any sales or dispositions of surplus, obsolete or worn out equipment,
and
(4) any sales or dispositions required for compliance with applicable law
or necessary governmental approvals.
LIMITATION ON BUSINESS ACTIVITIES
Edison Mission Holdings will not, nor will it permit any subsidiary
guarantor to, engage in any business or conduct any activities other than the
ownership and operation of the Homer City facilities,
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any expansion or improvements of the facilities, and matters reasonably
incidental to these permitted activities. Edison Mission Holdings and the
subsidiary guarantors may enter into fuel procurement or sales, purchases or
exchanges related to physical or financial capacity, energy and emissions
credits related to the Homer City facilities, so long as these activities are
not for speculative purposes.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
Subject to specified conditions contained in the indenture, Edison Mission
Holdings will not, and will not permit any of the subsidiary guarantors to,
enter into any transaction or arrangement, whether or not in the ordinary course
of business, with any affiliate, other than Edison Mission Holdings and its
Subsidiaries, other than:
- management, operating, marketing, trading or other similar services
agreements between and among Edison Mission Holdings and its Affiliates in
existence on May 27, 1999 and
- any transaction which is on terms that are no less favorable to Edison
Mission Holdings or the relevant subsidiary guarantor than those that
would have been obtained in a comparable arm's-length transaction by
Edison Mission Holdings or this subsidiary guarantor with an unrelated
Person.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the indenture:
(1) default for 15 days in the payment when due of any principal of,
premium, if any, or interest on the bonds;
(2) failure by Edison Mission Holdings or any of the subsidiary
guarantors to comply with the provisions described above under the
captions:
(A) "--Negative Covenants--Limitation on Incurrence of Indebtedness,"
(B) "--Negative Covenants--Limitation on Incurrence of Subsidiary
Guarantor Indebtedness,"
(C) "--Negative Covenants--Limitation on Liens,"
(D) "--Negative Covenants--Limitation on Restricted Payments,"
(E) "--Negative Covenants--Limitation on Asset Sales,"
(F) "--Negative Covenants--Limitation on Business Activities,"
(G) "--Negative Covenants--Limitation on Merger, Consolidation and
Sale of Substantially All Assets"; or
(H) "--Affirmative Covenants--Maintenance of Existence," and this
failure shall continue uncured for 30 or more days from the date
an authorized officer of Edison Mission Holdings receives actual
notice of this failure;
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(3) failure by Edison Mission Holdings or any of the subsidiary
guarantors to comply with any of its other agreements in the
indenture, the bonds or the Security Documents and this failure shall
continue uncured for 60 or more days from the date an authorized
officer of Edison Mission Holdings receives actual notice of this
failure, or to the extent this Default is curable but cannot be cured
within such 60 day period, so long as Edison Mission Holdings
provides an Officer's Certificate to the trustee stating that it is
diligently pursuing a cure, this longer period of time which may be
necessary in good faith to cure the same, but in no event to exceed
90 days;
(4) the occurrence of a Change of Control;
(5) any portion of the security interests granted under the Security
Documents ceasing to be a senior security interest in full force and
effect, which cessation has a Material Adverse Effect; provided that
Edison Mission Holdings shall have 10 days to cure this cessation;
(6) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Edison Mission Holdings or any of
the subsidiary guarantors, or the payment of which is guaranteed by
Edison Mission Holdings or any of the subsidiary guarantors, whether
this Indebtedness or guarantee now exists, or is created after
May 27, 1999, which default results in the acceleration of this
Indebtedness prior to its express maturity and, in each case, the
principal amount of any Indebtedness, together with the principal
amount of any other such Indebtedness the maturity of which has been
so accelerated, aggregates without duplication $15 million or more;
(7) failure by Edison Mission Holdings or any of the subsidiary
guarantors to pay final, non-appealable judgments aggregating in
excess of $15 million, excluding amounts covered by insurance, which
judgments are not paid, discharged or stayed for a period of
90 days; and
(8) certain events of bankruptcy or insolvency with respect to Edison
Mission Holdings or any of the subsidiary guarantors, including any
involuntary proceeding that continues unstayed and undismissed for a
period of 60 or more consecutive days.
ENFORCEMENT
Subject to the Intercreditor Agreement, if any Event of Default occurs and
is continuing, the trustee may, and upon written direction of bondholders
holding not less than 33 1/3%, in the case of any Event of Default specified in
clause (1) under "--Events of Default" above, or 50%, in the case of any other
Event of Default, of the aggregate principal amount of the bonds shall:
(1) declare, by written notice, the entire outstanding principal amount
of the bonds, accrued interest on the bonds, premium, if any, and
other amounts payable with respect to the bonds to be due and payable
immediately; provided that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency with respect to
Edison Mission Holdings or any of the subsidiary guarantors, all
outstanding principal, accrued interest and premium, if any, and
other amounts payable with respect to the bonds will become due and
payable without further action or notice; and
(2) proceed to enforce all remedies available to the trustee under the
indenture and the other documents to which the trustee is a party or
available under applicable law.
Bondholders may not enforce the indenture or the bonds except as provided in
the indenture. Subject to some limitations, bondholders holding a majority in
principal amount at maturity of the then outstanding bonds may direct the
trustee in its exercise of any trust or power. The trustee may withhold
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from bondholders notice of any continuing Default or Event of Default, except a
Default or an Event of Default relating to the payment of principal or interest,
if it determines that withholding notice is in their interest.
Bondholders holding a majority or, with respect to the Event of Default
specified in item (4) under "--Events of Default" above, 66 2/3% in aggregate
principal amount at maturity of the bonds then outstanding by notice to the
trustee may on behalf of all the bondholders waive any existing Default or Event
of Default and its consequences under the indenture except a continuing Default
or Event of Default specified in item (1) or (8) under "--Events of Default"
above.
No bondholder shall have any right to institute any proceeding for a remedy
under the indenture unless:
(1) such bondholder has previously given to the trustee written notice of
the occurrence of an Event of Default,
(2) the bondholders holding a majority in aggregate principal amount of
the Outstanding bonds have made written request to the trustee to
institute this proceeding,
(3) the bondholders have offered to the trustee adequate security and
indemnity against costs and liabilities associated with this
proceeding,
(4) the trustee has failed to institute this proceeding within 60 days
after the receipt of this notice and
(5) no direction inconsistent with this written request has been given to
the trustee during this 60 day period.
The following rights of any bondholder shall not be impaired or affected
without the consent of such bondholder:
(1) the absolute and unconditional right to receive payment of the
principal of, premium, if any, and interest on the bonds on or after
the due date expressed in the bonds,
(2) the right to institute suit for the enforcement of this payment on or
after this due date, and
(3) the absolute and unconditional obligation of Edison Mission Holdings
to pay the principal of, premium, if any, and interest on each of
these bonds to this bondholder at the time and place listed in the
bonds.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Legal and covenant defeasance shall be permitted upon terms and conditions
customary for transactions of this nature.
SATISFACTION AND DISCHARGE
Edison Mission Holdings may terminate the indenture by delivering all
outstanding bonds to the trustee for cancellation and by paying all other sums
payable under the indenture.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, subject to the
Intercreditor Agreement:
- the indenture or the bonds may be amended or supplemented with the consent
of bondholders holding at least a majority in principal amount at maturity
of the bonds then outstanding,
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including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, bonds, and
- any existing default or compliance with any provision of the indenture or
the bonds may be waived with the consent of bondholders holding at least a
majority in principal amount at maturity of the then outstanding bonds,
including consents obtained in connection with a tender offer or exchange
offer for bonds.
Without the consent of each bondholder affected, an amendment or waiver may
not, with respect to any bonds held by a non-consenting bondholder:
(1) reduce the principal amount of bonds whose holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any bond or
alter the provisions with respect to the redemption of the bonds;
(3) reduce the rate of or change the time for payment of interest on any
bond;
(4) waive a default or an Event of Default in the payment of principal
of, premium, if any, or interest on the bonds, except a rescission of
acceleration of the bonds by bondholders holding at least 66 2/3% in
aggregate principal amount at maturity of the bonds and a waiver of
the Default that resulted from this acceleration;
(5) make any bond payable in money other than that stated in the bonds;
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of bondholders to receive
payments of principal of, premium, if any, or interest on the bonds;
(7) waive a redemption payment with respect to any bond; or
(8) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding provisions, without the consent of any
bondholder, Edison Mission Holdings and the trustee may amend or supplement the
indenture or the bonds:
(1) to cure any ambiguity, omission, defect or inconsistency,
(2) to provide for uncertificated bonds in addition to or in place of
certificated bonds,
(3) to provide for the assumption of Edison Mission Holdings' obligations
to bondholders in the case of a merger, consolidation or asset
transfer,
(4) to make any change that would provide any additional rights or
benefits to the bondholders or that does not adversely affect the
legal rights under the indenture of any bondholder, or
(5) to comply with requirements of the Securities and Exchange Commission
in order to effect or maintain the qualification of the indenture
under the Trust Indenture Act of 1939.
CONCERNING THE TRUSTEE
The indenture contains some limitations on the rights of the trustee, should
it become a creditor of Edison Mission Holdings, to obtain payment of claims in
specified cases, or to realize on specified property received in respect of any
claim as security or otherwise. The trustee will be permitted to engage in other
transactions. However, if it acquires any conflicting interest it must eliminate
this conflict within 90 days or resign.
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Bondholders holding a majority in principal amount of the then outstanding
bonds will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
specified exceptions. The indenture provides that in case an Event of Default
shall occur, which shall not be cured, the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to these provisions, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request of any bondholder, unless this bondholder shall have offered to the
trustee security and indemnity satisfactory to it against any loss, liability or
expense.
TRANSFER AND EXCHANGE
A bondholder may transfer or exchange bonds in accordance with the
indenture. The Registrar and the trustee may require a bondholder, among other
things, to furnish appropriate endorsements and transfer documents and Edison
Mission Holdings may require a bondholder to pay any taxes and fees required by
law or permitted by the indenture. Edison Mission Holdings is not required to
transfer or exchange any bond selected for redemption. Also, Edison Mission
Holdings is not required to transfer or exchange any bond for a period of
15 days before a selection of bonds to be redeemed.
The registered bondholder will be treated as the owner of it for all
purposes.
SECURITY DEPOSIT AGREEMENT
GENERAL
Edison Mission Holdings, each of the subsidiary guarantors and the
Collateral Agent entered into a Security Deposit Agreement, dated as of
March 18, 1999, under which:
(1) specified Accounts of Edison Mission Holdings and the subsidiary
guarantors were established with the Collateral Agent,
(2) instructions for deposits into, and payments from, each of the
Accounts were established and
(3) Edison Mission Holdings and each of the subsidiary guarantors pledged
and assigned to the Collateral Agent, and created in favor of the
Collateral Agent, for the benefit of the Secured Parties, a security
interest in each such party's interest in and to Revenues received by
this party, the Accounts, all amounts on deposit from time to time in
the Accounts and all proceeds of the items listed in this clause.
ESTABLISHMENT OF ACCOUNTS
The following Accounts have been established by the Collateral Agent:
- Revenue Account;
- Accrued Interest Accounts;
- Principal Accounts;
- Debt Service Reserve Accounts;
- Environmental Capital Expenditure Account;
- Recovery Event Proceeds Account; and
- Equity Account.
Edison Mission Holdings and the subsidiary guarantors have granted a
security interest in the Accounts to the Collateral Agent for the benefit of the
Secured Parties. The Accounts will at all times
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be in the name of the Collateral Agent. Edison Mission Holdings and the
subsidiary guarantors will not have any right to withdraw monies from the
Accounts or any other rights with respect to the Accounts other than as
described in the Security Deposit Agreement.
REVENUE ACCOUNT
All Revenues received by Edison Mission Holdings or the subsidiary
guarantors shall be deposited into the Revenue Account. Funds on deposit in the
Revenue Account shall be transferred on each Monthly Transfer Date as described
under "--Priority of Payments" below.
ACCRUED INTEREST ACCOUNTS; PRINCIPAL ACCOUNTS
Accrued Interest Accounts and Principal Accounts were established for each
class of Senior Debt entitled to the benefits of the Security Documents. These
Accounts shall be funded from funds on deposit in the Revenue Account on each
Monthly Transfer Date as described below under "--Priority of Payments." Amounts
on deposit in the Accrued Interest Accounts and Principal Accounts will be
utilized by the Secured Parties' Representatives to pay when due amounts owing
from time to time under Senior Debt.
DEBT SERVICE RESERVE ACCOUNTS
Debt Service Reserve Accounts were established for each class of Senior Debt
that, under the terms of the Financing Document governing this Senior Debt,
requires Edison Mission Holdings to satisfy a Debt Service Reserve Requirement
for this Senior Debt. Any DSR Credit Instrument delivered to the Collateral
Agent in accordance with any Debt Service Reserve Requirement will be deposited
in the related Debt Service Reserve Account.
ENVIRONMENTAL CAPITAL EXPENDITURE ACCOUNT
All proceeds of the Construction Term Loans issued under the Credit
Agreement will be deposited into the Environmental Capital Expenditure Account.
Except during a Default Period, as specified in a Request Letter from Edison
Mission Holdings to the Collateral Agent requesting a transfer, the Collateral
Agent will transfer to Edison Mission Holdings or any of the subsidiary
guarantors, from the funds on deposit in the Environmental Capital Expenditure
Account, the amount certified in this Request Letter to be the aggregate amount
then due and payable in respect of Environmental Capital Expenditures.
RECOVERY EVENT PROCEEDS ACCOUNT
All Recovery Event Proceeds will be deposited into the Recovery Event
Proceeds Account. Except during a Default Period, funds on deposit in the
Recovery Event Proceeds Account shall be utilized as follows, in each case under
the terms of the Financing Documents governing Senior Debt: either
(1) the Collateral Agent shall transfer to Edison Mission Holdings or any
of the subsidiary guarantors, from the funds on deposit in the
Recovery Event Proceeds Account, the amount certified in the related
Request Letter to be the aggregate amount then due and payable in
respect of restoration of the asset or assets under which Recovery
Event Proceeds have been received; or
(2) the Collateral Agent shall transfer to the Secured Parties'
Representative for Senior Debt required to be repaid from these
Recovery Event Proceeds the amount certified in the related Request
Letter to be the aggregate amount of principal, premium and interest
then due and payable in respect of this Senior Debt.
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EQUITY ACCOUNT
The Equity Account will be funded from amounts on deposit in the Revenue
Account on each Monthly Transfer Date as described below under "--Priority of
Payments." Except during a Default Period, on each Restricted Payment Date, the
Collateral Agent shall transfer, from the funds on deposit in the Equity
Account, the amount certified by Edison Mission Holdings in the Request Letter
delivered in connection with this Restricted Payment Date to be then available
for use in making Restricted Payments in accordance with the terms of the
Financing Documents.
PRIORITY OF PAYMENTS
Except during a Default Period, on each Monthly Transfer Date the Collateral
Agent shall transfer, from the funds on deposit in the Revenue Account, the
following amounts in the following order of priority:
(1) First, to the operating account established by Edison Mission
Holdings for this purpose, the amount certified in the related
Request Letter to be the excess, if any, of the aggregate amount of
operating expenses then due and payable or projected to become due
and payable in the next succeeding month over the balance then on
deposit in this account;
(2) Second, to the Collateral Agent and each Secured Parties'
Representative, the amount certified in the related Request Letter to
be the sum of the unpaid fees, indemnities, costs and expenses then
due and payable to the Collateral Agent and these Secured Parties'
Representatives in respect of their respective services in those
capacities;
(3) Third,
(A) into each Accrued Interest Account, the Accrued Interest Amount
calculated for this Accrued Interest Account, together with the
amount of all deficiencies, if any, with respect to deposits of
Accrued Interest Amounts required in all prior months, as
certified in the related Request Letter,
(B) into each Principal Account, other than
(1) the Principal Account relating to the Loans and any other
Principal Account established in respect of non-amortizing
Senior Debt;
(2) any Principal Account established for non-amortizing DSR
Letter of Credit Indebtedness or Ordinary Course Letter of
Credit Indebtedness, or so long as any Loans or related
commitments remain outstanding, any DSR Letter of Credit
Indebtedness, and
(3) any Principal Account relating to Swap Indebtedness, an
amount equal to 1/6th of the principal amount, if any, which
is payable on or within six months following such Monthly
Transfer Date on account of the Senior Debt with respect to
which this Principal Account was established, together with
the amount of all deficiencies, if any, with respect to
deposits of principal required in all prior months, as
certified in the related Request Letter,
(C) into each Principal Account relating to non-amortizing Ordinary
Course Letter of Credit Indebtedness, the amount certified in
such Request Letter to be sufficient to repay in full the related
Ordinary Course Letter of Credit Indebtedness then outstanding,
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(D) into each Swap Indebtedness Termination Payment Account, the
amount certified in the related Request Letter to be sufficient
to repay in full the related termination payment then due and
payable, and
(E) to the Administrative Agent, the amount specified in the related
Request Letter to be applied to the repayment of Revolving Loans;
(4) Fourth, into each Principal Account relating to non-amortizing DSR
Letter of Credit Indebtedness or, so long as any Loans or related
commitments remain outstanding, any DSR Letter of Credit
Indebtedness, the amount certified in the related Request Letter to
be sufficient to repay in full the related DSR Letter of Credit
Indebtedness then outstanding;
(5) Fifth, into each Debt Service Reserve Account, the amounts certified
in the related Request Letter to be necessary to cause the amount on
deposit, in the form of one or more DSR Credit Instruments, cash,
Permitted Investments or a combination of these forms, in this Debt
Service Reserve Account to be equal to the related Debt Service
Reserve Requirement; and
(6) Sixth, into the Equity Account, the balance remaining in the Revenue
Account.
If, on any Monthly Transfer Date, the funds on deposit in the Revenue
Account are insufficient to make in full any transfer required under clause
First, Second, Third or Fourth above, the Collateral Agent shall make this
transfer with funds then on deposit in the Equity Account. If, on any Senior
Debt Payment Date, after giving effect to any transfer to be made on such date
from funds on deposit in the Revenue Account or Equity Account as specified
above, the funds on deposit in the Accrued Interest Account for any Senior Debt
for which Debt Service is payable on this date are less than such Debt Service,
the Collateral Agent shall demand payment under the Credit Support Guarantee.
The Collateral Agent shall allocate the proceeds of this payment received under
the Credit Support Guarantee among all Accrued Interest Accounts, without regard
to whether there is any shortfall in these accounts, proportionally based on the
principal amount of all Senior Debt outstanding or committed on this date. If on
any Senior Debt Payment Date, after giving effect to any transfer to be made on
this date from funds on deposit in the Revenue Account or Equity Account, or
from payments under the Credit Support Guarantee, in each case as specified
above, the funds on deposit in the Accrued Interest Account or Principal Account
for any Senior Debt for which Debt Service is payable on this date are less than
such Debt Service, the Collateral Agent shall obtain the funds necessary to pay
this Debt Service: first, from funds in the Debt Service Reserve Account with
respect to this Senior Debt, if any, including funds obtained from drawings
under any DSR Credit Instrument, other than any Debt Service Reserve Guarantee,
held by the Collateral Agent in respect of this Senior Debt; and, second, from
the proceeds of any Debt Service Reserve Guarantee held by the Collateral Agent
in respect of this Senior Debt.
PRIORITY OF PAYMENTS DURING AN EVENT OF DEFAULT
During a Default Period, Edison Mission Holdings will be entitled to issue
Request Letters and otherwise direct the transfer of funds from the Accounts
until the Collateral Agent receives a Notice of Action directing that action be
taken. See "Intercreditor Agreement--Default; Acceleration; Exercise of
Remedies."
At any time after the Collateral Agent receives a Notice of Action
specifying that action be taken in accordance with the Security Deposit
Agreement, the Collateral Agent shall:
(1) transfer all amounts in the Environmental Capital Expenditure Account
to the Administrative Agent, and this transfer shall be deemed to be
a payment made on
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account of the Debt Service then due and payable in respect of the
Construction Term Loans;
(2) with respect to any Senior Debt, transfer all amounts in the Debt
Service Reserve Account with respect to this Senior Debt, including
amounts obtained from drawings under any DSR Credit Instrument held
by the Collateral Agent in respect of this Senior Debt, to the
Secured Parties' Representative for this Senior Debt, and this
transfer shall be deemed to be a payment made on account of the Debt
Service then due and payable in respect of this Senior Debt; and
(3) with respect to any Senior Debt, transfer all amounts in the Accrued
Interest Account and the Principal Account with respect to this
Senior Debt to the Secured Parties' Representative for this Senior
Debt, and this transfer shall be deemed to be a payment made on
account of the Debt Service then due and payable in respect of this
Senior Debt.
After making the transfers specified by the immediately preceding clauses
(1), (2) and (3), the Collateral Agent shall take or discontinue to take all
actions specified in this Notice of Action and/or shall transfer all amounts
remaining in the Accounts in the following order of priority:
(1) First, to the Collateral Agent and each Secured Parties'
Representative, the amount certified by this person to be the sum of the
unpaid fees, indemnities, costs and expenses then due and payable to this
person for its services in this capacity;
(2) Second, to each Secured Parties' Representative for Senior Debt,
the amount certified by this Secured Parties' Representative to be the
aggregate amount of principal, premium and interest then due and payable in
respect of this Senior Debt under the related Financing Documents;
(3) Third, to each Secured Parties' Representative for Senior Debt, the
amount certified by this Secured Parties' Representative to be the aggregate
amount of all Debt Service, other than principal, premium and interest, then
due and payable in respect of this Senior Debt under the related Financing
Documents; and
(4) Fourth, any surplus then remaining shall be paid to Edison Mission
Holdings or its successors or assigns or to whoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct.
INTERCREDITOR AGREEMENT
GENERAL
Edison Mission Holdings, each of the subsidiary guarantors, the
Administrative Agent and the Collateral Agent, together with other Secured
Parties' Representatives from time to time party to this agreement, entered into
a Collateral Agency and Intercreditor Agreement, dated as of March 18, 1999,
under which (1) the Collateral Agent was appointed by the Secured Parties'
Representatives as collateral agent for these parties under the Security
Documents and (2) the Secured Parties' Representatives agreed as to specified
procedures regarding the sharing of Collateral. Upon the issuance of the bonds,
the trustee became a party to the Intercreditor Agreement as a Secured Parties'
Representative.
Under the Intercreditor Agreement, all secured Senior Debt incurred by
Edison Mission Holdings from time to time shall be entitled to the benefits of
the Security Documents and rank equally without any preference among these
obligations by reason of date of incurrence or otherwise.
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DEFAULT; ACCELERATION; EXERCISE OF REMEDIES
The Intercreditor Agreement permits holders of Senior Debt to declare
defaults and events of default with respect to the Financing Document governing
this Senior Debt, and to accelerate this Senior Debt upon the occurrence of an
event of default, in accordance with the provisions described in this Financing
Document. Notice of any event of default or acceleration of Senior Debt must be
provided by the applicable Secured Parties' Representative to the Collateral
Agent, who shall promptly forward this notice to Edison Mission Holdings and
each other Secured Parties' Representative.
Following the delivery of a notice of acceleration of Senior Debt to the
Collateral Agent, during any period during which an event of default under
Senior Debt shall have occurred and be continuing, the Required Secured Parties
may deliver a Notice of Action to the Collateral Agent directing the Collateral
Agent to exercise one or more of the rights and remedies available to the
Collateral Agent under the Security Documents. The Collateral Agent shall
exercise the rights and remedies and take the other actions described in that
Notice of Action at the time or times specified in that Notice of Action.
AMENDMENT OF FINANCING DOCUMENTS
The Intercreditor Agreement requires in addition to any consent requirement
contained in any Financing Document, the consent of each Secured Parties'
Representative:
(1) in connection with any amendment, supplement or other modification of
any Financing Document that would increase the amount of or change
the scheduled date of maturity of any Senior Debt or the scheduled
date of any installment of principal payable on any Senior Debt, or
increase the stated rate of any interest, premium, fee or other
amount payable in respect of any Senior Debt or change the scheduled
date of any payment of any Senior Debt, or provide for any additional
mandatory prepayment of any Senior Debt,
(2) to release all or any material portion of the Collateral from the
Liens of the Security Documents,
(3) to release any of Edison Mission Holdings or any of the subsidiary
guarantors from its obligations under the Security Documents,
(4) to release Edison Mission Energy from its obligations under the
Credit Support Guarantee,
(5) to amend, modify or waive any provision of the Security Documents
relating to the order of priority or amounts of transfers of cash and
other property to be made in accordance with the Security Documents
or to amend or modify the definitions of "Obligations" or "Senior
Debt" under these documents, or
(6) to amend or modify the definition of "Required Secured Parties" under
the Security Documents or the percentages required for any action to
be taken under the Security Documents.
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AMENDMENT OF INTERCREDITOR AGREEMENT
With the written consent of the Required Secured Parties, the Collateral
Agent, Edison Mission Holdings and the subsidiary guarantors may, from time to
time, enter into an amendment, supplement, waiver or other modification of the
Intercreditor Agreement or change in any manner the rights of the Collateral
Agent, the Secured Parties or Edison Mission Holdings under the Intercreditor
Agreement; if (1) any amendment, supplement, waiver or other modification of the
provisions described in this agreement relating to amendments of Financing
Documents shall require the consent of each Secured Parties' Representative and
the Collateral Agent and (2) any amendment, supplement, waiver or other
modification of the provisions relating to amendments of the Intercreditor
Agreement described in this agreement shall require the consent of each Secured
Parties' Representative, the Collateral Agent, Edison Mission Holdings and each
of the subsidiary guarantors.
Notwithstanding the preceding provisions, without the consent of any Secured
Party, the Collateral Agent, Edison Mission Holdings and, as long as any
obligations are outstanding under the Credit Agreement, the Administrative
Agent, at any time and from time to time, may enter into one or more agreements
supplemental to the Intercreditor Agreement, in form satisfactory to the
Collateral Agent:
- to add to the covenants of Edison Mission Holdings and the subsidiary
guarantors for the benefit of the Secured Parties or to surrender any
right or power conferred upon Edison Mission Holdings or any of the
subsidiary guarantors,
- to mortgage or pledge to the Collateral Agent, or grant a security
interest in favor of the Collateral Agent in, any property or assets as
security or additional security for the obligations under secured Senior
Debt or
- to cure any ambiguity, defect or inconsistency or to make any other change
that would provide any additional rights or benefits to the Secured
Parties or that does not adversely affect the legal rights under the
Financing Documents of any Secured Party.
OTHER SECURITY DOCUMENTS
GUARANTEE AND COLLATERAL AGREEMENT
Under the Guarantee and Collateral Agreement, the Secured Parties will have
a security interest in certain collateral, including:
- all tangible and intangible property of Edison Mission Holdings and each
subsidiary guarantor,
- all proceeds and products of any and all of the preceding property and
assets,
- all collateral security and guarantees given by any Person with respect to
any of the preceding property and assets, and
- the books and records pertaining to the above securing, in the case of
Edison Mission Holdings, the Obligations of Edison Mission Holdings under
Senior Debt and, in the case of the subsidiary guarantors, the Obligations
of the subsidiary guarantors under their guarantees.
Under this agreement, each subsidiary guarantor will fully and
unconditionally guarantee the Obligations of Edison Mission Holdings under the
Senior Debt.
The Obligations of each subsidiary guarantor under its respective guarantee
will be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of this subsidiary guarantor including, without
limitation, any obligations under any Senior Debt and after giving effect to any
collections from or payments made by or on behalf of any other subsidiary
guarantor in respect of the obligations of this subsidiary guarantor under its
guarantee, result in the
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Obligations of this subsidiary guarantor under its guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.
MORTGAGE
Under the Mortgage, the Secured Parties will have a Lien on all of the real
property interests of EME Homer City now held or after acquired as security for
the Edison Mission Holdings' Obligations under Senior Debt and EME Homer City's
Obligations under its guarantee as a subsidiary guarantor.
CREDIT SUPPORT GUARANTEE
Under the Credit Support Guarantee, Edison Mission Energy unconditionally
and irrevocably guarantees to the Collateral Agent, for the benefit of the
Secured Parties, the prompt and complete payment and performance by Edison
Mission Holdings when due of all of Edison Mission Holdings' Obligations under
the Senior Debt up to an amount of $42 million. Under the Security Deposit
Agreement, the Credit Support Guarantee would be utilized for payments on Senior
Debt prior to amounts available in the Debt Service Reserve Accounts. Amounts
under the Credit Support Guarantee will be available until December 31, 2001.
BOND DEBT SERVICE RESERVE ACCOUNT
A Debt Service Reserve Account was established with the Collateral Agent for
the benefit of the bondholders. Amounts on deposit in the Bond Debt Service
Reserve Account will be used to pay Edison Mission Holdings' scheduled
installments of principal and interest on the bonds in the event Edison Mission
Holdings' cash flow from operations is inadequate for payment of these
installments. The required balance of Bond Debt Service Reserve Account on any
date of determination will be 100% of the projected debt service on the bonds
for the succeeding six-month period.
This reserve requirement may be satisfied by one or a combination of the
following:
- cash;
- a letter of credit that constitutes Acceptable Credit Support; or
- a guarantee of Edison Mission Holdings' obligations with respect to this
reserve requirement, so long as this guarantee constitutes Acceptable
Credit Support, in the form described in the indenture, made by Edison
Mission Energy in favor of the Collateral Agent for the benefit of the
bondholders.
Edison Mission Energy has provided a guarantee in satisfaction of the debt
service reserve requirement for the bonds up to $35.3 million.
SUBORDINATION AGREEMENT
Edison Mission Holdings, each subsidiary guarantor and the Collateral Agent
entered into the Intercompany Loan Subordination Agreement on March 18, 1999,
under which any and all obligations owed by Edison Mission Holdings or any
subsidiary guarantor to Edison Mission Holdings or any subsidiary guarantor are
subordinated to Edison Mission Holdings' and the subsidiary guarantors'
obligations under the Financing Documents.
The Subordination Agreement includes customary "deep subordination" terms,
including without limitation:
- an agreement by the subordinated parties not to exercise any remedies in
respect of subordinated claims until all of the senior claims have been
indefeasibly paid in full,
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- an obligation of the subordinated parties to turn over any payments
received in respect of the subordinated claims in violation of the
Subordination Agreement and
- a right of the holders of senior claims to enforce subordinated claims in
a bankruptcy proceeding of the borrower.
CREDIT AGREEMENT
GENERAL
On March 18, 1999, Edison Mission Holdings executed the Credit Agreement,
under which 25 various banks and financial institutions agreed to provide the
following credit facilities:
- the 364-day term loan facility in an amount of up to $800 million;
- the five-year term loan facility for environmental improvements to the
Homer City units in an amount of up to $250 million; and
- the five-year revolving credit facility in an amount of up to $50 million
for Edison Mission Holdings' and the subsidiary guarantors' general
working capital purposes.
The 364-day term loan facility was eliminated upon issuance of the bonds.
Proceeds of the $800 million 364-day term loan were used to finance a
portion of the acquisition of the Homer City facilities; proceeds of the
five-year term loan facility for environmental improvements to the Homer City
facilities will be used as necessary to finance costs associated with the
environmental capital improvements; and proceeds of the five-year revolving
credit facility will be used for Edison Mission Holdings' and the subsidiary
guarantors' general working capital purposes.
INTEREST
Edison Mission Holdings will pay interest on the unpaid principal amount of
the Loans (1) with respect to Base Rate Loans, at a rate per annum equal to the
Base Rate, and (2) with respect to LIBO Rate Loans, at a rate per annum equal to
LIBOR plus an applicable margin, which will be variable depending on Edison
Mission Holdings' debt rating. Edison Mission Holdings will also pay facility
fees on the Construction Term Loan Commitments and the Revolving Loan
Commitments.
CONDITIONS PRECEDENT
Each loan under the Credit Agreement is subject to the satisfaction of the
following conditions precedent:
(1) specified representations and warranties previously made by Edison
Mission Holdings shall continue to be true and correct in all
material respects with the same effect as if then made, unless stated
to relate solely to an earlier date, in which case these
representations and warranties shall be true and correct as of that
earlier date
(2) no default or event of default under the Credit Agreement shall have
occurred and be continuing or would result from these loans;
(3) the Administrative Agent shall have received a borrowing request for
these loans and each of the delivery of a borrowing request and the
acceptance by Edison Mission Holdings of the proceeds of these loans
shall constitute a representation and warranty by Edison Mission
Holdings that on the date of these loans, both immediately before and
after giving effect to them and the application of their proceeds,
the statements made in clauses (1) and (2) above are true and
correct; and
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(4) all documents executed or submitted under the Credit Agreement by or
on behalf of Edison Mission Holdings shall be satisfactory in form
and substance to the Administrative Agent and its counsel.
AFFIRMATIVE COVENANTS
Until all Obligations under the Credit Agreement are paid in full and the
Commitments are terminated, Edison Mission Holdings shall:
(1) deliver to the Administrative Agent (a) unaudited quarterly
consolidated financial statements and (b) audited annual consolidated
financial statements of Edison Mission Holdings which will include
results for its consolidated Subsidiaries, together with an
unqualified opinion of Arthur Andersen & Co. or other internationally
recognized independent auditors;
(2) at the time of delivery of the audited financial statements, deliver
to the Administrative Agent either (a) the annual report provided to
senior management and shareholder of Edison Mission Holdings for the
preceding calendar year with respect to the Homer City facilities or
(b) a report including certain information with respect to the Homer
City facilities;
(3) at the time of delivery of the audited financial statements, deliver
to the Administrative Agent an operating budget for the Homer City
facilities for the current calendar year, together with, in the case
of each calendar year beginning with the year 2000, an "income
statement variance report" showing the actual experience for the
preceding calendar year, or portion of this year, against the income
statement projections for the preceding calendar year, or portion of
this year;
(4) within 60 days of each quarterly payment date on which Edison Mission
Holdings intends to make certain investments or restricted payments,
deliver to the Administrative Agent a certificate showing certain
actual and projected Debt Service Coverage Ratios of Edison Mission
Holdings;
(5) deliver to the Administrative Agent notices of defaults under
material agreements of Edison Mission Holdings or any of the
subsidiary guarantors, material litigation, specified ERISA events
and other material events;
(6) deliver to the Administrative Agent all reports and registration
statements which Edison Mission Holdings files with the Securities
and Exchange Commission or any national securities exchange;
(7) deliver to the Administrative Agent notices of any change in Edison
Mission Holdings' debt rating;
(8) deliver to the Administrative Agent notices of casualty or damage or
loss to the Homer City facilities involving a probable loss of
$3 million or more and the occurrence of the cancellation or other
material change regarding the insurance policies required to be
maintained;
(9) deliver to the Administrative Agent notice of any material
modification of its environmental capital expenditure program;
(10) deliver to the Administrative Agent notice that any material
governmental approval may be revoked, fail to be granted or renewed,
or materially modified;
(11) continue its business and maintain its existence and its material
rights and privileges;
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(12) comply with applicable laws and contractual obligations, except to
the extent non-compliance would not have a Material Adverse Effect;
(13) maintain in good repair property and equipment, ordinary wear and
tear excepted, to the extent that is necessary to do business;
(14) maintain certain insurance against casualties and contingencies;
(15) maintain books and records;
(16) implement a Year 2000 plan;
(17) comply with environmental laws;
(18) perform any and all acts required to maintain perfection of the
Collateral including after-acquired property covered by the relevant
Security Documents; and
(19) in relation to any Recovery Event, provide the Administrative Agent
and the Collateral Agent with a Reinvestment Notice; however if the
settlement or payment related to this Recovery Event is $50 million
or more, Edison Mission Holdings shall:
(A) make a prepayment of the net proceeds of this Recovery Event,
with a corresponding reduction in the amount of Commitments, or
(B) if these net proceeds are to be used for restoration or
replacement, the Independent Engineer shall have certified Edison
Mission Holding's restoration or replacement plan and the
feasibility of this plan as detailed in Edison Mission Holding's
Reinvestment Notice relating to this Recovery Event.
NEGATIVE COVENANTS
Until all Obligations under the Credit Agreement are paid in full and the
Commitments are terminated, Edison Mission Holdings agrees, and agrees to cause
the subsidiary guarantors:
(1) not to suffer to exist any Indebtedness other than specified
permitted Indebtedness;
(2) not to suffer to exist any Liens granted by Edison Mission Holdings
and the subsidiary guarantors other than specified permitted Liens;
(3) not to consolidate with or merge into any other person or sell,
convey or lease all or substantially all of its assets to any person
unless (a) no default or event of default shall occur and be
continuing prior to and after this consolidation, merger or sale and
(b) Edison Mission Holdings or the relevant subsidiary guarantor is
the surviving entity;
(4) not to undertake the sale of assets subject to specified exceptions;
(5) not to create or acquire Subsidiaries;
(6) not to make investments in any other person subject to specified
exceptions, these exceptions include investments in EME Homer City to
implement its environmental capital expenditure program and
investments in EME Homer City to make capital expenditures for
improvements to the Homer City facilities; provided, in the latter
case, that all amounts due and payable in respect of the Senior Debt
has been paid, there is no default or event of default under the
Credit Agreement, specified Debt Service Coverage Ratios are above
specified levels and the Debt Service Reserve Requirement for the
Loans is satisfied;
(7) not to enter into transactions with Affiliates subject to specified
exceptions;
90
<PAGE>
(8) not to make distributions, dividend payments or other restricted
payments subject to specified exceptions, including an exception
allowing restricted payments by Edison Mission Holdings, if:
(A) there is no default or event of default under the Credit
Agreement,
(B) specified Debt Service Coverage Ratios are above specified levels
and
(C) the Debt Service Reserve Requirement for the Loans is satisfied;
(9) not to enter into any agreement prohibiting the ability of Edison
Mission Holdings to amend or otherwise modify the Credit Agreement or
any related agreement, or the ability of any subsidiary guarantor to
make dividend payments and other payments to Edison Mission Holdings;
(10) not to engage in any business other than the ownership, maintenance
and operation of the Homer City facilities, the sale of wholesale
electric power from the Homer City facilities and related products
and services and other incidental businesses;
(11) not to take any action which may subject Edison Mission Holdings or
any of the subsidiary guarantors to specified governmental regulation
or cause Edison Mission Holdings or any of the subsidiary guarantors
to lose specified rights to sell electric power and related products
and services; and
(12) not to engage in speculative transactions.
EVENTS OF DEFAULT
The following constitute events of default under the Credit Agreement:
(1) nonpayment of principal when due;
(2) nonpayment of interest, fees or other amounts within five business
days of the date when due;
(3) inaccuracy in any material respect of representations and warranties
when made;
(4) violation of covenants, subject, in the case of certain affirmative
covenants, to a 30-day grace period;
(5) cross-default with respect to other indebtedness of Edison Mission
Holdings or any of the subsidiary guarantors of at least $15 million
in principal amount;
(6) bankruptcy events with respect to Edison Mission Holdings or any of
the subsidiary guarantors;
(7) certain ERISA events;
(8) judgments in excess of $15 million in the aggregate not discharged,
stayed or bonded within 60 days;
(9) Edison Mission Energy shall cease to own, directly or indirectly, 50%
of the economic equity interests in Edison Mission Holdings and each
of the subsidiary guarantors or cease to maintain equivalent voting
control of Edison Mission Holdings and each of the subsidiary
guarantors or Edison Mission Energy shall cease, directly or through
a subsidiary guarantor, to be in control of the operation of the
Homer City facility, or Edison Mission Holdings shall cease to own,
directly or indirectly, 100% of the general and limited partnership
interests in EME Homer City; and
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<PAGE>
(10) until the termination of the Credit Support Guarantee or while any
guarantee of Edison Mission Energy is being used to satisfy the Debt
Service Reserve Requirement for the Loans, (a) bankruptcy events with
respect to Edison Mission Energy and (b) cross-default with respect
to Indebtedness of Edison Mission Energy of at least $20 million in
principal amount.
REMEDIES
Except as may be otherwise agreed among the banks and other financial
institutions party to the Credit Agreement, upon the occurrence and during the
continuance of an event of default under the Credit Agreement other than
bankruptcy events with respect to Edison Mission Holdings, the majority of the
banks and other financial institutions may exercise any or all of the following
remedies: (1) declaration of all or any portion of the outstanding principal
amount under the Credit Agreement to be immediately due and payable; or
(2) termination of their Commitments. In case of a bankruptcy event with respect
to Edison Mission Holdings, the Commitments shall automatically terminate and
the outstanding principal amount under the Credit Agreement shall automatically
and immediately become due and payable, without notice or demand.
BANK DEBT SERVICE RESERVE ACCOUNT
A Debt Service Reserve Account was established with the Collateral Agent for
the benefit of the banks and other financial institutions party to the Credit
Agreement to be used to pay Edison Mission Holdings' scheduled debt service for
the Loans in the event that its cash flow from operations is inadequate for this
debt service. Any DSR Credit Instrument delivered to the Collateral Agent in
accordance with any Debt Service Reserve Requirement, which is equal to the debt
service projected to be due in the next six months, will be deposited in the
Bank Debt Service Reserve Account. The Bank Debt Service Reserve Account and the
Bond Debt Service Reserve Account are funded in the same order of priority with
proportional amounts based upon the respective debt service for the bonds and
for the Loans. Edison Mission Holdings may provide a letter of credit or parent
company guaranty in lieu of funding the Bank Debt Service Reserve Account. At
September 30, 1999, Edison Mission Holdings provided the guarantee of Edison
Mission Energy, its parent company, of up to $3 million in support of bank debt
service requirements.
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<PAGE>
EXCHANGE OFFER; REGISTRATION RIGHTS
As part of the sale of the original bonds and under a registration rights
agreement dated as of May 27, 1999, we agreed with the initial purchasers, for
the benefit of the holders of the bonds, that we will file and use our
reasonable best efforts to cause to become effective, at our cost, a
registration statement with respect to a registered offer to exchange the
original bonds for the exchange bonds which are in all material respects
substantially identical to the original bonds. Once this registration statement
is declared effective, we shall offer the exchange bonds in return for surrender
of the original bonds. This offer shall remain open for no less than 30 days
after the date notice of the exchange offer is mailed to the bondholders. For
each original bond surrendered to us under the exchange offer, the bondholder
will receive exchange bonds aggregating an equal principal amount. Interest on
each exchange bond shall accrue from the last Interest Payment Date on which
interest was paid on the original bond so surrendered.
In the event that we determine in good faith that applicable interpretations
of the staff of the Securities and Exchange Commission or other circumstances
specified in the registration rights agreement do not permit us to effect such
an exchange offer, we shall, at our cost, use our reasonable best efforts,
subject to customary representations and agreements of the bondholders, to have
a shelf registration statement covering resale of the original bonds declared
effective and kept effective until May 27, 2001, subject to specified
exceptions. We shall, in the event of a shelf registration, provide to each
bondholder copies of the prospectus, notify each bondholder when a registration
statement for the original bonds has become effective and take certain other
actions as are appropriate to permit resale of the original bonds.
In the event that this exchange offer is not commenced or this registration
statement is not declared effective by February 21, 2000, the respective annual
interest rates on the original bonds shall increase by one-half of one percent
(50 basis points) effective on the 271(st) day following May 27, 1999 until the
date on which this exchange offer is commenced and the registration statement
shall have become effective.
A bondholder that sells original bonds in accordance with a shelf
registration generally:
(1) would be required to be named as a selling holder in the related
prospectus and to deliver a prospectus to purchasers
(2) will be subject to the civil liability provisions under the Securities
Act in connection with this sale and
(3) will be required to agree in writing to be bound by the provisions of
the registration rights agreement which are applicable to this
bondholder, including indemnification obligations.
Each bondholder, other than some specified holders, who wishes to exchange
the original bonds for exchange bonds in the exchange offer shall be required to
represent that:
(1) any exchange bonds to be received by it shall be acquired in the
ordinary course of business and
(2) that at the time of the commencement of the exchange offer it shall have
no arrangement with any person to participate in the distribution, within
the meaning of the Securities Act, of the exchange bonds.
93
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange bonds for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange bonds. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange bonds received in exchange for original bonds where the
original bonds were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 180 days after the
expiration date of the exchange offer, we will make this prospectus available to
any broker-dealer for use in connection with any resale. In addition, until
, 2000, all dealers effecting transactions in the exchange bonds may be
required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange bonds by
broker-dealers. Exchange bonds received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the exchange bonds or a combination of these methods of resale.
These resales may be made at market prices prevailing at the time of resale, at
prices related to these prevailing market prices or negotiated prices. Any
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
broker-dealer or the purchasers of any of the exchange bonds. Any broker-dealer
that resells exchange bonds that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of
the exchange bonds may be deemed to be an underwriter within the meaning of the
Securities Act, and any profit on the resale of exchange bonds and any
commission or concessions received by those persons may be deemed to be
underwriting compensation under the Securities Act. Any broker-dealer that
resells bonds that were received by it for its own account in the exchange offer
and any broker-dealer that participates in a distribution of those bonds may be
deemed to be an underwriter within the meaning of the Securities Act and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, including the delivery
of a prospectus that contains information with respect to any selling holder
required by the Securities Act in connection with any resale of the exchange
bonds. The letter of transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the Securities Act.
Futhermore, any broker-dealer that acquired any of its outstanding bonds
directly from us:
- may not rely on the applicable interpretation of the staff of the SEC's
position contained in Exxon Capital Holdings Corp., SEC no-action letter
(April 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter
(June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2,
1983) and
- must also be named as a selling bondholder in connection with the
registration and prospectus delivery requirements of the Securities Act
relating to any resale transaction.
For a period of 180 days after the expiration date of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests these documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer, including the expenses of one counsel for the holders of the
bonds, other than commissions or concessions of any brokers or dealers. We will
indemnify the holders of the bonds, including any broker-dealers, against
various liabilities, including liabilities under the Securities Act.
In addition, all reports and other documents Edison Mission Energy
subsequently files under Sections 13 and 15(d) of the Exchange Act will be
deemed to be incorporated by reference into this
94
<PAGE>
prospectus and to be part of this prospectus from the date Edison Mission Energy
subsequently files the reports and documents.
Any statements contained in a document incorporated or deemed to be
incorporated by reference into this prospectus are deemed to be modified or
superseded for purposes of this prospectus to the extent modified or superseded
by another statement contained in any subsequently filed document also
incorporated by reference in this prospectus. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute part of this prospectus.
You may request a copy of any of these filings, at no cost, by writing or
telephoning us at the following address or phone number:
Edison Mission Holdings Co.
18101 Von Karman Avenue, Suite 1700
Irvine, California 92612
(949) 752-5588
Attention: Corporate Secretary
95
<PAGE>
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes material United States federal income tax
considerations that may be relevant to beneficial owners of the bonds. The
summary is based on the Internal Revenue Code of 1986, as amended, and
regulations, rulings and judicial decisions as of the date of this prospectus,
all of which may be repealed, revoked or modified with possible retroactive
effect. This discussion does not deal with holders that may be subject to
special tax rules including, but not limited to, insurance companies, tax-exempt
organizations, financial institutions, dealers in securities or currencies,
holders whose functional currency is not the United States dollar or holders who
will hold the bonds as a hedge against currency risks or as part of a straddle,
synthetic security, conversion transaction or other integrated investment
comprised of the bonds and one or more other investments. The summary is
applicable only to purchasers that acquire the bonds in the offering at the
initial offering price and who will hold the bonds as capital assets within the
meaning of Section 1221 of the Code. This summary is for general information
only and does not address all aspects of United States federal income taxation
that may be relevant to holders of the bonds in light of their particular
circumstances, and it does not address any tax consequences arising under the
laws of any state, local or foreign taxing jurisdiction. Prospective holders
should consult their own tax advisors as to the particular tax consequences to
them of acquiring, holding or disposing of the bonds.
As used herein, the term "United States Holder" means a beneficial owner of
a bond that is (1) a citizen or resident of the United States for United States
federal income tax purposes, (2) a corporation created or organized under the
laws of the United States, any state thereof or the District of Columbia,
(3) an estate the income of which is subject to United States federal income tax
without regard to its source or (4) a trust if (x) a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust or (y) the trust has a valid election in
effect under applicable United States Treasury regulations to be treated as a
United States Holder. A "Non-United States Holder" is any beneficial holder of a
bond that is not a United States Holder.
UNITED STATES HOLDERS
THE EXCHANGE
For United States federal income tax purposes, a beneficial owner of a bond
will not recognize any taxable gain or loss on the exchange of the original
bonds for exchange bonds in the exchange offer, and a United States Holder's tax
basis and holding period in the exchange bonds will be the same as in the
original bonds.
STATED INTEREST ON EXCHANGE BONDS
Stated interest on an exchange bond generally will be taxable to a United
States Holder as ordinary income at the time it accrues or is received in
accordance with the United States Holder's method of accounting for United
States federal income tax purposes.
DISPOSITION OF AN EXCHANGE BOND
Upon the sale, exchange, redemption, retirement or other disposition of an
exchange bond, a United States Holder generally will recognize gain or loss
equal to the difference between the amount realized upon the sale, exchange,
redemption, retirement or other disposition, not including amounts attributable
to accrued but unpaid interest, which will be taxable as such, and such United
States Holder's adjusted tax basis in the exchange bond. A United States
Holder's tax basis in an exchange bond will, in general, be the United States
Holder's basis in the bond exchanged therefor. Such gain or loss will be capital
gain or loss. Capital gain recognized by an individual investor upon a
disposition of an exchange bond that has been held for more than 12 months will
generally be subject to a maximum
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<PAGE>
tax rate of 20% or, in the case of an exchange bond that has been held for
12 months or less, will be subject to tax at ordinary income tax rates.
MARKET DISCOUNT
United States Holders other than original purchasers of the bonds in the
offering of the original bonds should be aware that the sale of the exchange
bonds may be affected by the market discount provisions of the Code. The market
discount rules generally provide that if a United States Holder purchased the
bond, after the original offering, at a "market discount", i.e., at an amount
less than the adjusted issue price of the bond as determined on the date of such
purchase, exceeding a statutorily-defined minimum amount, and subsequently
recognized gain upon a disposition, including a partial redemption, of the
exchange bond received in exchange for an original bond, the lesser of such gain
or the portion of the market discount that accrued while the original bond and
exchange bond were held by such United States Holder will be treated as ordinary
interest income at the time of disposition. The rules also provide that a United
States Holder who acquires a bond at a market discount may be required to defer
a portion of any interest expense that may otherwise be deductible on any
indebtedness incurred or maintained to purchase or carry the bond until the
United States Holder disposes of such bond in a taxable transaction. If a holder
of a bond elects to include market discount in income currently, both of the
preceding rules would not apply.
NON-UNITED STATES HOLDERS
Under present United States federal income tax law, subject to the
discussion of backup withholding and information reporting below:
(a) payments of principal and interest on the exchange bonds to any
Non-United States Holder will not be subject to United States federal
income or withholding tax if:
(1) the Non-United States Holder does not actually or
constructively own 10% or more of the total combined voting
power of all classes of stock of Edison Mission Holdings
entitled to vote,
(2) the Non-United States Holder is not a bank receiving interest
under a loan agreement entered into in the ordinary course of
its trade or business,
(3) the Non-United States Holder is not a controlled foreign
corporation that is related to Edison Mission Holdings,
directly or indirectly, through stock ownership,
(4) such interest payments are not effectively connected with a
United States trade or business and
(5) certain certification requirements are met.
Such certification will be satisfied if the beneficial owner of the exchange
bond certifies on IRS Form W-8 or a substantially similar substitute form, under
penalties of perjury, that it is not a United States person and provides its
name and address, and (x) such beneficial owner files such form with the
withholding agent or (y) in the case of an exchange bond held by a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business and holds the
exchange bond, such financial institution certifies to Edison Mission Holdings
or its agent under penalties of perjury that such statement has been received
from the beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the withholding agent with a copy of such
statement; and
(b) a Non-United States Holder will not be subject to United States
federal income tax on gain realized on the sale, exchange, redemption,
retirement or other disposition of an
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<PAGE>
exchange bond, unless (1) the gain is effectively connected with a trade
or business carried on by such holder within the United States or, if a
treaty applies, is generally attributable to a United States permanent
establishment maintained by the holder, or (2) the holder is an
individual who is present in the United States for 183 days or more in
the taxable year of disposition and certain other requirements are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, payments of interest and the proceeds of the sale, exchange,
redemption, retirement or other disposition of the exchange bonds payable by a
United States paying agent or other United States intermediary will be subject
to information reporting. In addition, backup withholding at a rate of 31% will
apply to these payments if the holder fails to provide an accurate taxpayer
identification number in the case of a United States Holder or the certification
described above, in the case of a Non-United States Holder, or other evidence of
exempt status or fails to report all interest and dividends required to be shown
on its United States federal income tax returns. Certain United States Holders,
including, among others, corporations, and Non-United States Holders that comply
with certain certification requirements are not subject to backup withholding.
Any amount paid as backup withholding will be creditable against the holder's
United States federal income tax liability if the required information is timely
furnished to the IRS. Holders of exchange bonds should consult their tax
advisors as to their qualification for exemption from backup withholding and the
procedure for obtaining such an exemption. On October 6, 1997, new Treasury
Regulations were issued that generally modify the information reporting and
backup withholding rules applicable to certain payments made after December 31,
2000. In general, the new regulations would not significantly alter the present
rules discussed above, except in certain special situations.
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<PAGE>
LEGAL MATTERS
The legality of the exchange bonds and the guarantees, other than the
guarantee of EME Homer City Generation L.P., will be passed upon for Edison
Mission Holdings by Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square,
New York, New York. The legality of the guarantee of EME Homer City Generation
L.P. will be passed upon for Edison Mission Holdings by Morgan, Lewis & Bockius
LLP, 1701 Market Street, Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements of Edison Mission Holdings and
subsidiaries for the nine months ended September 30, 1999, which are included in
this prospectus, and the consolidated financial statements of Edison Mission
Energy and subsidiaries included in Edison Mission Energy's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998, which are incorporated by
reference in this prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. The audited special-purpose combined accounts of
Fiddlers Ferry and Ferrybridge C Power Stations for the year ended March 30,
1997, the year ended March 29, 1998 and the nine month period ended January 3,
1999 incorporated in this prospectus by reference to the two reports on
Form 8-K/A dated July 19, 1999 of Edison Mission Energy have been so
incorporated in reliance on the report of PricewaterhouseCoopers, Chartered
Accountants, given the authority of said firm as experts in auditing and
accounting.
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<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
EDISON MISSION HOLDINGS CO.
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheet--September 30, 1999.............. F-3
Consolidated Statement of Operations--Nine Months Ended
September 30, 1999......................................... F-4
Consolidated Statement of Changes in Shareholder's
Equity--Nine Months Ended
September 30, 1999......................................... F-5
Consolidated Statement of Cash Flows--Nine Months Ended
September 30, 1999........................................ F-6
Notes to Consolidated Financial Statements--September 30,
1999....................................................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Edison Mission Holdings Co.:
We have audited the accompanying consolidated balance sheet of Edison
Mission Holdings Co. and subsidiaries (the Company), a wholly owned subsidiary
of Edison Mission Energy, as of September 30, 1999, and the related consolidated
statements of operations, shareholders equity and cash flows for the nine months
ended September 30, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Edison
Mission Holdings Co. as of September 30, 1999, and the results of its operations
and its cash flows for the nine months ended September 30, 1999, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Los Angeles, California
November 5, 1999
F-2
<PAGE>
EDISON MISSION HOLDINGS CO.
CONSOLIDATED BALANCE SHEET--SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
1999
--------------
(IN THOUSANDS)
<S> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 125,204
Due from Affiliates....................................... 30,049
Fuel inventory............................................ 21,315
Spare parts inventory..................................... 23,647
Other current assets...................................... 1,376
----------
Total current assets.................................. 201,591
----------
Operating facility and equipment
Property, plant & equipment............................... 1,867,436
Accumulated depreciation.................................. (25,280)
----------
Net property, plant & equipment........................... 1,842,156
Other assets
Deferred financing charges, net........................... 11,714
----------
Total assets........................................ $2,055,461
==========
LIABILITIES AND EQUITY
Current liabilities
Accounts payable.......................................... $ 8,497
Accrued liabilities....................................... 26,910
Due to Affiliates......................................... 8,996
Interest payable.......................................... 24,856
----------
Total current liabilities............................. 69,259
----------
Long-term debt.............................................. 885,000
Deferred taxes.............................................. 14,623
Benefits plans.............................................. 17,150
----------
Total liabilities..................................... 986,032
----------
Commitments and contingencies (Note 7)
Shareholder's equity
Common stock, no par value; 10,000 shares authorized; 100
shares issued and outstanding........................... --
Additional paid-in-capital................................ 1,036,921
Retained earnings......................................... 32,508
----------
Total shareholder's equity............................ 1,069,429
----------
Total liabilities and shareholder's equity.......... $2,055,461
==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
EDISON MISSION HOLDINGS CO.
CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
1999
--------------
(IN THOUSANDS)
<S> <C>
Operating revenues from marketing affiliate
Capacity revenues....................................... $ 22,010
Energy revenues......................................... 223,778
--------
Total operating revenues.................................... 245,788
--------
Operating expenses
Fuel.................................................... 84,391
Plant operations........................................ 40,786
Depreciation and amortization........................... 25,280
Administrative and general.............................. 542
--------
Total operating expenses.................................... 150,999
--------
Income from operations...................................... 94,789
--------
Other income (expense)
Interest and other income............................... 834
Interest expense........................................ (35,506)
--------
Total other expense......................................... (34,672)
--------
Income before income taxes and extraordinary loss........... 60,117
Provision for income taxes before extraordinary loss........ 24,939
--------
Income before extraordinary loss............................ 35,178
--------
Extraordinary loss on early extinguishment of debt,
net of income tax benefit of $2,280....................... (2,667)
--------
NET INCOME.................................................. $ 32,511
========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
EDISON MISSION HOLDINGS CO.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED SHAREHOLDER'S
STOCK PAID-IN-CAPITAL EARNINGS EQUITY
-------- --------------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at January 1, 1999....................... $ -- $ 3 $ (3) $ --
------- ---------- ------- ----------
Net income....................................... -- -- 32,511 32,511
Cash contribution................................ -- 1,066,917 -- 1,066,917
Cash dividends................................... -- (29,999) -- (29,999)
------- ---------- ------- ----------
Balance at September 30, 1999.................... $ -- $1,036,921 $32,508 $1,069,429
======= ========== ======= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
EDISON MISSION HOLDINGS CO.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
1999
--------------
(IN THOUSANDS)
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 32,511
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary loss on early extinguishment of debt,
net of tax.......................................... 2,667
Depreciation and amortization......................... 26,434
Deferred tax provision................................ 14,623
Increase in due from Affiliates....................... (30,049)
Increase in inventory................................. (3,541)
Increase in prepaid and other assets.................. (1,376)
Increase in payables.................................. 8,498
Increase in accrued liabilities....................... 26,134
Increase in due to Affiliates......................... 11,276
Increase in interest payable.......................... 24,856
Increase in other liabilities......................... 1,349
-----------
Net cash provided by operating activities............... 113,382
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Homer City facility....................... (1,818,631)
Capital expenditures.................................. (73,650)
-----------
Net cash used in investing activities................... (1,892,281)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from parent...................... 1,066,917
Borrowings on long-term obligations................... 885,000
Borrowings under Acquisition Facility................. 800,000
Repayments on debt obligations........................ (800,000)
Financing costs....................................... (17,815)
Cash dividends to parent.............................. (29,999)
-----------
Net cash provided by financing activities............... 1,904,103
-----------
NET INCREASE IN CASH........................................ 125,204
CASH AND CASH EQUIVALENTS, beginning of period.............. --
-----------
CASH AND CASH EQUIVALENTS, at end of period................. $ 125,204
===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. GENERAL
Edison Mission Holdings Co. (the "Company"), a wholly owned subsidiary of
Edison Mission Energy ("EME"), an indirect wholly owned subsidiary of Edison
International("EIX"), is a California corporation formed for the purpose of
issuing the bonds and, through its subsidiaries, acquiring, owning and operating
three coal-fired electric generating units (collectively, the "Homer City
Units") and related facilities (the Homer City Units and such related
facilities, the "Homer City facilities") located in Indiana County, Pennsylvania
for the purpose of producing electric energy.
On March 18, 1999, the Company's subsidiary, EME Homer City Generation L.P.
completed its acquisition (the "Acquisition") of 100% of the ownership interests
in the Homer City facilities and assumed certain liabilities of the former
owners. The accompanying financial statements reflect the operations of the
Homer City facilities commencing from the date of acquisition. The Homer City
facilities were part of the former owners regulated operations and were not
operated as a separate business. Effective with the date of acquisition, the
Homer City facilities were no longer operated as part of a regulated utility,
but rather as a merchant plant selling power into a pool. Accordingly, no prior
period financial results of the predecessor operations are presented. The
acquisition has been accounted for utilizing the purchase method. The purchase
price was allocated to the assets acquired and liabilities assumed based upon a
preliminary assessment of their respective fair market values. This allocation
may change as the fair market valuation is finalized.
The acquisition was financed through a capital contribution by EME of
approximately $1.1 billion and a short-term loan of approximately $800 million.
The short-term loan was subsequently replaced by $830 million of senior secured
bonds.
The Homer City facilities consist of three coal fired steam turbine units,
one coal preparation facility, an 1,800 acre dam site and associated support
facilities. Units 1 and 2 are essentially identical steam turbine generators
with net summer capacities of 620 MW and 614 MW, respectively. Units 1 and 2
began commercial operation in 1969. Unit 3 is also a steam turbine generator
with a net summer capacity of 650 MW. Unit 3 began commercial operations in
1977. The Homer City facilities benefit from direct transmission access into
both the Pennsylvania-New Jersey-Maryland power market (the "PJM") and the New
York independent system operator ("NYISO").
The Company has entered into a contract with a marketing affiliate for the
sale of energy and capacity produced by the Homer City facilities, which enables
such marketing affiliate to engage in forward sales and hedging transactions to
manage electricity price exposure. The marketing affiliate has systems in place
which monitor real-time spot and forward pricing and perform options valuations.
The Company pays the marketing affiliate a nominal fee for the performance of
marketing services. All revenues from physical sales transactions executed by
the marketing affiliate are deposited into a revenue account established for the
benefit of the holders of the Company's senior secured debt.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and
F-7
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
NEW ACCOUNT PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133) "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133, as amended, will become effective
on January 1, 2001. This statement establishes accounting and reporting
standards requiring that every derivative instrument be recorded in the balance
sheet as either an asset or liability measured at its fair value. It also
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. A derivative's gains
and losses for qualifying hedges offset related results on the hedged item in
the income statement and a company must formally document, designate and assess
the effectiveness of transactions that receive hedge accounting. The impact of
adopting Statement 133 on the Company's financial statements has not been
quantified at this time.
CASH AND CASH EQUIVALENTS
The Company considers cash and cash equivalents to include cash and
short-term investments with original maturities of three months or less.
INVENTORY
Inventory consists of spare parts, coal and fuel oil and is stated at the
lower of weighted average cost or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed
on a straight-line basis over the following estimated useful lives:
<TABLE>
<S> <C>
Power plant facilities...................................... 39 years
Furniture, office equipment, and vehicles................... 5 to 7 years
</TABLE>
F-8
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At September 30, 1999, property, plant and equipment consisted of the
following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Land........................................................ $ 4,500
Power plant facilities...................................... 1,787,227
Construction in progress.................................... 71,816
Equipment, furniture, and fixtures.......................... 3,893
----------
1,867,436
----------
Accumulated depreciation.................................... (25,280)
----------
Property, plant and equipment, net.......................... $1,842,156
==========
</TABLE>
DEFERRED COSTS
Deferred costs at September 30, 1999 consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Deferred financing costs.................................... $12,233
Accumulated amortization.................................... (519)
-------
Net deferred financing costs................................ $11,714
=======
</TABLE>
Deferred financing costs consist of legal and other costs incurred by the
Company to obtain long-term financing (Note 3). These costs are being amortized
over the life of the related long-term debt using the effective interest method.
REVENUE RECOGNITION
Revenue and related costs are recorded as electricity is generated or
services are provided.
POWER MARKETING ACTIVITIES
The Company has entered into a contract with a marketing affiliate for the
sale of energy and capacity produced by the Homer City facilities, which enables
such marketing affiliate to engage in forward sales and hedging transactions to
manage the Company's electricity price exposure. Net gains or losses on hedges
by the marketing affiliate which are physically settled are recognized in the
same manner as the hedged item. The Company receives the net transaction price
on all contracts that are physically settled by its marketing affiliate. Another
marketing affiliate of the Company enters into option contacts using the credit
of the Company. Options written and premiums received by this affiliate are not
transferred to the Company.
INCOME TAXES
The Company is included in the consolidated federal income tax and combined
state franchise tax returns of EIX. The Company calculates its income tax
provision on a separate company basis under a tax sharing arrangement with an
affiliate of EIX, which in turn has an agreement with EIX. Tax
F-9
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
benefits generated by the Company and used in the EIX consolidated tax return
are recognized by the Company without regard to separate company limitations.
The Company accounts for income taxes using the asset-and-liabilities
method, wherein deferred tax assets and liabilities are recognized for future
tax consequences of temporary differences between the carrying amounts and the
tax bases of assets and liabilities using enacted rates.
MAINTENANCE ACCRUAL
Each of the Homer City facility's major pieces of equipment (e.g. boiler and
turbine) requires major maintenance on a periodic basis ranging from three to
thirty years. These costs are being accrued on a straight-line basis over the
respective periods.
The maintenance accrual is based on management's estimates of what these
events will cost at the time the events occur. Due to fluctuations in prices and
changes in the scope and timing of the work to be performed, the actual amounts
expended, may differ from the amounts estimated for these events.
3. LONG-TERM DEBT
On March 18, 1999 the Company entered into a debt agreement (the "Initial
Financing") with a bank for a combination of loan and line of credit agreements
aggregating $1.1 billion. The Initial Financing consisted of a short-term loan
for $800 million for the initial financing of the acquisition (the "Acquisition
Facility"), a $250 million construction loan (the "Environmental Capital
Improvements Facility") that would be drawn on when needed, and a $50 million
line of credit (the "Working Capital Facility"). Amounts outstanding under the
Initial Financing bear interest at variable Eurodollar rates or Base rates as
defined in the Agreement, at the option of the Partnership. If the Company
elects to pay Eurodollar rates, interest costs include a margin of 0.85% to
2.50% depending on the Company's current debt rating. At September 30, 1999 the
margin was 1.00%. Additionally, the Company pays a facility fee of .0015% to
.0050%, depending on the Company's current debt rating, on the total outstanding
commitment irrespective of usage. At September 30, 1999 the facility fee was
.0025%. The Company also pays an agent bank fee of $50,000 per year.
On May 27, 1999, the Company completed a private offering of $300 million
aggregate principal amount of 8.137% Senior Secured Bonds due 2019 and
$530 million aggregate principal amount of 8.734% Senior Secured Bonds due 2026
(collectively the "Senior Secured Bonds"). The net proceeds from the Senior
Secured Bonds were used to repay the outstanding principal of, and to
permanently reduce the bank commitments associated with, the Acquisition
Facility and to repay a portion of EME's equity investment in the form of a
dividend. As a result of the early extinguishment of the Acquisition Facility,
the Company wrote off unamortized deferred financing costs which were reported
as an extraordinary loss of $4.9 million ($2.7 million after tax).
At September 30, 1999, the Company had drawn $55 million on the
Environmental Capital Improvements Facility and had not drawn on the Working
Capital Facility. The Environmental Capital Improvements Facility matures on
March 18, 2004. Interest on the Initial Financing is indexed at LIBOR (5.387% at
September 30, 1999). Interest paid under the Initial Financing and Senior
Secured Bonds was $9.6 million and $24.4 million, respectively for the nine
months ended September 30, 1999.
F-10
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
3. LONG-TERM DEBT (CONTINUED)
At September 30, 1999, the future maturities of the debt are as follows:
<TABLE>
<CAPTION>
PERIOD ENDING SEPTEMBER 30,
- --------------------------- (IN THOUSANDS)
<S> <C>
October 1999-September 2000................................. $ --
October 2000-September 2001................................. --
October 2001-September 2002................................. --
October 2002-September 2003................................. --
October 2003-September 2004................................. 58,292
Thereafter.............................................. 826,708
--------
Total................................................... $885,000
========
</TABLE>
The Company has certain financial and non-financial debt covenants
associated with its debt that may limit distributions. With the exception of the
initial $30 million distribution from the net proceeds of the Senior Secured
Bonds, the Company, in order to make distributions, must maintain a specified
debt service coverage ratio, net cash flows over the aggregate principal,
interest, and fixed charges for a period, ranging from 1.5 to 1.7 over the life
of the debt. The Company is also limited in obtaining new debt including capital
lease obligations in excess of $10 million, working capital loans in excess of
$50 million (with such amount to be escalated annually in accordance with the
consumer price index), and other senior indebtedness in excess of $20 million.
The Company is required to maintain a debt service reserve account for the
benefit of the holders of the Bonds. The account must be funded based on
projected debt service due in the next six months (initially approximately
$35 million) on the Bonds. The Company may provide a letter of credit or parent
company guaranty in lieu of funding the debt service reserve account. At
September 30, 1999, EME provided a parent guaranty of $35.3 million in support
of debt service requirements. The collateral for the Bonds and any borrowings
under the Credit Agreement are secured by all of the assets of the Company;
including its ownership interests in subsidiaries, a mortgage on real property;
and, a security interest in all bank accounts, insurance policies and other
intangible assets whether now owned or thereafter acquired. Each of the wholly-
owned subsidiaries of the Company has executed full and unconditional guarantees
in support of the Bonds and borrowings under the Credit Agreement on a joint and
several basis. The Company does not have any material assets apart from its
investments in its subsidiaries.
The Company's parent, EME, has entered into the Credit Support Guarantee,
which, under certain conditions, must make up to $42 million in payments. The
Credit Support Guarantee is available until December 31, 2001 as additional
cashflow to support shortfalls in the payment of the Bonds and other senior
secured debt. Similar guarantees have been extended by EME with respect to the
obligations in the Credit Agreement.
4. RELATED-PARTY TRANSACTIONS
The Company has entered into an energy sales agreement with a marketing
affiliate for the sale of energy and capacity at a price equal to (i) the price
which a third party purchaser of the capacity or energy has agreed to pay less
(ii) $.02 per MWh of capacity and energy. Payment is due and payable within
thirty days from billing which is rendered on a monthly basis. At September 30,
1999, the
F-11
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
4. RELATED-PARTY TRANSACTIONS (CONTINUED)
amount due from the marketing affiliate was $30.0 million. The net fees earned
by the marketing affiliate were $131,000 for the nine months ended
September 30, 1999.
Certain administrative services such as payroll, employee benefit plans,
insurance and information technology are shared among all affiliates of EIX and
the costs of these corporate support services are allocated to all affiliates.
The cost of services provided by EIX, including those related to the Company,
are allocated to EME based on one of the following formulas; percentage of time
worked, equity in investment and advances, number of employees, or multi-factor
(operating revenues, operating expenses, total assets and total employees). In
addition, EIX will bill EME for any direct labor and out-of-pocket expenses for
services directly requested for the benefit of the Company. All charges from EIX
related to the Company are billed to EME.
The Company receives administrative services under an agreement with EME
which provides for: (1) reimbursement of any charges from EIX directly for the
benefit of the Company, (2) reimbursement of any payments made to third parties
for goods and services for the sole benefit of the Company, (3) labor and
expenses of EME personnel providing services requested by the Company, and
(4) a corporate allocation. Certain of the officers of the Company are also
officers of EME. Compensation of common officers is paid for by EME and are
considered part of the corporate allocation under (4) above. Management believes
the allocation methodologies utilized are reasonable. The Company made
reimbursements for the cost of these programs and other services totaling
$520,000 for the nine-month period ended September 30, 1999.
The Company has also recorded a payable to EME of $9.0 million at
September 30, 1999, primarily related to tax due under the tax sharing
agreement. See Note 2 for the further discussion of the tax sharing agreement.
5. INCOME TAXES
Income tax expense includes the current tax benefit from the operating loss
and the change in deferred income taxes during the year. The components of the
net accumulated deferred income tax liability were:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
- ------------------------------- --------------
(IN THOUSANDS)
<S> <C>
Deferred tax assets
Loss carryforwards........................................ $ 1,226
State tax deduction..................................... 834
Other................................................... 225
-------
$ 2,285
-------
Deferred tax liabilities
Accumulated depreciation difference....................... $16,908
-------
Deferred taxes, net......................................... $14,623
=======
</TABLE>
F-12
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
5. INCOME TAXES (CONTINUED)
Loss carryforwards represent Pennsylvanian state tax losses totaling
$12.3 million at September 30, 1999, which would expire in 2009 and are limited
in use to $2.0 million per year.
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
- ------------------------------- -----------
(IN
THOUSANDS)
<S> <C>
Current
Federal................................................... $ 6,522
State..................................................... 1,514
-------
Total current........................................... 8,036
-------
Deferred
Federal................................................... 10,984
State..................................................... 3,639
-------
Total deferred.......................................... 14,623
-------
Provision for income taxes.................................. $22,659
=======
</TABLE>
Income tax provision (benefit) is included in the statement of operations as
follows:
<TABLE>
<S> <C>
Income before extraordinary loss............................ $24,939
Extraordinary loss.......................................... (2,280)
-------
Total................................................... $22,659
=======
</TABLE>
The components of the deferred tax provision, which arise from timing
differences between financial and tax reporting, are presented below:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
- ------------------------------- --------
<S> <C>
Accumulated depreciation difference......................... $16,908
Loss carryforwards.......................................... (1,226)
State tax deduction......................................... (834)
Other....................................................... (225)
-------
Total deferred provision................................ $14,623
=======
</TABLE>
Variations from the 35% federal statutory rate are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
- ------------------------------- --------
<S> <C>
Expected provision for federal income taxes................. $21,041
Decrease in taxes from:
State tax--net of federal benefit......................... 3,898
-------
Total provision for income taxes........................ $24,939
=======
Effective tax rate.......................................... 41.48%
=======
</TABLE>
F-13
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
6. EMPLOYEE BENEFITS PLANS
Employees of the Company are eligible for various benefit plans of EIX.
PENSION PLANS
The Company maintains a pension plan specifically for the benefit of its
union employees. The Company's non-union employees participate in the EIX
pension plan. Both plans are noncontributory, defined benefit pension plans and
cover employees who fulfill minimum service requirements. There are no prior
service costs for the plans.
Information on plan assets and benefits obligations is shown below:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, UNION PLAN NON-UNION
- ------------------------------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Change in Benefit Obligation
Benefit obligation at beginning of period............ $ -- $ --
Benefit obligation acquired.......................... (6,000) (800)
Service cost......................................... (344) (94)
Interest cost........................................ (241) (28)
Actuarial gain....................................... -- 122
------- -------
Benefit obligation at end of period................ $(6,585) $ (800)
------- -------
Change in Plan Assets
Fair value of plan assets at beginning of period..... $ -- $ --
Actual return on plan assets......................... 2 --
Employer contributions............................... 100 --
------- -------
Fair value of plan assets at end of period......... $ 102 $ --
------- -------
Funded status.......................................... $(6,484) $ (800)
Unrecognized net loss (gain)........................... 3 (122)
------- -------
Pension liability.................................... $(6,481) $ (922)
======= =======
Discount rate.......................................... 7.50% 7.0-7.5%
Rate of compensation increase.......................... 5.00% 5.00%
Expected return on plan assets......................... 6.75% 7.50%
</TABLE>
Components of pension expense were:
<TABLE>
<S> <C> <C>
Service cost........................................... $344 $ 94
Interest cost obligation............................... 241 28
Expected return on plan assets......................... (4) --
---- ----
Net pension expense.................................... $581 $122
==== ====
</TABLE>
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company's employees retiring at or after age 55 with at least 10 years
of service are eligible for postretirement health care, dental, life insurance
and other benefits.
F-14
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
6. EMPLOYEE BENEFITS PLANS (CONTINUED)
Information on plan assets and benefit obligations is shown below:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999 UNION PLAN NON-UNION
- ------------------------------------ ---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Change in Benefit Obligation
Benefit obligation at beginning of period............ $ -- $ --
Benefit obligation acquired.......................... (7,500) (1,600)
Service cost......................................... (233) (47)
Interest cost........................................ (301) (66)
Actuarial loss (gain)................................ -- 185
Benefits paid........................................ -- --
------- --------
Benefit obligation at end of period................ $(8,034) $ (1,528)
------- --------
Change in Plan Assets
Fair Value of plan assets at beginning of period..... $ -- $ --
Employer contributions............................... -- --
Benefits paid........................................ -- --
------- --------
Fair value of plan assets at end of period......... $ -- $ --
------- --------
Funded status.......................................... $(8,034) $ (1,528)
Unrecognized net loss (gain)........................... -- (185)
------- --------
Recorded liability................................... $(8,034) $ (1,713)
======= ========
Discount rate.......................................... 6.75% 7.0-7.5%
</TABLE>
The components of post-retirement benefits other than pension expense were:
<TABLE>
<S> <C> <C>
Service cost........................................... $ 233 $ 47
Interest cost.......................................... 301 66
------- --------
Total expense.......................................... $ 534 $ 113
======= ========
</TABLE>
For the non-union plan, the assumed rate of future increases in the
per-capita cost of health care benefits is 8.25% for 1999, gradually decreasing
to 5.0% for 2009 and beyond. Increasing the health care cost trend rate by one
percentage point would increase the accumulated obligation as of September 30,
1999, by $400,000 and annual aggregate service and interest costs by $15,000.
Decreasing the health care cost trend rate by one percentage point would
decrease the accumulated obligation as of September 30, 1999, by $300,000 and
annual aggregate service and interest costs by $10,000.
For the union plan, the assumed rate of future increases in the per-capita
cost of health care benefits is 8.60% for 1999, gradually decreasing to 5.0% for
2009 and beyond. Increasing the health care cost trend rate by one percentage
point would increase the accumulated obligation as of September 30, 1999, by
$1.9 million and annual aggregate service and interest costs by $230,000.
Decreasing the health care cost trend rate by one percentage point would
decrease the accumulated obligation as of June 30, 1999, by $1.5 million and
annual aggregate service and interest costs by $180,000.
F-15
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
6. EMPLOYEE BENEFITS PLANS (CONTINUED)
EMPLOYEE STOCK PLANS
A 401(k) plan is maintained to supplement eligible employees' retirement
income. The Company matches 100 percent of non-union employee contributions up
to 6 percent of such employees' annual compensation. The Company also matches
65 percent of contributions made by union employees, up to 2.6 percent of annual
compensation. Employer contributions vest 20 percent per year. Contribution
expense for the nine month period ended September 30, 1999 was $220,000.
7. COMMITMENTS AND CONTINGENCIES
The Company has entered into separate transition contracts (the "Transition
Contracts") with Pennsylvania Electric Company ("Penelec") and New York State
Electric & Gas Corporation ("NYSEG"), pursuant to which EME Homer City may
exercise a put option to sell certain quantities of capacity to Penelec and
NYSEG, and Penelec and NYSEG may exercise call options to purchase certain
quantities of capacity. The terms of the NYSEG Transition Contract and the
Penelec Transition Contract continue until April 30, 2001 and May 31, 2001,
respectively. EME Homer City has exercised a put option to sell 942 MW of
capacity to Penelec for the period from March 18, 1999 through May 31, 2000
under the Penelec Transition Contract for a price of $49.90/MW-day from
March 18, 1999 through May 31, 1999 and $59.90/MW-day for the year ending
May 31, 2000. EME Homer City has also entered into contractual arrangements with
NYSEG to sell 942 MW of capacity for the period from March 18, 1999 to May 31,
1999 for a price of $55.00/MW-day and sell 99% of the remaining installed
capacity over the transition contracts through May 31, 2000 at a weighted
average price of $65.00/MW-day.
At September 30, 1999, the marketing affiliate has sold 82% of the
anticipated energy output of Homer City Units 1 and 2 for the remainder of the
1999 with an average price of $22.00/MWh. In addition, the marketing affiliate
had entered into forward energy sales totaling 856 MWh during on-peak hours in
2000 at an average price of $40.90/MWh. Lastly, the marketing affiliate had sold
99% of the remaining capacity over the transition contract amounts through
May 2000 at a weighted average price of $65.00/MW-day. At September 30, 1999,
the Company's affiliate sold call options to third parties for 238 MWh of energy
for various periods from October 1, 1999 through December 31, 2000, at a
weighted average price of $37.42.
CREDIT SUPPORT TO AFFILIATES
The Company has entered into a contract with a marketing affiliate for the
sale of energy and capacity produced by the Homer City facilities, which enables
such marketing affiliate to engage in forward sales and hedging transactions to
manage the Company's electricity price exposure. Net gains or losses on hedges
by the marketing affiliate which are physically settled are recognized in the
same manner as the hedged item. The Company receives the net transaction price
on all contracts that are physically settled by its marketing affiliate. Another
marketing affiliate of the Company enters into option contracts using credit of
the Company. Options written and premiums received by this affiliate are not
transferred to the Company. In connection with these agreements, the Company has
agreed to provide credit support in the form of guarantees. At September 30,
1999, the Company has executed guarantees totaling $71 million.
F-16
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
ASH DISPOSAL SITE
Pennsylvania Department of Environmental Protection ("PaDEP") regulations
governing ash disposal sites require, among other things, groundwater
assessments of landfills if existing groundwater monitoring indicates the
possibility of degradation. The assessments could lead to the installation of
additional monitoring wells and if degradation of the groundwater is discovered,
the Company would be required to develop abatement plans, which may include the
lining of unlined sites. To date, the Facilities' ash disposal site has not
shown any signs that would require abatement. Management does not believe that
the costs of maintaining and abandoning the ash disposal site will have a
material impact on the Company's results of operations or financial position.
TWO LICK CREEK RESERVOIR DEEP MINE DISCHARGES
In connection with its purchase of the Homer City facilities on March 18,
1999, the Company acquired the Two Lick Creek Dam and Reservoir. Acid discharges
from two inactive deep mines were being collected and partially treated on the
reservoir property by a mining company before being pumped off the property for
additional treatment at a nearby treatment plant. The mining company, which
filed for bankruptcy, operated the collection and treatment system until
May 1999, when its assets were allegedly depleted.
The PaDEP initially advised the Company that it was potentially responsible
for treating the discharges by virtue of its alleged ownership of the property
of which the discharges allegedly emanated. Without any admission of its
liability, the Company voluntarily agreed through a Letter Agreement to fund the
operation of the treatment plant (approximately $11,000 per month) for an
interim period while PaDEP continued its investigation. The agency has recently
notified the Company that it is responsible for treatment of one of the
discharges. It has also advised the owner of the mineral rights and three former
operators of the mine that they are liable and has requested them to
cooperatively develop and implement a plan with the Company to treat the
discharge. The Company estimates the cost of a passive treatment system to be
approximately $750,000. The cost of operating a passive treatment system would
be considerably less than the cost of operating the current treatment plant.
FUEL CONTRACTS COMMITMENT
The Company has entered into several fuel purchase agreements with various
third party suppliers for the purchase of bituminous steam coal. These contracts
call for the purchase of a minimum quantity of coal over the term of the
contracts, which extend from three months to 8.5 years from September 30, 1999,
with an option at the Company's discretion to purchase additional amounts of
coal as stated in the agreements. The minimum quantity of coal to be purchased
through these contracts is 16.9 million tons over the terms of the respective
contracts. Pricing is based on fixed prices per ton
F-17
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
with various methods of escalation as defined in the agreements. The escalation
is generally based on market conditions.
<TABLE>
<CAPTION>
MINIMUM QUANTITY MAXIMUM QUANTITY BASE PRICE
SUPPLIER TERMINATION DATE (TONS PER MONTH) (TONS) ($/TON)
- -------- ---------------- ---------------- ----------------------- ----------
<S> <C> <C> <C> <C>
Canterbury Coal Company..... 12/31/03 28,000 40,000/month 21.33(1)
Mears Enterprises, Inc...... 12/31/00 30,000 35,000/month 21.41
Rosebud Mining Company...... 12/31/00 25,000 1,050,000/contract term 21.42
Helvetia Coal Company....... (2) 1,800,000/year None 26.75(3)
Unionvale Coal Company...... 12/31/07 (4) (5) (6)
Tanoma Coal Sales, Inc...... 12/31/04 25,000 (7) (8)
12/31/99 10,000 25,000 (9)
12/31/99 15,000 None 21.40
12/31/02 85,000 95,000/month 37.00(10)
Kajon Materials, Inc........ 5/31/00 10,000 360,000/contract term 20.37
DLR Coal Company............ 12/31/04 20,000 1,500,000/contract term 19.00
Britt Resources, Inc........ 4/30/03 15,000 65,000/month (11)
</TABLE>
- ------------------------
(1) The base price per ton under the Canterbury Coal Company agreement
increased to $22.05 on January 1, 2000 and will be increased to $22.30 on
January 1, 2002.
(2) The Helvetia agreement will terminate when 16 million tons of raw coal have
been delivered under this agreement. At current delivery rates, the
contract will expire in 2002.
(3) The base price for coal delivered under the Helvetia agreement was $26.75
per ton as of January 1995 and is adjusted quarterly in accordance with a
cost index and a market index.
(4) The minimum monthly quantities under the Unionvale Coal Company agreement
are as follows: (1) from August 1, 1999 through December 31, 2000, 35,000
tons; (2) from January 1, 2001 through December 31, 2001, 45,000 tons; and
(3) from January 1, 2002 through December 31, 2007, 60,000 tons.
(5) The maximum monthly quantities under the Unionvale Coal Company agreement
are as follows: (1) from August 1, 1999 through December 31, 2000, 50,000
tons; (2) from January 1, 2001 through December 31, 2001, 60,000 tons; and
(3) from January 1, 2002 through December 31, 2007, 67,500 tons.
(6) The price paid for coal under the Unionvale Coal Company agreement is as
follows: (1) through December 31, 2000, $21.50/ton; (2) from January 1,
2001 through December 31, 2001, $21.93/ton; (3) from January 1, 2002 through
December 31, 2002, $22.37/ton; (4) from January 1, 2003 through
December 31, 2005, as determined in good faith between the parties to the
agreement, not to exceed the price specified in clause (3) plus 5%;
(5) from January 1, 2006 through December 31, 2006, the price specified in
clause (4) plus 2% thereof; and (6) from January 1, 2007 through
December 31, 2007, the price specified in clause (5) plus 2% of such price.
(7) Under the Tanoma agreement terminating on December 31, 2004, EME Homer City
can receive up to 35,000 tons of coal per month on and after July 1, 1999
if it notifies Tanoma by February 1, 1999, and can receive up to 45,000 tons
of coal per month on and after October 1, 2000 if it notifies Tanoma by
May 1, 2000.
(8) The price paid for coal under the Tanoma agreement terminating on
December 31, 2004 is as follows: (1) through December 31, 2000, $21.30/ton;
and (2) from January 1, 2001 through December 31, 2004, as determined in
accordance with a combination of (a) good faith negotiations between the
parties, (b) changes in the prices under other coal supply agreements for
the Homer City facilities and (c) changes in the economic dispatch rates for
Units 1 and 2.
(9) The price paid for coal under the Tanoma agreement terminating on December
31, 1999 is as follows: (1) for the first 10,000 tons, $22.05/tons; (2) for
the next 10,000 tons, $22.89/tons; and (3) for the final 5,000 tons,
$22.47/ton.
(10) The price paid for coal under the Tanoma agreement terminating on
December 31, 2002 is subject to adjustment for several factors, including
the economic dispatch rate for Unit 3 and the market price of similar low
sulfur coal.
F-18
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
(11) The price paid for coal under the Britt Resources agreement is as follows:
(1) up to 25,000 tons, $21.00/ton; (2) from 25,001 to 40,000 tons,
$22.00/ton; and (3) from 40,001 to 65,000 tons, $23.00/ton.
PLANT IMPROVEMENTS
Upon acquisition, the Company began major plant improvements consisting
primarily of a turnkey pollution control retrofit project. The cost of
environment capital improvements is estimated to be $258 million, of which
$74 million was incurred prior to September 30, 1999.
LEASES
At September 30, 1999 the Company had no capital leases, however, the
Company did have several operating leases in place relating mainly to flue gas
conditioning equipment and trucks. At September 30, 1999, the future operating
lease commitments were as follows:
<TABLE>
<CAPTION>
PERIOD ENDING SEPTEMBER 30,
- --------------------------- (IN THOUSANDS)
<S> <C>
October 1999-September 2000................................. $ 811
October 2000-September 2001................................. 132
October 2001-September 2002................................. 131
October 2002-September 2003................................. 126
October 2003-September 2004................................. 75
------
Total................................................... $1,275
======
</TABLE>
COAL CLEANING AGREEMENT
The Company has entered into a Coal Cleaning Agreement with Homer City Coal
Processing Corp. to operate and maintain a coal cleaning plant owned by the
Company. Under the terms of the agreement, which is scheduled to expire on
August 31, 2002, the Company is obligated to reimburse Homer City Coal
Processing Corp. for the actual costs incurred in the operations and maintenance
of the coal cleaning plant, a fixed general and administrative service fee of
$260,000 per year, and an operating fee that ranges from $.20 to $.35 per ton
depending on the level of tonnage.
INTERCONNECTION AGREEMENT
Subsidiaries of the Company have entered into Interconnection Agreements
with NYSEG and Penelec to provide interconnection services necessary to
interconnect the Homer City Station with NYSEG and Penelec's transmission
systems. Unless terminated earlier in accordance with the terms thereof, the
Interconnection Agreement will terminate on a date mutually agreed to by EME
Homer City, NYSEG and Penelec. This date will not exceed the retirement date of
the Homer City Units. NYSEG and Penelec have agreed to extend such
interconnection services to modifications, additions, upgrades or repowering of
the Homer City Units. EME Homer City is required to compensate NYSEG and Penelec
for all reasonable costs associated with any modifications, additions or
replacements made to NYSEG or Penelec's interconnection facilities or
transmission systems in connection with any modification, addition, upgrade to
the Homer City Units.
F-19
<PAGE>
EDISON MISSION HOLDINGS CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
8. SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
- ------------------------------- --------------
(IN THOUSANDS)
<S> <C>
Cash paid:
Interest.................................................... $ 10,131
NINE MONTHS ENDED SEPTEMBER 30,
- ------------------------------------------------------------
Details of facility acquisition:
Fair value of assets acquired............................... $1,835,207
Liabilities assumed......................................... (16,576)
----------
Net cash paid for acquisition............................... $1,818,631
==========
</TABLE>
F-20
<PAGE>
APPENDIX A
GLOSSARY OF DEFINED TERMS
Unless the context requires otherwise, any reference in this prospectus to
any agreement shall mean that agreement and all schedules, exhibits and
attachments to that agreement as amended, supplemented or otherwise modified and
in effect as of the date of this prospectus. All terms defined in this appendix
used in the singular shall have the same meanings when used in the plural and
vice versa.
THE TERMS DEFINED BELOW ARE SUMMARIES OF TERMS DEFINED IN, AND ARE DEFINED
MORE SPECIFICALLY IN, THE OPERATIVE CONTRACTS AND THE FINANCING DOCUMENTS. THESE
SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO, ALL OF THE PROVISIONS OF THE OPERATIVE CONTRACTS
AND THE FINANCING DOCUMENTS. COPIES OF THE OPERATIVE CONTRACTS AND THE FINANCING
DOCUMENTS HAVE BEEN FILED AS EXHIBITS TO THE REGISTRATION STATEMENT OF WHICH
THIS PROSPECTUS FORMS A PART. SEE "AVAILABLE INFORMATION."
"Acceptable Credit Provider" means a bank or trust company with a combined
capital and surplus of at least $1 billion whose long term unsecured debt is
rated "A2" or higher by Moody's or "A" or higher by S&P.
"Acceptable Credit Support" means (1) an unconditional guarantee by Edison
Mission Energy or any other Affiliate of Edison Mission Holdings, with such
entity in each case being rated "Baa1" or higher by Moody's and "BBB+" or higher
by S&P or (2) an irrevocable letter of credit from an Acceptable Credit
Provider. In the event of a downgrade of any Acceptable Credit Provider by
Moody's or S&P to below the minimum criteria specified above, substitute
Acceptable Credit Support must be provided within 30 days of such event.
Otherwise, the Trustee shall draw down the then outstanding amount of the
Acceptable Credit Support and deposit such monies into the Debt Service Reserve
Accounts.
"Accounts" means, collectively, the Accrued Interest Accounts, the Debt
Service Reserve Accounts, the Equity Account, the Environmental Capital
Expenditures Account, the Principal Accounts, the Recovery Event Proceeds
Account and the Revenue Account.
"Accrued Interest Account" means, for each class of Senior Debt, the account
established by the Collateral Agent for such Senior Debt pursuant to the
Security Deposit Agreement into which amounts shall be deposited for the purpose
of making payments when due of accrued interest on such Senior Debt.
"Accrued Interest Amount" means, with respect to any Accrued Interest
Account, as of any date of calculation, an amount sufficient to cause the
balance of such Accrued Interest Account to equal the sum of (1) all accrued and
unpaid interest and fees in respect of the related Indebtedness on such date,
(2) all amounts in respect of funding losses, increased capital costs, taxes,
indemnities, costs and expenses associated with such Indebtedness due and
payable on such date and (3) if the next succeeding interest payment date with
respect to such Indebtedness will occur prior to the next succeeding Monthly
Transfer Date, all interest and fees projected to accrue in respect of such
Indebtedness from the date of calculation to but excluding such interest payment
date and all amounts in respect of funding losses, increased capital costs,
taxes, indemnities, costs and expenses associated with such Indebtedness
projected to be due and payable on such interest payment date.
"Additional Bonds" means any bonds issued pursuant to the indenture other
than the original bonds.
"Administrative Agent" means Citicorp USA, Inc., in its capacity as
administrative agent for the Bank Lenders, and includes each other Person as may
have subsequently been appointed as the successor Administrative Agent under the
Credit Agreement.
A-1
<PAGE>
"Alternate Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of (1) the
"base rate" of the Administrative Agent and (2) the Federal Funds Rate most
recently determined by the Administrative Agent plus 1/2 of 1%.
"Base Rate Loans" means all Loans bearing interest based on the Alternate
Base Rate.
"Beneficial Owner" means any person who holds a beneficial ownership
interest in a bond.
"Capital Lease Obligation" means, as to any Person, all monetary obligations
of such Person under any leasing or similar arrangement which, in accordance
with GAAP, would be classified as capitalized leases, and, for purposes of the
indenture, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Equivalents" means, at any time: (1) any evidence of Indebtedness,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or an agency thereof; (2) other investments in
securities or bank instruments rated at least "A" by S&P and "A2" by Moody's or
"A-1" by S&P and "P-1" by Moody's and with maturities of less than 366 days; or
(3) other securities as to which Edison Mission Holdings has demonstrated, to
the satisfaction of the trustee, adequate liquidity through secondary markets or
deposit agreements.
"Change of Control" means the reduction in Edison Mission Energy's direct or
indirect beneficial ownership in Edison Mission Holdings to less than 50% at any
time unless at such time either (1) the bonds are rated at least Investment
Grade by each Rating Agency then rating the bonds and a Ratings Reaffirmation is
obtained or (2) the reduction in Edison Mission Energy's voting interest has
been approved by a vote of more than 66 2/3% of the bondholders.
"Collateral Agent" means United States Trust Company of New York, as
collateral agent for the benefit of the Secured Parties under the Guarantee and
Collateral Agreement, together with its successors and assigns.
"Commitments" means the collective reference to the 364-Day Term Loan
Commitments, the Construction Term Loan Commitments and the Revolving Loan
Commitments.
"Debt Service" means, with respect to any Senior Debt, principal, or, in the
case of Swap Indebtedness, amounts payable on early termination of the related
Interest Rate Hedging Obligation, interest or, in the case of any Swap
Indebtedness, fixed payments in respect of the related Interest Rate Hedging
Obligation, fees and amounts in respect of funding losses, increased capital
costs, taxes, indemnities, costs and expenses, in each case payable in respect
of such Senior Debt.
"Debt Service Coverage Ratio" means, for any period, a ratio the numerator
of which is Net Cashflow for such period, and the denominator of which is the
aggregate of all principal, interest and other fixed charges payable during such
period on the bonds or on other Permitted Indebtedness which is equivalent with
the bonds.
"Debt Service Reserve Accounts" means, collectively, (1) the Bond Debt
Service Reserve Account, (2) the Bank Debt Service Reserve Account and (3) any
similar debt service reserve accounts established for the benefit of holders of
other secured Senior Debt.
"DSR Credit Instrument" means, with respect to any Senior Debt, a letter of
credit, guarantee or other instrument that under the Financing Documents
relating to such Senior Debt may be delivered to the Collateral Agent in total
or partial satisfaction of the Debt Service Reserve Requirement relating to such
Senior Debt.
"DSR Letter of Credit Indebtedness" means any indebtedness incurred under an
agreement relating to letters of credit issued to satisfy a Debt Service Reserve
Requirement.
A-2
<PAGE>
"Equity Account" means the account of such name established under the
Security Deposit Agreement.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock.
"Final Maturity Date" means the last stated maturity date of any series of
the bonds.
"Financing Documents" means, collectively, the indenture, the bonds, the
Purchase Agreement, the registration rights agreement, the Credit Agreement and
the Security Documents.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, letters of credit and
reimbursement agreements in respect of such instruments, of all or any part of
any Indebtedness.
"Indebtedness" of any Person means, without duplication: (1) all
indebtedness for borrowed money; (2) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services which purchase
price is due more than six months from the date of incurrence of the obligation
in respect of such obligations or is evidenced by a note or other instrument,
except trade accounts arising in the ordinary course of business; (3) all
reimbursement obligations with respect to surety bonds, letters of credit to the
extent not collateralized with cash or Cash Equivalents, bankers' acceptances
and similar instruments in each case, whether or not matured; (4) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses; (5) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property; (6) all
Capital Lease Obligations; (7) all Interest Rate Hedging Obligations; (8) all
indebtedness referred to in clauses (1) through (7) above secured by, or for
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by, any Lien upon or in property, including accounts
and contracts rights, owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; and (9) all
contingent liabilities.
"Independent Engineer" means Stone and Webster Management Consultants, Inc.
or another nationally recognized independent engineering and consulting firm
which, as Independent Engineer, will independently review the technical aspects
of the project, analyze the contractual structure and create financial
projections for the benefit of the bondholders.
"Initial Purchasers" means, collectively, Lehman Brothers Inc., Credit
Suisse First Boston Corporation, Salomon Smith Barney Inc. and SG Cowen
Securities Corp.
"Interest Payment Date" means (1) with respect to the bonds, each April 1
and October 1, commencing on October 1, 1999 and concluding on the Final
Maturity Date and each other date on which interest on the bonds becomes due and
payable, whether on a Redemption Date, the Final Maturity Date, declaration of
acceleration or otherwise, and (2) with respect to any other Secured
Obligations, each regularly scheduled date on which interest is due and payable
with respect to such Secured Obligations, as such date may be established from
time to time, and any date on which interest on such Secured Obligations becomes
due and payable, whether at redemption, the final maturity date or declaration
of acceleration or otherwise.
"Interest Rate Hedging Obligations" means, as to any Person, the net payment
Obligations of all interest rate swaps, caps or collar agreements or similar
arrangements entered into by such Person in order to protect against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies, and, in any event, not for
speculative purposes.
A-3
<PAGE>
"Interest Rate Protection Agreement" means any agreement providing for
swaps, ceiling rates, ceiling and floor rates, contingent participation or other
hedging mechanisms with respect to the payment of interest.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons, including Affiliates in the forms of direct or indirect
loans, including Guarantees of Indebtedness or other Obligations, advances of
assets or capital contributions, excluding commission, travel and entertainment,
moving, and similar advances to officers and employees made in the ordinary
course of business, purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"LIBO Rate Loans" means all Loans bearing interest based upon a rate
determined in the London Interbank Market.
"Loans" means the collective reference to Acquisition Loans, Environmental
Capital Improvements Loans and Working Capital Loans.
"Monthly Transfer Date" means the last Business Day of each month.
"Net Cash Flow" means, for any period, (1) all Revenues for such period,
minus (2) the sum of (a) all amounts paid by or on behalf of Edison Mission
Holdings and the Guarantors during such period in respect of fuel,
administration, operation, maintenance, repairs and overhead, but excluding all
subordinated payments made to Affiliates and capital expenditures which are
funded with Permitted Indebtedness plus (b) all taxes paid by Edison Mission
Holdings and the Guarantors during such period, plus (c) all fees paid by Edison
Mission Holdings and the Guarantors relating to financing activities during such
period.
"Obligations" means any principal, premium, if any, interest, including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to Edison Mission Holdings or any of the Guarantors
whether or not a claim for post-filing interest is allowed in such proceeding,
penalties, fees, charges, expenses, indemnifications, reimbursement obligations,
damages, guarantees and other liabilities or amounts payable under the
documentation governing any Indebtedness or in respect of such Indebtedness.
"Officer" means, with respect to any Person, any Chairman of the Board,
President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, Senior Vice President, Vice President, Treasurer or Secretary of such
Person.
"Officer's Certificate" means a certificate signed by an Officer of Edison
Mission Holdings.
"Operative Contracts" means, collectively, the Transition Contracts, the
Interconnection Agreement, the Easement Agreement, the Coal Supply Agreements,
the Coal Cleaning Agreement, the Operating Agreement, the Joint Services
Agreement, the Leases and any other material agreement entered into by Edison
Mission Holdings or any of the Guarantors with respect to the operation,
maintenance, management, repair or improvement of the Homer City facilities.
"Opinion of Counsel" means a written opinion of counsel for any Person
either expressly referred to in the indenture or otherwise reasonably
satisfactory to the trustee which may include, without limitation, counsel for
Edison Mission Holdings, whether or not such counsel is an employee of Edison
Mission Holdings.
"Ordinary Course Letter of Credit Indebtedness" means any indebtedness
incurred in the form of reimbursement obligations relating to letters of credit,
surety bonds and performance bonds used by Edison Mission Holdings and the
Guarantors in the ordinary course of their business.
A-4
<PAGE>
"Outstanding" means when used with respect to the bonds, shall mean, as of
the date of determination, all bonds authenticated and delivered under the
indenture, except: (1) bonds canceled by the trustee or delivered to the trustee
for cancellation; (2) bonds or portions of the bonds deemed to have been paid
within the meaning stated in the indenture; and (3) bonds in exchange for or in
lieu of which other bonds have been authenticated and delivered under the
indenture; provided, however, that in determining whether the holders of the
requisite principal of bonds outstanding have given any request, demand,
authorization, direction, notice, consent or waiver under the indenture or the
Security Documents or whether or not a quorum is present at a meeting of
bondholders, bonds owned by Edison Mission Holdings or any Affiliate of Edison
Mission Holdings shall be disregarded and deemed not to be outstanding as
provided in the indenture.
"Permitted Investments" means (1) obligations issued or guaranteed as to
principal and interest including money market securities by (a) the United
States of America or (b) any agency thereof for which its obligations are backed
by the full faith and credit of the United States of America, and certificates
evidencing ownership of the right to the payment of the principal of and
interest on such obligations, if such obligations are held in the custody of an
Acceptable Credit Provider in a special account separate from the general assets
of such custodian; (2) certificates of deposit or other interest-bearing
obligations of the Collateral Agent, an Acceptable Credit Provider or other bank
with long-term unsecured debt rated either "AAA" by S&P or "Aaa" by Moody's, or
"A" or higher by S&P and "A2" or higher by Moody's; and (3) commercial paper,
money market securities and other corporate debt securities rated, on the date
of purchase, "A-1" by S&P or "P-1" by Moody's or higher for securities with
original maturities of less than one year and "AAA" by S&P or "Aaa" by Moody's,
or "A" or higher by S&P and "A2" or higher by Moody's, for securities with
original maturities of one year or greater and maturing not more than one year
from the date of acquisition of such securities.
"Power Market Consultant" means PHB Hagler Bailly, Inc. or another
nationally recognized power market consulting firm which, as Power Market
Consultant, which will perform a market study of certain markets relating to the
Homer City facilities and develop independent electricity price forecasts for
the benefit of the bondholders.
"Principal Account" means, for each class of Senior Debt, the account
established by the Collateral Agent for such Senior Debt under the Security
Deposit Agreement into which amounts shall be deposited for the purpose of
making payments when due of the principal amount of such Senior Debt.
"Principal Payment Date" means (1) with respect to the bonds, the date on
which all or a portion of the principal of such bonds becomes due and payable as
provided in the bonds or in the indenture, whether on a scheduled date for
payment of principal, at a Redemption Date, the Final Maturity Date, declaration
of acceleration or otherwise and (2) with respect to any other Secured
Obligations, the date on which all or a portion of the principal of such Secured
Obligations becomes due and payable under the terms of such other secured
obligations, whether on a scheduled date for payment of principal, at a
Redemption Date, a final maturity date, declaration of acceleration or
otherwise.
"Prudent Industry Practice" means any of the practices, methods, standards
and acts, including but not limited to the practices, methods and acts engaged
in or approved by a significant portion of the electric power generation
industry in the United States that, at a particular time, in the exercise of
reasonable judgment in light of the facts known or that should reasonably have
been known at the time a decision was made, could have been expected to
accomplish the desired result consistent with good business practices,
reliability, economy, safety and expedition, and which practices generally
conform to applicable law and governmental approvals.
"Qualified Institutional Buyer" means a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act.
A-5
<PAGE>
"Rating Agencies" means each of Moody's, S&P and Duff & Phelps, together
with any other nationally recognized credit rating agency of similar standing if
any such entity is not then currently rating the bonds.
"Ratings Reaffirmation" means, with respect to a specified event, a written
confirmation from two or more Rating Agencies that a lowering of the
then-current credit ratings of the bonds will not result from such event.
"Recovery Event" means any settlement of or payment of $5,000,000 or more in
respect of (1) any property or casualty insurance claim relating to any asset of
Edison Mission Holdings or any of the Guarantors or (2) any seizure,
condemnation, confiscation or taking of, or requisition of title or use of, the
Homer City facilities or any part thereof by any Governmental Authority.
"Recovery Event Proceeds" means proceeds received in respect of a Recovery
Event.
"Redemption Date" means a date indicated for redemption of bonds under the
indenture.
"Redemption Price" means the price to be paid by Edison Mission Holdings for
the bonds that are redeemed under the indenture.
"Regular Record Date" means, with respect to any scheduled payment date of
any installment of principal of any bond, or payment of interest on any bond,
shall mean the 15th day, whether or not a Business Day, next preceding such
payment date.
"Reinvestment Notice" means a notice executed by an authorized Officer of
Edison Mission Holdings to the Collateral Agent and the trustee (1) indicating
in reasonable detail the nature of the proposed restoration or replacement and
the estimated cost and time to complete such restoration or replacement and
(2) stating that (a) no Default or Event of Default has occurred and is
continuing, (b) such restoration or replacement is technologically and
economically feasible, (c) the net cash proceeds of such Recovery Event,
together with other resources available to Edison Mission Holdings and the
Guarantors, are sufficient to pay the estimated cost of completing such
restoration or replacement and (d) Edison Mission Holdings has sufficient
resources, through business interruption insurance or otherwise, to pay all
principal, interest and other fixed charges projected to become due and payable
with respect to Senior Debt prior to the completion of such restoration or
replacement.
"Required Capital Improvements" means capital improvements to the Homer City
facilities which are either required by applicable law or which Edison Mission
Holdings reasonably believes are appropriate in response to enacted or
anticipated changes in applicable law or the interpretation of applicable law.
"Redemption Date" means the date on which Edison Mission Holdings elects or
is required to redeem all or a portion of the bonds in accordance with the
indenture.
"Required Secured Parties" shall mean, at any time, holders of Senior Debt
that at such time hold greater than 50% of the sum of all such Senior Debt
outstanding at such time, which amount shall include, (1) in the case of the
Loans, DSR Letter of Credit Indebtedness and Ordinary Course Letter of Credit
Indebtedness, the commitments with respect to such instruments at such time and
(2) in the case of Swap Indebtedness, (a) prior to the occurrence of an event of
default under any Senior Debt, zero, and (b) after the occurrence of an event of
default under any Senior Debt, the termination value of the Interest Rate
Hedging Obligation underlying such Swap Indebtedness.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Payment Date" means May 27, 1999 and the first Business Day of
each January, April, July and October.
A-6
<PAGE>
"Revenue Account" means the account of such name established under the
Security Deposit Agreement.
"Revenues" means (1) all revenues received from the operation of the Homer
City facilities, (2) all proceeds from business interruption or other insurance
and (3) all other amounts received in respect of the Home City facilities.
"Sale-Leaseback Transaction" means an arrangement relating to property now
owned or subsequently acquired whereby Edison Mission Holdings or a Guarantor
transfers such property to a Person and Edison Mission Holdings or a Guarantor
leases it from such Person.
"Secured Parties" means the bondholders, the Banks, the Collateral Agent,
the Secured Parties' Representatives and any other person that becomes a secured
party under any Financing Document.
"Secured Parties' Representatives" means the Administrative Agent and each
Person that serves as indenture trustee, collateral agent, lender's
representative or in any similar capacity for Persons that provide any Senior
Debt.
"Security Documents" means (1) the Guarantee and Collateral Agreement, the
Mortgage, the Subordination Agreement, the Intercreditor Agreement, the Security
Deposit Agreement and (2) the Credit Support Guarantee and any other guarantee
or instrument subsequently entered into by Edison Mission Holdings or any other
Person which guarantees or secures payment of the indebtedness evidenced by the
bonds or payment or performance of any other Obligation.
"Senior Debt" means (1) Edison Mission Holdings Indebtedness under the
bonds, (2) Edison Mission Holdings Indebtedness under the Credit Agreement,
(3) any additional senior Indebtedness incurred Edison Mission Holdings which is
permitted under the terms of any Senior Debt, (4) Edison Mission Holdings
Interest Rate Hedging Obligations to any lender under the Credit Agreement with
respect to the loans under such Credit Agreement and (5) Edison Mission
Holdings' Indebtedness as described above in clauses (10) and (13) of the
covenant described under the caption "Description of Principal Financing
Documents--Indenture--Limitation on the Incurrence of Indebtedness".
"Senior Debt Payment Date" means each date on which any Debt Service in
respect of any Senior Debt is due and payable, including without limitation any
Interest Payment Date or Principal Payment Date.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the credit agreement or other
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment of such
installment of interest or principal.
"Subordinated Indebtedness" means (1) with respect to Indebtedness of Edison
Mission Holdings or any Guarantor to any entity other than Edison Mission
Holdings or any Guarantor, Indebtedness that is (a) payable solely and
exclusively from the funds that would otherwise have been available to make
Restricted Payments from Edison Mission Holdings, (b) fully subordinated in all
rights and remedies to the bonds and (c) unsecured, or (2) with respect to
Indebtedness from Edison Mission Holdings to any Guarantor or from any Guarantor
to Edison Mission Holdings or any other Guarantor, Indebtedness for which
payments of principal and interest are included in cash flow available to pay
senior Indebtedness.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which more than 50% of
the outstanding capital stock, partnership interests or other equity interests
having ordinary voting power to elect a majority of the board of directors of
such corporation, irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency, or to control the
A-7
<PAGE>
management of such partnership, limited liability company or other entity is at
the time directly or indirectly owned by such Person, by such Person and one or
more other Subsidiaries of such Person, or by one or more other Subsidiaries of
such Person.
"Swap Indebtedness" means any indebtedness incurred under Interest Rate
Hedging Obligations of Edison Mission Holdings and the Guarantors.
"Trustee" means United States Trust Company of New York, as trustee for the
benefit of the bondholders under the indenture, together with its successors and
assigns.
"Yield Maintenance Premium" means, with respect to any bond to be redeemed
on any Redemption Date, an amount calculated by us as of such date equal to the
excess, if any, of (1) the net present value of the then remaining scheduled
installments of principal and payments of interest, but excluding that portion
of any scheduled installment of principal or payment of interest that is
actually due and paid on the Redemption Date, in respect of such bond calculated
using a discount factor equal to the sum of the Treasury Yield plus 50 basis
points over (2) the unpaid principal amount of such bond. Such Yield Maintenance
Premium shall be determined in accordance with the following provisions:
(1) the average life of the remaining scheduled installments of principal in
respect of such bond (the "Remaining Average Life") shall be calculated
as of such Redemption Date; and
(2) the "Treasury Yield" shall be calculated for the United States Treasury
security having an average life equal to the Remaining Average Life and
trading in the secondary market at the price closest to par (the "Primary
Issue"); PROVIDED, HOWEVER, that, if no United States Treasury security
has an average life equal to the Remaining Average Life, the yields (the
"Other Yields") for maturities of the two United States Treasury
securities having average lives most closely corresponding to such
Remaining Average Life and trading in the secondary market at the price
closest to par shall be calculated, and the yield to maturity for the
Primary Issue shall be the yield interpolated or extrapolated from such
Other Yields on a straight-line basis, rounding in each of such relevant
periods to the nearest month.
A-8
<PAGE>
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on unauthorized information. This prospectus does not offer to sell or buy
any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current as of , 2000. However, you should realize that
our affairs may have changed since the date of this prospectus.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Forward-Looking Statements............. i
Available Information.................. i
Incorporation of Documents by
Reference............................ i
Notice to New Hampshire Residents...... ii
Prospectus Summary..................... 1
Summary Consolidated Financial Data.... 11
Risk Factors........................... 12
Use of Proceeds........................ 16
Capitalization......................... 16
Selected Consolidated Financial Data... 17
Management's Discussion and Analysis of
Financial Condition.................. 18
The Exchange Offer..................... 24
Edison Mission Holdings and Edison
Mission Energy....................... 33
Business............................... 35
Management............................. 49
Intercompany Relationships and Related
Transactions......................... 51
Description of Principal Contracts..... 53
Description of the Bonds............... 63
Description of Principal Financing
Documents............................ 69
Exchange Offer; Registration Rights.... 93
Plan of Distribution................... 94
Material United States Federal Income
Tax Considerations................... 96
Legal Matters.......................... 99
Experts................................ 99
Index to Consolidated Financial
Statements........................... F-1
Appendix A--Glossary of Defined
Terms................................ A-1
</TABLE>
$830,000,000
<TABLE>
<C> <S>
EDISON MISSION
[LOGO] HOLDINGS CO.
An EDISON MISSION ENERGY
Company
</TABLE>
8.173% SENIOR SECURED BONDS DUE 2019
8.734% SENIOR SECURED BONDS DUE 2026
-------------------
PROSPECTUS
, 2000
-----------------
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
I. EDISON MISSION HOLDINGS, EDISON MISSION FINANCE CO., HOMER CITY PROPERTY
HOLDINGS, INC., MISSION ENERGY WESTSIDE, INC., CHESTNUT RIDGE ENERGY COMPANY
AND EDISON MISSION ENERGY.
Edison Mission Holdings, Edison Mission Finance Co., Homer City Property
Holdings, Inc., Mission Energy Westside, Inc. and Chestnut Ridge Energy Company,
is each a California corporation. Article VI of each of Edison Mission Holdings,
Edison Mission Finance Co.'s, Homer City Property Holdings, Inc.'s, Mission
Energy Westside, Inc.'s, Chestnut Ridge Energy Company's and Edison Mission
Energy's respective Bylaws provide, in effect, that, to the extent and under the
circumstances permitted by Section 317 of the California Corporations Code, each
such company shall indemnify any person who was or is a party or is threatened
to be made a party to any action, suit or proceeding of the type described in
that section by reason of the fact that he or she is or was a director of
officer of the applicable company.
Section 317 of the California Corporations Code empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, other than in certain actions
by or in the right of the corporation as described below, by reason of the fact
that he or she is or was a director, officer, employee or other agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or was a director, officer, employee or
agent of a corporation that was a predecessor corporation of the corporation or
of another enterprise at the request of the predecessor corporation, against
expenses,including attorneys' fees, judgments, fines, settlements and other
amounts actually or reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and in a manner he
or she reasonably believed to be in the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe that his or her conduct was unlawful. In the case of an action by or in
the right of the corporation, no indemnification shall be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation in the performance of his or her duty to the
corporation and its shareholders unless and only to the extent that the court in
which such action or suit is or was pending shall determine that, in view of all
of the circumstances of the case, such person is fairly and reasonably entitled
to indemnify for such expenses which such court shall deem proper. Section 317
further provides that to the extent that such director, officer, employee or
agent of a corporation has been successful on the merits in defense of any
action, suit or proceeding referred to above or in the defense of any claim,
issue or matter therein, such person shall be indemnified against
expenses,including attorneys' fees, actually and reasonably incurred by him or
her in connection therewith.
Article V of each of the Edison Mission Holdings', Edison Mission Finance
Co.'s, Homer City Property Holdings, Inc.'s, Mission Energy Westside, Inc.'s,
and Chestnut Ridge Energy Company's respective Articles of Incorporation and
Article IV of Edison Mission Energy's Articles of Incorporation relieve their
respective directors from monetary damages to their respective companies or
their respective shareholders for any breach of such director's fiduciary duty
as a director to the extent permitted by the California Corporations Code. Under
Section 204(a)(10) of the California Corporations Code, a corporation may
relieve its directors from personal liability to such corporation or its
shareholders for monetary damages for any breach of their fiduciary duty as
directors except (i) for acts or omissions that show a reckless disregard for
the director's duty to the corporation or its shareholders in circumstances in
which the director was unaware, or should have been aware, in the
II-1
<PAGE>
ordinary course of performing his or her duties, of a risk of serious injury to
the corporation or its shareholders, (ii) for any act or omission not in good
faith or that a director believes to be contrary to the best interests of the
corporation or its shareholders, (iii) for any intentional misconduct or knowing
and culpable violation of law, (iv) for any willful or negligent violation of
certain provisions of the California Corporations Code imposing certain
requirements with respect to the making of loans or guarantees and the payment
of dividends, (v) for any transaction from which the director derived an
improper personal benefit or (vi) for acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the corporation or its shareholders.
II. EME HOMER CITY GENERATION L.P.
EME Homer City Generation L.P. (the "Partnership") is a limited partnership
organized under the laws of the State of Pennsylvania. Section 8510 of the
Pennsylvania Revised Uniform Limited Partnership Act provides that, subject to
such standards and restrictions, if any, as are described in its partnership
agreement, a limited partnership may, and shall have the power to, indemnify and
hold harmless any partner or other persons from and against any and all claims
and demands whatsoever; if, however, such indemnification shall not be made in
any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
Section 8.7 of the Partnership's Agreement of Limited Partnership (the
"Agreement") provides that the General Partner, as defined in the Agreement,
will not be liable to the Partnership or the Limited Partners, as defined in the
Agreement, for any act or omission by the General Partner under to the authority
granted to it by the Agreement, except by reason of fraud, bad faith, willful
misfeasance, gross negligence or any act in breach of the Agreement. The General
Partner will indemnify and save harmless the Partnership and the Limited
Partners from any loss or liability arising out of its fraud, bad faith, willful
misfeasance, gross negligence or breach of the Agreement. Moreover, the
Partnership will indemnify and save harmless the General Partner from any loss
or liability incurred by the General Partner by reason of any act performed by
the General Partner on behalf of the Partnership or in furtherance of the
Partnership's interest other than by reason of the General Partner's fraud, bad
faith, willful misfeasance, negligence or breach of the Agreement. In the event
the General Partner is found personally liable for any debts of the Partnership,
other than any debt or liability incurred by reason of the General Partner's
fraud, bad faith, willful misfeasance, negligence or breach of the Agreement,
and is required to and does satisfy a Partnership liability out of its personal
assets, the General Partner will have a right of reimbursement out of the assets
of the Partnership (the "Right of Reimbursement"). The Right of Reimbursement
will accrue to the General Partner 30 days after written notice of such right is
given to each of the other Partners. Upon such accrual of the Right of
Reimbursement, the General Partner will be reimbursed out of the assets of the
Partnership in the order of priority specified in Section 8.7 of the Agreement,
but only to the extent necessary to satisfy such Right of Reimbursement. To the
extent not reimbursed as provided in the Agreement, the General Partner will
have no right of contribution from the Limited Partners.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
3.1 Articles of Incorporation of Edison Mission Holdings.
3.2 Certificate of Amendment of Articles of Incorporation of
Edison Mission Holdings.
3.3 By-Laws of Edison Mission Holdings.
3.4 Articles of Incorporation of Edison Mission Finance Co.
3.5 By-Laws of Edison Mission Finance Co.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
3.6 Articles of Incorporation of Homer City Property
Holdings, Inc.
3.7 By-Laws of Homer City Property Holdings, Inc.
3.8 Articles of Incorporation of Mission Energy Westside, Inc.
3.9 Certificate of Amendment to Articles of Incorporation of
Mission Energy Westside, Inc.
3.10 By-Laws of Mission Energy Westside, Inc.
3.11 Articles of Incorporation of Chestnut Ridge Energy Company.
3.12 By-Laws of Chestnut Ridge Energy Company.
3.13 Edison Mission Energy Homer City Generation L.P. Agreement
of Limited Partnership.
3.14 Amended and Restated Articles of Incorporation of Edison
Mission Energy, incorporated by reference to Exhibit 3.1 to
Edison Mission Energy's Current Report on Form 8-K, dated
January 30, 1996.
3.15 By-Laws of Edison Mission Energy, incorporated by reference
to Exhibit 3.2 to Edison Mission Energy's Registration
Statement on Form 10 filed with the Securities and Exchange
Commission on November 21, 1994 ("Form 10").
4.1 Indenture, dated as of May 27, 1999, between Edison Mission
Holdings and United States Trust Company of New York, as
Trustee. See Exhibit 10.74
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to Edison Mission Holdings.*
5.2 Opinion of Morgan, Lewis & Bockius LLP, special Pennsylvania
counsel to EME Homer City Generation L.P.**
10.1 Exchange and Registration Rights Agreement, dated as of May
27, 1999, by and among the Initial Purchasers, the
Guarantors and Edison Mission Holdings.
10.2 Power Purchase Contract between Southern California Edison
Company and Champlin Petroleum Company, dated March 8, 1985,
incorporated by reference to Exhibit 10.2 to Edison Mission
Energy's Form 10.
10.2.1 Amendment to Power Purchase Contract between Southern
California Edison Company and Champlin Petroleum Company,
dated July 29, 1985, incorporated by reference to Exhibit
10.2.1 to Edison Mission Energy's Form 10.
10.2.2 Amendment No. 2 to Power Purchase Contract between Southern
California Edison Company and Champlin Petroleum Company,
dated October 29, 1985, incorporated by reference to Exhibit
10.2.2 to Edison Mission Energy's Form 10.
10.3 Power Purchase Contract between Southern California Edison
Company and Imperial Energy Company, dated February 22,
1984, incorporated by reference to Exhibit 10.4 Edison
Mission Energy's Form 10.
10.3.1 Amendment to Power Purchase Contract between Southern
California Edison Company and Imperial Energy Company, dated
November 13, 1984, incorporated by reference to Exhibit
10.4.1 to Edison Mission Energy's Form 10.
10.4 Power Purchase Contract between Southern California Edison
Company and Imperial Energy Company Niland No. 2, dated
April 16, 1985, incorporated by reference to Exhibit 10.6 to
Edison Mission Energy's Form 10.
10.5 Power Purchase Contract between Southern California Edison
Company and Chevron U.S.A. Inc., dated November 9, 1984,
incorporated by reference to Exhibit 10.7 to Edison Mission
Energy's Form 10.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.5.1 Amendment No. 1 to Power Purchase Contract between Southern
California Edison Company and Chevron U.S.A. Inc., dated
March 29, 1985, incorporated by reference to Exhibit 10.7.1
to Edison Mission Energy's Form 10.
10.5.2 Amendment No. 2 to Power Purchase Contract between Southern
California Edison Company and Chevron U.S.A. Inc., dated
November 21, 1985, incorporated by reference to Exhibit
10.7.2 to Edison Mission Energy's Form 10.
10.5.3 Amendment No. 3 to Power Purchase Contract between Southern
California Edison Company and Chevron U.S.A. Inc., dated
November 21, 1985, incorporated by reference to Exhibit
10.7.3 to Edison Mission Energy's Form 10.
10.6 Power Purchase Contract between Southern California Edison
Company and Arco Petroleum Products Company (Watson
Refinery), incorporated by reference to Exhibit 10.8 to
Edison Mission Energy's Form 10.
10.7 Power Supply Agreement between State Electricity Commission
of Victoria, Loy Yang B Power Station Pty. Ltd. and the
Company Australia Pty. Ltd., as managing partner of the
Latrobe Power Partnership, dated December 31, 1992,
incorporated by reference to Exhibit 10.9 to Edison Mission
Energy's Form 10.
10.8 Power Purchase Agreement between P.T. Paiton Energy Company
as Seller and Perusahaan Umum Listrik Negara as Buyer, dated
February 12, 1994, incorporated by reference to Exhibit
10.10 to Edison Mission Energy's Form 10.
10.9 Amended and Restated Power Purchase Contract between
Southern California Energy Company and Midway-Sunset
Cogeneration Company, dated May 5, 1988, incorporated by
reference to Exhibit 10.11 to Edison Mission Energy's Form
10.
10.10 Parallel Generation Agreement between Kern River
Cogeneration Company and Southern California Energy Company,
dated January 6, 1984, incorporated by reference to Exhibit
10.12 to Edison Mission Energy's Form 10.
10.11 Parallel Generation Agreement between Kern River
Cogeneration (Sycamore Project) Company and Southern
California Energy Company, dated December 18, 1984,
incorporated by reference to Exhibit 10.13 to Edison Mission
Energy's Form 10.
10.12 Amendment No. 2 to Power Purchase Agreement between Southern
California Energy Company and Vulcan/BN Geothermal Power
Company, dated April 1, 1986, incorporated by reference to
Exhibit 10.14 to Edison Mission Energy's Form 10.
10.13 U.S. $325 million Bank of Montreal Revolver, dated October
29, 1993, incorporated by reference to Exhibit 10.15 to
Edison Mission Energy's Form 10.
10.13.1 U.S. $400 million Bank of America National Trust and Savings
Association Credit Agreement, dated October 27, 1994,
incorporated by reference to Exhibit 10.15.1 to Edison
Mission Energy's Form 10.
10.13.2 Conformed copy of the Amended and Restated U.S. $400 million
Bank of America National Trust and Savings Association
Credit Agreement, dated as of November 17, 1994,
incorporated by reference to Exhibit 10.15.2 to Edison
Mission Energy's Annual Report on Form 10-K for the year
ended December 31, 1994.
10.13.3 Conformed copy of the Second Amended and Restated U.S. $400
million Bank of America National Trust and Savings
Association Credit Agreement, dated as of October 11, 1996,
incorporated by reference to Exhibit 10.15.3 to Edison
Mission Energy's Form 10-K for the year ended December 31,
1996.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.14 Amended and Restated Ground Lease Agreement between Texaco
Refining and Marketing Inc. and March Point Cogeneration
Company, dated August 21, 1992, incorporated by reference to
Exhibit 10.16 to Edison Mission Energy's Form 10.
10.14.1 Amendment No. 1 to Amended and Restated Ground Lease
Agreement between Texaco Refining and Marketing Inc. and
March Point Cogeneration Company, dated August 21, 1992,
incorporated by reference to Exhibit 10.16 to Edison Mission
Energy's Form 10.
10.15 Memorandum of Agreement between Atlantic Richfield Company
and Products Cogeneration Company, dated September 17, 1987,
incorporated by reference to Exhibit 10.17 to Edison Mission
Energy's Form 10.
10.16 Memorandum of Ground Lease between Texaco Producing Inc. and
Sycamore Cogeneration Company, dated January 19, 1987,
incorporated by reference to Exhibit 10.18 to Edison Mission
Energy's Form 10.
10.17 Amended and Restated Memorandum of Ground Lease between
Getty Oil Company and Kern River Cogeneration Company, dated
November 14, 1984, incorporated by reference to Exhibit
10.19 to Edison Mission Energy's Form 10.
10.18 Memorandum of Lease between Sun Operating Limited
Partnership and Midway-Sunset Cogeneration Company,
incorporated by reference to Exhibit 10.20 to Edison Mission
Energy's Form 10.
10.19 Executive Supplemental Benefit Program, incorporated by
reference to Exhibits to Forms 10-K filed by SCEcorp (File
No. 1-2313).
10.20 1981 Deferred Compensation Agreement, incorporated by
reference to Exhibits to Forms 10-K filed by SCEcorp (File
No. 1-2313).
10.21 1985 Deferred Compensation Agreement for Executives,
incorporated by reference to Exhibits to Forms 10-K filed by
SCEcorp (File No. 1-2313).
10.22 1987 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-2313).
10.23 1988 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-2313).
10.24 1989 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-9936).
10.25 1990 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-9936).
10.26 Annual Deferred Compensation Plan for Executives,
incorporated by reference to Exhibits to Forms 10-K filed by
SCEcorp (File No. 1-9936).
10.27 Executive Retirement Plan for Executives, incorporated by
reference to Exhibits to Forms 10-K filed by SCEcorp (File
No. 1-2313).
10.28 Long-Term Incentive Plan for Executive Officers,
incorporated by reference to the Registration Statement
(File No. 33-19541) under which SCEcorp registered
securities to be offered pursuant to the Plan under the
Securities Act of 1933.
10.29 Estate and Financial Planning Program for Executive
Officers, incorporated by reference to Exhibits to Forms
10-K filed by SCEcorp (File No. 1-9936).
10.30 Letter Agreement with Edward R. Muller, incorporated by
reference to Exhibit 10.32 to Edison Mission Energy's Form
10.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.31 Agreement with James S. Pignatelli, incorporated by
reference to Exhibit 10.33 to Edison Mission Energy's Form
10.
10.32 Conformed copy of the Guarantee Agreement dated as of
November 30, 1994, incorporated by reference to Exhibit
10.34 to Edison Mission Energy's Form 10.
10.33 Indenture of Lease between Brooklyn Navy Yard Development
Corporation and Cogeneration Technologies, Inc., dated as of
December 18, 1989, incorporated by reference to Exhibit
10.35 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1994.
10.33.1 First Amendment to Indenture of Lease between Brooklyn Navy
Yard Development Corporation and Cogeneration Technologies,
Inc., dated November 1, 1991, incorporated by reference to
Exhibit 10.35.1 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.33.2 Second Amendment to Indenture of Lease between Brooklyn Navy
Yard Development Corporation and Cogeneration Technologies,
Inc., dated June 3, 1994, incorporated by reference to
Exhibit 10.35.2 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.33.3 Third Amendment to Indenture of Lease between Brooklyn Navy
Yard Development Corporation and Cogeneration Technologies,
Inc., dated December 12, 1994, incorporated by reference to
Exhibit 10.35.3 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.34 Conformed copy of A$200 million Bank of America National
Trust and Savings Association Credit Agreement, dated
November 22, 1994, incorporated by reference to Exhibit
10.36 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1994.
10.34.1 Conformed copy of the Amended and Restated A$200 million
Bank of America National Trust and Savings Associated Credit
Agreement, dated December 12, 1994, incorporated by
reference to Exhibit 10.36.1 to Edison Mission Energy's Form
10-K for the year ended December 31, 1994.
10.34.2 Conformed copy of First Amendment to Amended and Restated
A$200 million Bank of America National Trust and Savings
Associated Credit Agreement, dated June 7, 1995,
incorporated by reference to Exhibit 10.36.2 to Edison
Mission Energy's Form 10-Q for the quarter ended September
30, 1995.
10.35 Amended and Restated Limited Partnership Agreement of
Mission Capital, L.P., dated as of November 30, 1994,
incorporated by reference to Exhibit 10.37 to Edison Mission
Energy's Form 10-K for the year ended December 31, 1994.
10.36 Action of General Partner of Mission Capital, L.P. creating
the 9 7/8% Cumulative Monthly Income Preferred Securities,
Series A, dated as of November 30, 1994, incorporated by
reference to Exhibit 10.38 to Edison Mission Energy's Form
10-K for the year ended December 31, 1994.
10.37 Action of General Partner of Mission Capital, L.P. creating
the 8 1/2% Cumulative Monthly Income Preferred Securities,
Series B, dated as of August 8, 1995, incorporated by
reference to Exhibit 10.39 to Edison Mission Energy's Form
10-Q for the quarter ended June 30, 1995.
10.38 Power Purchase Contract between ISAB Energy, S.r.l. as
Seller and Enel, S.p.A. as Buyer, dated June 9, 1995,
incorporated by reference to Exhibit 10.40 to Edison Mission
Energy's Form 10-Q for the quarter ended June 30, 1995.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.39 400 million sterling pounds Barclays Bank Plc Credit
Agreement, dated December 18, 1995, incorporated by
reference to Exhibit 10.41 to Edison Mission Energy's Form
8-K, dated December 21, 1995.
10.40 Guarantee by Edison Mission Energy, dated December 1, 1995
supporting Letter of Credit issued by Bank of America
National Trust and Savings Association to secure payment of
bonds issued pursuant to the Brooklyn Navy Yard project
tax-exempt bond financing, incorporated by reference to
Exhibit 10.42 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1995.
10.41 Guarantee by Edison Mission Energy, dated December 1, 1995,
supporting Letter of Credit issued by Bank of America
National Trust and Savings Association to secure Brooklyn
Navy Yard's indemnity to the New York City Industrial
Development Agency pursuant to the Brooklyn Navy Yard
project tax-exempt bond financing, incorporated by reference
to Exhibit 10.43 to Edison Mission Energy's Form 10-K for
the year ended December 31, 1995.
10.42 Guarantee by Edison Mission Energy, dated December 20, 1996,
in favor of The Fuji Bank, Limited, Los Angeles Agency, to
secure Camino Energy Company's payments pursuant to Camino
Energy Company's Credit Agreement and Defeasance Agreement,
incorporated by reference to Exhibit 10.44 to Edison Mission
Energy's Form 10-K for the year ended December 31, 1996.
10.43 Power Purchase Agreement between National Power Corporation
and San Pascual Cogeneration Company International B.V.,
dated September 10, 1997, incorporated by reference to
Exhibit 10.45 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1997.
10.44 Power Purchase Agreement between Gulf Power Generation Co.,
LTD., and Electricity Generating Authority of Thailand,
dated December 22, 1997, incorporated by reference to
Exhibit 10.46 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1997.
10.45 Guarantee by Edison Mission Energy, dated June 30, 1998, in
favor of Tri Energy Company Limited and the Sanwa Bank,
Limited to guarantee payment of 25% of Tri Energy Company
Limited's aggregate capital contributions under the Equity
Bridge Loan, incorporated by reference to Exhibit 10.47 to
Edison Mission Energy's Form 10-Q for the quarter ended
September 30, 1998.
10.46 Guarantee by Edison Mission Energy, dated June 30, 1998, in
favor of Tri Energy Company Limited and the Sanwa Bank,
Limited to guarantee payment of 37.5% of Tri Energy Company
Limited's aggregate capital contributions attributable to
Banpu Gas and BANPU, incorporated by reference to Exhibit
10.48 to Edison Mission Energy's Form 10-Q for the quarter
ended September 30, 1998.
10.47 Equity Support Guarantee by Edison Mission Energy, dated
December 23, 1998, in favor of ABN AMRO Bank N.V., and the
Chase Manhattan Bank to guarantee certain equity funding
obligations of EcoElectrica Ltd. and EcoElectrica Holdings
Ltd. pursuant to EcoElectrica Ltd.'s Credit Agreement dated
as of October 31, 1997, incorporated by reference to Exhibit
10.49 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1998.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.48 Master Guarantee and Support Instrument by Edison Mission
Energy, dated December 23, 1998, in favor of ABN AMRO Bank
N.V., and the Chase Manhattan Bank to guarantee the
availability of funds to purchase fuel for the EcoElectrica
project pursuant to EcoElectrica Ltd.'s Credit Agreement
dated as of October 31, 1997 and Intercreditor Agreement
dated as of October 31, 1997, incorporated by reference to
Exhibit 10.50 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1998.
10.49 Guarantee Assumption Agreement from Edison Mission Energy,
dated December 23, 1998, under Edison Mission Energy assumed
all of the obligations of KENETECH Energy Systems, Inc. to
Union Carbide Caribe Inc., under the certain Guaranty dated
November 25, 1997, incorporated by reference to Exhibit
10.51 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1998.
10.50 Transition Power Purchase Agreement, dated August 1, 1998,
between New York State Electric & Gas Corporation and
Mission Energy Westside, Inc, incorporated by reference to
Exhibit 10.52 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1998.
10.51 Transition Power Purchase Agreement, dated August 1, 1998,
between Pennsylvania Electric Company and Mission Energy
Westside, Inc., incorporated by reference to Exhibit 10.53
to Edison Mission Energy's Form 10-K for the year ended
December 31, 1998.
10.52 Guarantee, dated August 1, 1998, between Edison Mission
Energy, Pennsylvania Electric Company, NGE Generation, Inc.
and New York State Electric & Gas Corporation, incorporated
by reference to Exhibit 10.54 to Edison Mission Energy's
Form 10-K for the year ended December 31, 1998.
10.53 Second Amended and Restated Credit Agreement among Edison
Mission Energy and Bank of America, dated as of October 11,
1996, US$400 million Bank of America Revolver, incorporated
by reference to Exhibit 10.15.3 to Edison Mission Energy's
Form 10-K for the year ended December 31, 1996.
10.54 Sale, Purchase and Leasing Agreements between Edison First
Power Limited and PowerGen UK plc for the purchase of the
Ferrybridge C and Fiddler's Ferry Power Stations;
incorporated by reference to Exhibits 2.7 and 2.8 to Edison
Mission Energy's Form 8-K/A, dated August 2, 1999.
10.55 Credit Agreement, dated March 18, 1999, among Edison Mission
Holdings Co. and Certain Commercial Lending Institutions,
and Citicorp USA, Inc., incorporated by reference to Exhibit
10.55 to Edison Mission Energy's Form 8-K dated March 18,
1999.
10.56 Guarantee and Collateral Agreement made by Edison Mission
Holdings Co., Edison Mission Finance Co., Homer City
Property Holdings, Inc., Chestnut Ridge Energy Co., Mission
Energy Westside, Inc., EME Homer City Generation L.P. and
Edison Mission Energy in favor of United States Trust
Company of New York, dated as of March 18, 1999,
incorporated by reference to Exhibit 10.56 to Edison Mission
Energy's Form 8-K dated March 18, 1999.
10.56.1 Amendment No. 1 to the Guarantee and Collateral Agreement,
dated May 27, 1999, between Edison Mission Holdings, Edison
Mission Finance Co., Homer City Property Holdings, Inc.,
Chestnut Ridge Energy Company, Mission Energy Westside,
Inc., EME Homer City Generation L.P. and Edison Mission
Energy in favor of United States Trust Company of New York.*
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.56.2 Open-End Mortgage, Security Agreement and Assignment of
Leases and Rents, dated March 18, 1999, from EME Homer City
Generation L.P. to United States Trust Company of New York.*
10.56.3 Amendment No. 1 to the Open-End Mortgage, Security Agreement
and Assignment of Leases and Rents, dated May 27, 1999, from
EME Homer City Generation L.P. to United States Trust
Company of New York.*
10.57 Collateral Agency and Intercreditor Agreement among Edison
Mission Holdings Co., Edison Mission Finance Co., Homer City
Property Holdings, Inc., Chestnut Ridge Energy Co., Mission
Energy Westside, Inc., EME Homer City Generation L.P., The
Secured Parties' Representatives, Citicorp USA, Inc. as
Administrative Agent and United States Trust Company of New
York, as Collateral Agent, dated as of March 18, 1999,
incorporated by reference to Exhibit 10.57 to Edison Mission
Energy's Form 8-K dated March 18, 1999.
10.58 Security Deposit Agreement among Edison Mission Holdings
Co., Edison Mission Finance Co., Homer City Property
Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy
Westside, Inc., EME Homer City Generation L.P. and United
States Trust Company of New York, as Collateral Agent, dated
as of March 18, 1999, incorporated by reference to Exhibit
10.58 to Edison Mission Energy's Form 8-K dated March 18,
1999.
10.58.1 Amendment No. 1 to the Security Deposit Agreement, dated
May 27, 1999, between Edison Mission Holdings, Edison
Mission Finance Co., Homer City Property Holdings, Inc.,
Chestnut Ridge Energy Company, Mission Energy Westside,
Inc., EME Homer City Generation L.P. and United States Trust
Company of New York, as Collateral Agent.*
10.59 Credit Support Guarantee, dated as of March 18, 1999, made
by Edison Mission Energy in favor of United States Trust
Company of New York, incorporated by reference to Exhibit
10.59 to Edison Mission Energy's Form 8-K dated March 18,
1999.
10.59.1 Amendment No. 1 to the Credit Support Guarantee, dated
May 27, 1999, made by Edison Mission Energy in favor of
United States Trust Company of New York.*
10.60 Debt Service Reserve Guarantee, dated as of March 18, 1999,
made by Edison Mission Energy in favor of United States
Trust Company of New York on behalf of the various financial
institutions (Lenders) as are or may become parities to the
Credit Agreement, dated as of March 18, 1999, among Edison
Mission Holdings Co., the Lenders and Citicorp USA, Inc.,
incorporated by reference to Exhibit 10.60 to Edison Mission
Energy's Form 8-K dated March 18, 1999.
10.60.1 Amendment No. 1 to the Debt Service Reserve Guarantee, dated
May 27, 1999, made by Edison Mission Energy in favor of
United States Trust Company of New York.*
10.60.2 Bond Debt Service Reserve Guarantee, dated May 27, 1999,
made by Edison Mission Energy in favor of United States
Trust Company of New York.*
10.61 Credit Agreement, dated March 18, 1999, among Edison Mission
Energy and Certain Commercial Lending Institutions, and
Citicorp USA, Inc., incorporated by reference to Exhibit
10.61 to Edison Mission Energy's Form 8-K dated March 18,
1999.
10.62 Agreement for the sale and purchase of shares in First Hydro
Limited, dated December 21, 1995, between PSB Holding
Limited and First Hydro Finance Plc, incorporated by
reference to Exhibit 2.1 to Edison Mission Energy's Current
Report on Form 8-K, No. 1-13434 dated January 4, 1996.
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.63 Transaction Implementation Agreement, dated March 29, 1997,
between The State Electricity Commission of Victoria, Edison
Mission Energy Australia Limited, Loy Yang B Power Station
Pty Ltd, Loy Yang Power Limited, The Honourable Alan Robert
Stockdale, Leanne Power Pty Ltd and Edison Mission Energy,
incorporated by reference to Exhibit 2.2 to Edison Mission
Energy's Current Report on Form 8-K, No. 1-13434 dated May
22, 1997.
10.64 Stock Purchase and Assignment Agreement, dated December 23,
1998, between KES Puerto Rico, L.P., KENETECH Energy
Systems, Inc., KES Bermuda, Inc. and Edison Mission Energy
del Caribe for the (i) sale and purchase of KES Puerto Rico,
L.P.'s shares in EcoElectrica Holdings Ltd.; (ii) assignment
of KENETECH Energy Systems' rights and interests in that
certain Project Note from the Partnership; and (iii)
assignment of KES Bermuda, Inc.'s rights and interests in
that certain Administrative Services Agreement dated October
31, 1997, incorporated by reference to Exhibit 2.3 to Edison
Mission Energy's 10-K for the year ended December 31, 1998.
10.65 Asset Purchase Agreement, dated August 1, 1998, between
Pennsylvania Electric Company, NGE Generation, Inc., New
York State Electric & Gas Corporation and Mission Energy
Westside, Inc, incorporated by reference to Exhibit 2.4 to
Edison Mission Energy's 10-K for the year ended December 31,
1998.
10.66 Asset Sale Agreement, dated March 22, 1999 between
Commonwealth Edison Company and Edison Mission Energy as to
the Fossil Generating Assets, incorporated by reference to
Exhibit 2.5 to Edison Mission Energy's 10-K for the year
ended December 31, 1998.
10.67 Agreement for the Sale and Purchase of Shares in Contact
Energy Limited, dated March 10, 1999, between Her Majesty
the Queen in Right of New Zealand, Edison Mission Energy
Taupo Limited and Edison Mission Energy, incorporated herein
by reference to Exhibit 2.6 to the Edison Mission Energy's
Form 10-Q for the quarter ended March 31, 1999.
10.68 Copy of the Global Debenture representing Edison Mission
Energy's 9 7/8% Junior Subordinated Deferrable Interest
Debentures, Series A, Due 2024, incorporated by reference as
Exhibit 4.1 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.69 Conformed copy of the Indenture, dated as of November 30,
1994, between Edison Mission Energy and The First National
Bank of Chicago, as Trustee, incorporated by reference as
Exhibit 4.2 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.70 First Supplemental Indenture, dated as of November 30, 1994,
to Indenture dated as of November 30, 1994 between Edison
Mission Energy and The First National Bank of Chicago, as
Trustee, incorporated by reference as Exhibit 4.2.1 to
Edison Mission Energy's Form 10-K for the year ended
December 31, 1994.
10.71 Indenture, dated as of June 28, 1999, between Edison Mission
Energy and The Bank of New York, as Trustee.
10.72 First Supplemental Indenture, dated as of June 28, 1999, to
Indenture dated as of June 28, 1999, between Edison Mission
Energy and The Bank of New York, as Trustee.
10.73 Registration Rights Agreement, dated as of June 23, 1999,
between Edison Mission Energy and the Initial Purchasers
specified therein.
12.1 Statement regarding the computation of ratio of earnings to
fixed charges for Edison Mission Energy.
21.1 List of Subsidiaries.
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
23.1 Consent of Arthur Andersen LLP*.
23.2 Consent of PricewaterhouseCoopers.*
23.3 Consent of Skadden, Arps, Slate Meagher & Flom LLP (included
in Exhibit 5.1).
23.4 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit
5.2).
25.1 Statement of Eligibility and Qualification on Form T-1 of
United States Trust Company of New York, as Trustee, under
the Indenture filed as Exhibit 4.1 hereto.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
</TABLE>
- ------------------------
*Filed herewith
**To be filed by amendment
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
II-11
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(d) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Irvine, State of California, on the
8th day of February, 2000.
<TABLE>
<S> <C> <C>
EDISON MISSION HOLDINGS CO.
(REGISTRANT)
By: /s/ KEVIN M. SMITH
-----------------------------------------
Kevin M. Smith
VICE PRESIDENT AND TREASURER
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
JAMES V. IACO, JR.*
---------------------------- President and Director February 8, 2000
James V. Iaco, Jr. (Principal Executive Officer)
Vice President, Treasurer
/s/ KEVIN M. SMITH and Director
---------------------------- (Principal Financial and Accounting February 8, 2000
Kevin M. Smith Officer)
MARTHA A. SPIKES*
---------------------------- Director February 8, 2000
Martha A. Spikes
RAYMOND W. VICKERS*
---------------------------- Director February 8, 2000
Raymond W. Vickers
PAUL R. GILLESPIE*
---------------------------- Director February 8, 2000
Paul R. Gillespie
*By: /s/ KEVIN M. SMITH
------------------------
Attorney-in-Fact
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Irvine, State of California, on the
8th day of February, 2000.
<TABLE>
<S> <C> <C>
EDISON MISSION FINANCE CO.
(REGISTRANT)
By: /s/ KEVIN M. SMITH
-----------------------------------------
Kevin M. Smith
VICE PRESIDENT AND TREASURER
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
JAMES V. IACO, JR.*
---------------------------- President and Director February 8, 2000
James V. Iaco, Jr. (Principal Executive Officer)
Vice President, Treasurer
/s/ KEVIN M. SMITH and Director
---------------------------- (Principal Financial and Accounting February 8, 2000
Kevin M. Smith Officer)
MARTHA A. SPIKES*
---------------------------- Director February 8, 2000
Martha A. Spikes
RAYMOND W. VICKERS*
---------------------------- Director February 8, 2000
Raymond W. Vickers
PAUL R. GILLESPIE*
---------------------------- Director February 8, 2000
Paul R. Gillespie
*By: /s/ KEVIN M. SMITH
------------------------
Attorney-in-Fact
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, State of
California, on the 8th day of February, 2000.
<TABLE>
<S> <C> <C>
HOMER CITY PROPERTY HOLDINGS, INC.
(REGISTRANT)
By: /s/ KEVIN M. SMITH
----------------------------------------------
Kevin M. Smith
VICE PRESIDENT AND TREASURER
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
JAMES V. IACO, JR.*
---------------------------- President and Director February 8, 2000
James V. Iaco, Jr. (Principal Executive Officer)
Vice President, Treasurer
/s/ KEVIN M. SMITH and Director
---------------------------- (Principal Financial and Accounting February 8, 2000
Kevin M. Smith Officer)
MARTHA A. SPIKES*
---------------------------- Director February 8, 2000
Martha A. Spikes
RAYMOND W. VICKERS*
---------------------------- Director February 8, 2000
Raymond W. Vickers
PAUL R. GILLESPIE*
---------------------------- Director February 8, 2000
Paul R. Gillespie
*By: /s/ KEVIN M. SMITH
------------------------
Attorney-in-Fact
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, State of
California, on the 8th day of February, 2000.
<TABLE>
<S> <C> <C>
MISSION ENERGY WESTSIDE, INC.
(REGISTRANT)
By: /s/ KEVIN M. SMITH
-----------------------------------------
Kevin M. Smith
VICE PRESIDENT AND TREASURER
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
JAMES V. IACO, JR.*
---------------------------- President and Director February 8, 2000
James V. Iaco, Jr. (Principal Executive Officer)
Vice President, Treasurer
/s/ KEVIN M. SMITH and Director
---------------------------- (Principal Financial and Accounting February 8, 2000
Kevin M. Smith Officer)
MARTHA A. SPIKES*
---------------------------- Director February 8, 2000
Martha A. Spikes
RAYMOND W. VICKERS*
---------------------------- Director February 8, 2000
Raymond W. Vickers
PAUL R. GILLESPIE*
---------------------------- Director February 8, 2000
Paul R. Gillespie
*By: /s/ KEVIN M. SMITH
------------------------
Attorney-in-Fact
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Irvine, State of California, on the
8th day of February, 2000.
<TABLE>
<S> <C> <C>
CHESTNUT RIDGE ENERGY COMPANY
(REGISTRANT)
By: /s/ KEVIN M. SMITH
-----------------------------------------
Kevin M. Smith
VICE PRESIDENT AND TREASURER
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
JAMES V. IACO, JR.*
---------------------------- President and Director February 8, 2000
James V. Iaco, Jr. (Principal Executive Officer)
Vice President, Treasurer
/s/ KEVIN M. SMITH and Director
---------------------------- (Principal Financial and Accounting February 8, 2000
Kevin M. Smith Officer)
MARTHA A. SPIKES*
---------------------------- Director February 8, 2000
Martha A. Spikes
RAYMOND W. VICKERS*
---------------------------- Director February 8, 2000
Raymond W. Vickers
PAUL R. GILLESPIE*
---------------------------- Director February 8, 2000
Paul R. Gillespie
*By: /s/ KEVIN M. SMITH
------------------------
Attorney-in-Fact
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Irvine, State of California, on the
8th day of February, 2000.
<TABLE>
<S> <C> <C>
EME HOMER CITY GENERATION L.P. (REGISTRANT)
By: /s/ KEVIN M. SMITH
-----------------------------------------
Kevin M. Smith
VICE PRESIDENT AND TREASURER
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
JAMES V. IACO, JR.*
---------------------------- President and Director February 8, 2000
James V. Iaco, Jr. (Principal Executive Officer)
Vice President, Treasurer
/s/ KEVIN M. SMITH and Director
---------------------------- (Principal Financial and Accounting February 8, 2000
Kevin M. Smith Officer)
MARTHA A. SPIKES*
---------------------------- Director February 8, 2000
Martha A. Spikes
RAYMOND W. VICKERS*
---------------------------- Director February 8, 2000
Raymond W. Vickers
PAUL R. GILLESPIE*
---------------------------- Director February 8, 2000
Paul R. Gillespie
*By: /s/ KEVIN M. SMITH
------------------------
Attorney-in-Fact
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, State of
California, on the 8th day of February, 2000.
<TABLE>
<S> <C> <C>
EDISON MISSION ENERGY
(REGISTRANT)
By: /s/ KEVIN M. SMITH
-----------------------------------------
Kevin M. Smith
SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND TREASURER
</TABLE>
POWER OF ATTORNEY
KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each of Alan J. Fohrer
and John E. Bryson whose signature appears below constitutes and appoints Kevin
M. Smith and Steven D. Eisenberg as his attorneys-in-fact, with the power of
substitution, for him in any and all capacities, to sign any amendments to this
registration statement (including post-effective amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ALAN J. FOHRER President and Chief Executive
---------------------------- Officer, Director February 8, 2000
Alan J. Fohrer (Principal Executive Officer)
/s/ KEVIN M. SMITH
---------------------------- February 8, 2000
Kevin M. Smith Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
/s/ JOHN E. BRYSON
---------------------------- Chairman of the Board February 8, 2000
John E. Bryson
/s/ BRYANT C. DANNER*
---------------------------- Director February 8, 2000
Bryant C. Danner
/s/ ROBERT M. EDGELL*
---------------------------- Director February 8, 2000
Robert M. Edgell
*By: /s/ KEVIN M. SMITH
------------------------
Attorney-in-Fact
</TABLE>
II-19
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 Articles of Incorporation of Edison Mission Holdings.
3.2 Certificate of Amendment of Articles of Incorporation of the
Company.
3.3 By-Laws of Edison Mission Holdings.
3.4 Articles of Incorporation of Edison Mission Finance Co.
3.5 By-Laws of Edison Mission Finance Co.
3.6 Articles of Incorporation of Homer City Property
Holdings, Inc.
3.7 By-Laws of Homer City Property Holdings, Inc.
3.8 Articles of Incorporation of Mission Energy Westside, Inc.
3.9 Certificate of Amendment to Articles of Incorporation of
Mission Energy Westside, Inc.
3.10 By-Laws of Mission Energy Westside, Inc.
3.11 Articles of Incorporation of Chestnut Ridge Energy Company.
3.12 By-Laws of Chestnut Ridge Energy Company.
3.13 EME Homer City Generation L.P. Agreement of Limited
Partnership.
3.14 Amended and Restated Articles of Incorporation of Edison
Mission Energy, incorporated by reference to Exhibit 3.1 to
Edison Mission Energy's Current Report on Form 8-K, dated
January 30, 1996.
3.15 By-Laws of Edison Mission Energy, incorporated by reference
to Exhibit 3.2 to Edison Mission Energy's Registration
Statement on Form 10 filed with the Securities and Exchange
Commission on November 21, 1994 ("Form 10").
4.1 Indenture, dated as of May 27, 1999, between Edison Mission
Holdings and United States Trust Company of New York, as
Trustee. See Exhibit 10.74
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to Edison Mission Holdings.*
5.2 Opinion of Morgan, Lewis & Bockius LLP, special Pennsylvania
counsel to EME Homer City Generation L.P.**
10.1 Exchange and Registration Rights Agreement, dated as of May
27, 1999, by and among the Initial Purchasers, the
Guarantors and Edison Mission Holdings.
10.2 Power Purchase Contract between Southern California Edison
Company and Champlin Petroleum Company, dated March 8, 1985,
incorporated by reference to Exhibit 10.2 to Edison Mission
Energy's Form 10.
10.2.1 Amendment to Power Purchase Contract between Southern
California Edison Company and Champlin Petroleum Company,
dated July 29, 1985, incorporated by reference to Exhibit
10.2.1 to Edison Mission Energy's Form 10.
10.2.2 Amendment No. 2 to Power Purchase Contract between Southern
California Edison Company and Champlin Petroleum Company,
dated October 29, 1985, incorporated by reference to Exhibit
10.2.2 to Edison Mission Energy's Form 10.
10.3 Power Purchase Contract between Southern California Edison
Company and Imperial Energy Company, dated February 22,
1984, incorporated by reference to Exhibit 10.4 Edison
Mission Energy's Form 10.
10.3.1 Amendment to Power Purchase Contract between Southern
California Edison Company and Imperial Energy Company, dated
November 13, 1984, incorporated by reference to Exhibit
10.4.1 to Edison Mission Energy's Form 10.
10.4 Power Purchase Contract between Southern California Edison
Company and Imperial Energy Company Niland No. 2, dated
April 16, 1985, incorporated by reference to Exhibit 10.6 to
Edison Mission Energy's Form 10.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.5 Power Purchase Contract between Southern California Edison
Company and Chevron U.S.A. Inc., dated November 9, 1984,
incorporated by reference to Exhibit 10.7 to Edison Mission
Energy's Form 10.
10.5.1 Amendment No. 1 to Power Purchase Contract between Southern
California Edison Company and Chevron U.S.A. Inc., dated
March 29, 1985, incorporated by reference to Exhibit 10.7.1
to Edison Mission Energy's Form 10.
10.5.2 Amendment No. 2 to Power Purchase Contract between Southern
California Edison Company and Chevron U.S.A. Inc., dated
November 21, 1985, incorporated by reference to Exhibit
10.7.2 to Edison Mission Energy's Form 10.
10.5.3 Amendment No. 3 to Power Purchase Contract between Southern
California Edison Company and Chevron U.S.A. Inc., dated
November 21, 1985, incorporated by reference to Exhibit
10.7.3 to Edison Mission Energy's Form 10.
10.6 Power Purchase Contract between Southern California Edison
Company and Arco Petroleum Products Company (Watson
Refinery), incorporated by reference to Exhibit 10.8 to
Edison Mission Energy's Form 10.
10.7 Power Supply Agreement between State Electricity Commission
of Victoria, Loy Yang B Power Station Pty. Ltd. and the
Company Australia Pty. Ltd., as managing partner of the
Latrobe Power Partnership, dated December 31, 1992,
incorporated by reference to Exhibit 10.9 to Edison Mission
Energy's Form 10.
10.8 Power Purchase Agreement between P.T. Paiton Energy Company
as Seller and Perusahaan Umum Listrik Negara as Buyer, dated
February 12, 1994, incorporated by reference to Exhibit
10.10 to Edison Mission Energy's Form 10.
10.9 Amended and Restated Power Purchase Contract between
Southern California Energy Company and Midway-Sunset
Cogeneration Company, dated May 5, 1988, incorporated by
reference to Exhibit 10.11 to Edison Mission Energy's Form
10.
10.10 Parallel Generation Agreement between Kern River
Cogeneration Company and Southern California Energy Company,
dated January 6, 1984, incorporated by reference to Exhibit
10.12 to Edison Mission Energy's Form 10.
10.11 Parallel Generation Agreement between Kern River
Cogeneration (Sycamore Project) Company and Southern
California Energy Company, dated December 18, 1984,
incorporated by reference to Exhibit 10.13 to Edison Mission
Energy's Form 10.
10.12 Amendment No. 2 to Power Purchase Agreement between Southern
California Energy Company and Vulcan/BN Geothermal Power
Company, dated April 1, 1986, incorporated by reference to
Exhibit 10.14 to Edison Mission Energy's Form 10.
10.13 U.S. $325 million Bank of Montreal Revolver, dated October
29, 1993, incorporated by reference to Exhibit 10.15 to
Edison Mission Energy's Form 10.
10.13.1 U.S. $400 million Bank of America National Trust and Savings
Association Credit Agreement, dated October 27, 1994,
incorporated by reference to Exhibit 10.15.1 to Edison
Mission Energy's Form 10.
10.13.2 Conformed copy of the Amended and Restated U.S. $400 million
Bank of America National Trust and Savings Association
Credit Agreement, dated as of November 17, 1994,
incorporated by reference to Exhibit 10.15.2 to Edison
Mission Energy's Annual Report on Form 10-K for the year
ended December 31, 1994.
10.13.3 Conformed copy of the Second Amended and Restated U.S. $400
million Bank of America National Trust and Savings
Association Credit Agreement, dated as of October 11, 1996,
incorporated by reference to Exhibit 10.15.3 to Edison
Mission Energy's Form 10-K for the year ended December 31,
1996.
10.14 Amended and Restated Ground Lease Agreement between Texaco
Refining and Marketing Inc. and March Point Cogeneration
Company, dated August 21, 1992, incorporated by reference to
Exhibit 10.16 to Edison Mission Energy's Form 10.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.14.1 Amendment No. 1 to Amended and Restated Ground Lease
Agreement between Texaco Refining and Marketing Inc. and
March Point Cogeneration Company, dated August 21, 1992,
incorporated by reference to Exhibit 10.16 to Edison Mission
Energy's Form 10.
10.15 Memorandum of Agreement between Atlantic Richfield Company
and Products Cogeneration Company, dated September 17, 1987,
incorporated by reference to Exhibit 10.17 to Edison Mission
Energy's Form 10.
10.16 Memorandum of Ground Lease between Texaco Producing Inc. and
Sycamore Cogeneration Company, dated January 19, 1987,
incorporated by reference to Exhibit 10.18 to Edison Mission
Energy's Form 10.
10.17 Amended and Restated Memorandum of Ground Lease between
Getty Oil Company and Kern River Cogeneration Company, dated
November 14, 1984, incorporated by reference to Exhibit
10.19 to Edison Mission Energy's Form 10.
10.18 Memorandum of Lease between Sun Operating Limited
Partnership and Midway-Sunset Cogeneration Company,
incorporated by reference to Exhibit 10.20 to Edison Mission
Energy's Form 10.
10.19 Executive Supplemental Benefit Program, incorporated by
reference to Exhibits to Forms 10-K filed by SCEcorp (File
No. 1-2313).
10.20 1981 Deferred Compensation Agreement, incorporated by
reference to Exhibits to Forms 10-K filed by SCEcorp (File
No. 1-2313).
10.21 1985 Deferred Compensation Agreement for Executives,
incorporated by reference to Exhibits to Forms 10-K filed by
SCEcorp (File No. 1-2313).
10.22 1987 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-2313).
10.23 1988 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-2313).
10.24 1989 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-9936).
10.25 1990 Deferred Compensation Plan for Executives, incorporated
by reference to Exhibits to Forms 10-K filed by SCEcorp
(File No. 1-9936).
10.26 Annual Deferred Compensation Plan for Executives,
incorporated by reference to Exhibits to Forms 10-K filed by
SCEcorp (File No. 1-9936).
10.27 Executive Retirement Plan for Executives, incorporated by
reference to Exhibits to Forms 10-K filed by SCEcorp (File
No. 1-2313).
10.28 Long-Term Incentive Plan for Executive Officers,
incorporated by reference to the Registration Statement
(File No. 33-19541) under which SCEcorp registered
securities to be offered pursuant to the Plan under the
Securities Act of 1933.
10.29 Estate and Financial Planning Program for Executive
Officers, incorporated by reference to Exhibits to Forms
10-K filed by SCEcorp (File No. 1-9936).
10.30 Letter Agreement with Edward R. Muller, incorporated by
reference to Exhibit 10.32 to Edison Mission Energy's Form
10.
10.31 Agreement with James S. Pignatelli, incorporated by
reference to Exhibit 10.33 to Edison Mission Energy's Form
10.
10.32 Conformed copy of the Guarantee Agreement dated as of
November 30, 1994, incorporated by reference to Exhibit
10.34 to Edison Mission Energy's Form 10.
10.33 Indenture of Lease between Brooklyn Navy Yard Development
Corporation and Cogeneration Technologies, Inc., dated as of
December 18, 1989, incorporated by reference to Exhibit
10.35 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.33.1 First Amendment to Indenture of Lease between Brooklyn Navy
Yard Development Corporation and Cogeneration Technologies,
Inc., dated November 1, 1991, incorporated by reference to
Exhibit 10.35.1 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.33.2 Second Amendment to Indenture of Lease between Brooklyn Navy
Yard Development Corporation and Cogeneration Technologies,
Inc., dated June 3, 1994, incorporated by reference to
Exhibit 10.35.2 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.33.3 Third Amendment to Indenture of Lease between Brooklyn Navy
Yard Development Corporation and Cogeneration Technologies,
Inc., dated December 12, 1994, incorporated by reference to
Exhibit 10.35.3 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.34 Conformed copy of A$200 million Bank of America National
Trust and Savings Association Credit Agreement, dated
November 22, 1994, incorporated by reference to Exhibit
10.36 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1994.
10.34.1 Conformed copy of the Amended and Restated A$200 million
Bank of America National Trust and Savings Associated Credit
Agreement, dated December 12, 1994, incorporated by
reference to Exhibit 10.36.1 to Edison Mission Energy's Form
10-K for the year ended December 31, 1994.
10.34.2 Conformed copy of First Amendment to Amended and Restated
A$200 million Bank of America National Trust and Savings
Associated Credit Agreement, dated June 7, 1995,
incorporated by reference to Exhibit 10.36.2 to Edison
Mission Energy's Form 10-Q for the quarter ended September
30, 1995.
10.35 Amended and Restated Limited Partnership Agreement of
Mission Capital, L.P., dated as of November 30, 1994,
incorporated by reference to Exhibit 10.37 to Edison Mission
Energy's Form 10-K for the year ended December 31, 1994.
10.36 Action of General Partner of Mission Capital, L.P. creating
the 9 7/8% Cumulative Monthly Income Preferred Securities,
Series A, dated as of November 30, 1994, incorporated by
reference to Exhibit 10.38 to Edison Mission Energy's Form
10-K for the year ended December 31, 1994.
10.37 Action of General Partner of Mission Capital, L.P. creating
the 8 1/2% Cumulative Monthly Income Preferred Securities,
Series B, dated as of August 8, 1995, incorporated by
reference to Exhibit 10.39 to Edison Mission Energy's Form
10-Q for the quarter ended June 30, 1995.
10.38 Power Purchase Contract between ISAB Energy, S.r.l. as
Seller and Enel, S.p.A. as Buyer, dated June 9, 1995,
incorporated by reference to Exhibit 10.40 to Edison Mission
Energy's Form 10-Q for the quarter ended June 30, 1995.
10.39 400 million sterling pounds Barclays Bank Plc Credit
Agreement, dated December 18, 1995, incorporated by
reference to Exhibit 10.41 to Edison Mission Energy's Form
8-K, dated December 21, 1995.
10.40 Guarantee by Edison Mission Energy, dated December 1, 1995
supporting Letter of Credit issued by Bank of America
National Trust and Savings Association to secure payment of
bonds issued pursuant to the Brooklyn Navy Yard project
tax-exempt bond financing, incorporated by reference to
Exhibit 10.42 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1995.
10.41 Guarantee by Edison Mission Energy, dated December 1, 1995,
supporting Letter of Credit issued by Bank of America
National Trust and Savings Association to secure Brooklyn
Navy Yard's indemnity to the New York City Industrial
Development Agency pursuant to the Brooklyn Navy Yard
project tax-exempt bond financing, incorporated by reference
to Exhibit 10.43 to Edison Mission Energy's Form 10-K for
the year ended December 31, 1995.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.42 Guarantee by Edison Mission Energy, dated December 20, 1996,
in favor of The Fuji Bank, Limited, Los Angeles Agency, to
secure Camino Energy Company's payments pursuant to Camino
Energy Company's Credit Agreement and Defeasance Agreement,
incorporated by reference to Exhibit 10.44 to Edison Mission
Energy's Form 10-K for the year ended December 31, 1996.
10.43 Power Purchase Agreement between National Power Corporation
and San Pascual Cogeneration Company International B.V.,
dated September 10, 1997, incorporated by reference to
Exhibit 10.45 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1997.
10.44 Power Purchase Agreement between Gulf Power Generation Co.,
LTD., and Electricity Generating Authority of Thailand,
dated December 22, 1997, incorporated by reference to
Exhibit 10.46 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1997.
10.45 Guarantee by Edison Mission Energy, dated June 30, 1998, in
favor of Tri Energy Company Limited and the Sanwa Bank,
Limited to guarantee payment of 25% of Tri Energy Company
Limited's aggregate capital contributions under the Equity
Bridge Loan, incorporated by reference to Exhibit 10.47 to
Edison Mission Energy's Form 10-Q for the quarter ended
September 30, 1998.
10.46 Guarantee by Edison Mission Energy, dated June 30, 1998, in
favor of Tri Energy Company Limited and the Sanwa Bank,
Limited to guarantee payment of 37.5% of Tri Energy Company
Limited's aggregate capital contributions attributable to
Banpu Gas and BANPU, incorporated by reference to Exhibit
10.48 to Edison Mission Energy's Form 10-Q for the quarter
ended September 30, 1998.
10.47 Equity Support Guarantee by Edison Mission Energy, dated
December 23, 1998, in favor of ABN AMRO Bank N.V., and the
Chase Manhattan Bank to guarantee certain equity funding
obligations of EcoElectrica Ltd. and EcoElectrica Holdings
Ltd. pursuant to EcoElectrica Ltd.'s Credit Agreement dated
as of October 31, 1997, incorporated by reference to Exhibit
10.49 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1998.
10.48 Master Guarantee and Support Instrument by Edison Mission
Energy, dated December 23, 1998, in favor of ABN AMRO Bank
N.V., and the Chase Manhattan Bank to guarantee the
availability of funds to purchase fuel for the EcoElectrica
project pursuant to EcoElectrica Ltd.'s Credit Agreement
dated as of October 31, 1997 and Intercreditor Agreement
dated as of October 31, 1997, incorporated by reference to
Exhibit 10.50 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1998.
10.49 Guarantee Assumption Agreement from Edison Mission Energy,
dated December 23, 1998, under Edison Mission Energy assumed
all of the obligations of KENETECH Energy Systems, Inc. to
Union Carbide Caribe Inc., under the certain Guaranty dated
November 25, 1997, incorporated by reference to Exhibit
10.51 to Edison Mission Energy's Form 10-K for the year
ended December 31, 1998.
10.50 Transition Power Purchase Agreement, dated August 1, 1998,
between New York State Electric & Gas Corporation and
Mission Energy Westside, Inc, incorporated by reference to
Exhibit 10.52 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1998.
10.51 Transition Power Purchase Agreement, dated August 1, 1998,
between Pennsylvania Electric Company and Mission Energy
Westside, Inc., incorporated by reference to Exhibit 10.53
to Edison Mission Energy's Form 10-K for the year ended
December 31, 1998.
10.52 Guarantee, dated August 1, 1998, between Edison Mission
Energy, Pennsylvania Electric Company, NGE Generation, Inc.
and New York State Electric & Gas Corporation, incorporated
by reference to Exhibit 10.54 to Edison Mission Energy's
Form 10-K for the year ended December 31, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.53 Second Amended and Restated Credit Agreement among Edison
Mission Energy and Bank of America, dated as of October 11,
1996, US$400 million Bank of America Revolver, incorporated
by reference to Exhibit 10.15.3 to Edison Mission Energy's
Form 10-K for the year ended December 31, 1996.
10.54 Sale, Purchase and Leasing Agreements between Edison First
Power Limited and PowerGen UK plc for the purchase of the
Ferrybridge C and Fiddler's Ferry Power Stations;
incorporated by reference to Exhibits 2.7 and 2.8 to Edison
Mission Energy's Form 8-K/A, dated August 2, 1999.
10.55 Credit Agreement, dated March 18, 1999, among Edison Mission
Holdings Co. and Certain Commercial Lending Institutions,
and Citicorp USA, Inc., incorporated by reference to Exhibit
10.55 to Edison Mission Energy's Form 8-K dated March 18,
1999.
10.56 Guarantee and Collateral Agreement made by Edison Mission
Holdings Co., Edison Mission Finance Co., Homer City
Property Holdings, Inc., Chestnut Ridge Energy Co., Mission
Energy Westside, Inc., EME Homer City Generation L.P. and
Edison Mission Energy in favor of United States Trust
Company of New York, dated as of March 18, 1999,
incorporated by reference to Exhibit 10.56 to Edison Mission
Energy's Form 8-K dated March 18, 1999.
10.56.1 Amendment No. 1 to the Guarantee and Collateral Agreement,
dated May 27, 1999, between Edison Mission Holdings, Edison
Mission Finance Co., Homer City Property Holdings, Inc.,
Chestnut Ridge Energy Company, Mission Energy Westside,
Inc., EME Homer City Generation L.P. and Edison Mission
Energy in favor of United States Trust Company of New York.*
10.56.2 Open-End Mortgage, Security Agreement and Assignment of
Leases and Rents, dated March 18, 1999, from EME Homer City
Generation L.P. to United States Trust Company of New York.*
10.56.3 Amendment No. 1 to the Open-End Mortgage, Security Agreement
and Assignment of Leases and Rents, dated May 27, 1999, from
EME Homer City Generation L.P. to United States Trust
Company of New York.*
10.57 Collateral Agency and Intercreditor Agreement among Edison
Mission Holdings Co., Edison Mission Finance Co., Homer City
Property Holdings, Inc., Chestnut Ridge Energy Co., Mission
Energy Westside, Inc., EME Homer City Generation L.P., The
Secured Parties' Representatives, Citicorp USA, Inc. as
Administrative Agent and United States Trust Company of New
York, as Collateral Agent, dated as of March 18, 1999,
incorporated by reference to Exhibit 10.57 to Edison Mission
Energy's Form 8-K dated March 18, 1999.
10.58 Security Deposit Agreement among Edison Mission Holdings
Co., Edison Mission Finance Co., Homer City Property
Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy
Westside, Inc., EME Homer City Generation L.P. and United
States Trust Company of New York, as Collateral Agent, dated
as of Marcy 18, 1999, incorporated by reference to
Exhibit 10.58 to Edison Mission Energy's Form 8-K dated
March 18, 1999.
10.58.1 Amendment No. 1 to the Security Deposit Agreement, dated
May 27, 1999, between Edison Mission Holdings, Edison
Mission Finance Co., Homer City Property Holdings, Inc.,
Chestnut Ridge Energy Company, Mission Energy Westside,
Inc., EME Homer City Generation L.P. and United States Trust
Company of New York, as Collateral Agent.*
10.59 Credit Support Guarantee, dated as of March 18, 1999, made
by Edison Mission Energy in favor of United States Trust
Company of New York, incorporated by reference to Exhibit
10.59 to Edison Mission Energy's Form 8-K dated March 18,
1999.
10.59.1 Amendment No. 1 to the Credit Support Guarantee, dated
May 27, 1999, made by Edison Mission Energy in favor of
United States Trust Company of New York.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.60 Debt Service Reserve Guarantee, dated as of March 18, 1999,
made by Edison Mission Energy in favor of United States
Trust Company of New York on behalf of the various financial
institutions (Lenders) as are or may become parities to the
Credit Agreement, dated as of March 18, 1999, among Edison
Mission Holdings Co., the Lenders and Citicorp USA, Inc.,
incorporated by reference to Exhibit 10.60 to Edison Mission
Energy's Form 8-K dated March 18, 1999.
10.60.1 Amendment No. 1 to the Debt Service Reserve Guarantee, dated
May 27, 1999, made by Edison Mission Energy in favor of
United States Trust Company of New York.*
10.60.2 Bond Debt Service Reserve Guarantee, dated May 27, 1999,
made by Edison Mission Energy in favor of United States
Trust Company of New York.*
10.61 Credit Agreement, dated March 18, 1999, among Edison Mission
Energy and Certain Commercial Lending Institutions, and
Citicorp USA, Inc., incorporated by reference to Exhibit
10.61 to Edison Mission Energy's Form 8-K dated March 18,
1999.
10.62 Agreement for the sale and purchase of shares in First Hydro
Limited, dated December 21, 1995, between PSB Holding
Limited and First Hydro Finance Plc, incorporated by
reference to Exhibit 2.1 to Edison Mission Energy's Current
Report on Form 8-K, No. 1-13434 dated January 4, 1996.
10.63 Transaction Implementation Agreement, dated March 29, 1997,
between The State Electricity Commission of Victoria, Edison
Mission Energy Australia Limited, Loy Yang B Power Station
Pty Ltd, Loy Yang Power Limited, The Honourable Alan Robert
Stockdale, Leanne Power Pty Ltd and Edison Mission Energy,
incorporated by reference to Exhibit 2.2 to Edison Mission
Energy's Current Report on Form 8-K, No. 1-13434 dated May
22, 1997.
10.64 Stock Purchase and Assignment Agreement, dated December 23,
1998, between KES Puerto Rico, L.P., KENETECH Energy
Systems, Inc., KES Bermuda, Inc. and Edison Mission Energy
del Caribe for the (i) sale and purchase of KES Puerto Rico,
L.P.'s shares in EcoElectrica Holdings Ltd.; (ii) assignment
of KENETECH Energy Systems' rights and interests in that
certain Project Note from the Partnership; and (iii)
assignment of KES Bermuda, Inc.'s rights and interests in
that certain Administrative Services Agreement dated October
31, 1997, incorporated by reference to Exhibit 2.3 to Edison
Mission Energy's 10-K for the year ended December 31, 1998.
10.65 Asset Purchase Agreement, dated August 1, 1998, between
Pennsylvania Electric Company, NGE Generation, Inc., New
York State Electric & Gas Corporation and Mission Energy
Westside, Inc, incorporated by reference to Exhibit 2.4 to
Edison Mission Energy's 10-K for the year ended December 31,
1998.
10.66 Asset Sale Agreement, dated March 22, 1999 between
Commonwealth Edison Company and Edison Mission Energy as to
the Fossil Generating Assets, incorporated by reference to
Exhibit 2.5 to Edison Mission Energy's 10-K for the year
ended December 31, 1998.
10.67 Agreement for the Sale and Purchase of Shares in Contact
Energy Limited, dated March 10, 1999, between Her Majesty
the Queen in Right of New Zealand, Edison Mission Energy
Taupo Limited and Edison Mission Energy, incorporated herein
by reference to Exhibit 2.6 to the Edison Mission Energy's
Form 10-Q for the quarter ended March 31, 1999.
10.68 Copy of the Global Debenture representing Edison Mission
Energy's 9 7/8% Junior Subordinated Deferrable Interest
Debentures, Series A, Due 2024, incorporated by reference as
Exhibit 4.1 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
10.69 Conformed copy of the Indenture, dated as of November 30,
1994, between Edison Mission Energy and The First National
Bank of Chicago, as Trustee, incorporated by reference as
Exhibit 4.2 to Edison Mission Energy's Form 10-K for the
year ended December 31, 1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.70 First Supplemental Indenture, dated as of November 30, 1994,
to Indenture dated as of November 30, 1994 between Edison
Mission Energy and The First National Bank of Chicago, as
Trustee, incorporated by reference as Exhibit 4.2.1 to
Edison Mission Energy's Form 10-K for the year ended
December 31, 1994.
10.71 Indenture, dated as of June 28, 1999, between Edison Mission
Energy and The Bank of New York, as Trustee.
10.72 First Supplemental Indenture, dated as of June 28, 1999, to
Indenture dated as of June 28, 1999, between Edison Mission
Energy and The Bank of New York, as Trustee.
10.73 Registration Rights Agreement, dated as of June 23, 1999,
between Edison Mission Energy and the Initial Purchasers
specified therein.
12.1 Statement regarding the computation of ratio of earnings to
fixed charges for Edison Mission Energy.
21.1 List of Subsidiaries.
23.1 Consent of Arthur Andersen LLP.*
23.2 Consent of PricewaterhouseCoopers.*
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1).
23.4 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit
5.2).
25.1 Statement of Eligibility and Qualification on Form T-1 of
United States Trust Company of New York, as Trustee, under
the Indenture filed as Exhibit 4.1 hereto.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
</TABLE>
* Filed herewith
** To be filed by amendment
<PAGE>
Exhibit 5.1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NY 10036
(212) 735-3000
February 8, 2000
Edison Mission Holdings Co.
18101 Von Karman Avenue
Irvine, California 92612
Re: Edison Mission Holdings Co.
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We are acting as special counsel to Edison Mission Holdings
Co., a California corporation (the "Company"), in connection with the public
offering of $300,000,000 aggregate principal amount of the Company's 8.137%
Senior Secured Bonds due 2019 and of $530,000,000 aggregate principal amount of
the Company's 8.734% Senior Secured Bonds due 2026 (collectively, the "Exchange
Bonds"), which are guaranteed, (A) on a senior secured basis pursuant to (i) the
Guarantee and Collateral Agreement dated as of March 18, 1999, as amended by
Amendment No.1 dated as of May 27, 1999 (as so amended, the "Subsidiary
Guarantees"), by Edison Mission Finance Co., a California corporation ("Edison
Finance"), Homer City Property Holdings, Inc., a California corporation ("Homer
City Property"), Mission Energy Westside, Inc., a California corporation
("Mission Energy Westside"), Chestnut Ridge Energy Company, a California
corporation ("Chestnut Ridge") (collectively, the "California Subsidiaries") and
EME Homer City Generation L.P., a Pennsylvania limited partnership ("EME Homer
City" and, collectively with the California Subsidiaries, the "Subsidiary
Guarantors"); and (ii) the Credit Support Guarantee, dated as of March 18, 1999,
as amended by Amendment No.1 dated as of May 27, 1999 (as so amended, the
"Credit Support Guarantee"), by Edison Mission Energy, a California corporation
("EME"); and (B) pursuant to the Bond Debt Service Reserve Guarantee, dated as
of May 27, 1999, by EME (the "Bond Debt Service Reserve Guarantee" and,
collectively with the Credit Support Guarantee, the "EME Guarantees"). The
Exchange Bonds, together with the Subsidiary Guarantees and the EME Guarantees,
are referred to herein as the "Securities". The Exchange Bonds are to be issued
<PAGE>
Edison Mission Holdings Co.
February 8, 2000
Page 2
pursuant to an exchange offer (the "Exchange Offer") in exchange
for a like principal amount of the issued and outstanding 8.137% Senior Secured
Bonds due 2019 and 8.734% Senior Secured Bonds due 2026 of the Company
(collectively, the "Original Bonds") under the Indenture, dated as of May 27,
1999 (the "Indenture"), between the Company and United States Trust Company of
New York, as Trustee (the "Trustee"), as contemplated by the Registration Rights
Agreement, dated as of May 27, 1999 (the "Registration Rights Agreement"), by
and among the Company, Lehman Brothers Inc., Credit Suisse First Boston
Corporation, Salomon Smith Barney Inc. and SG Cowen Securities Corp.
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-4 relating to the Securities filed with the
Securities and Exchange Commission (the "Commission") on December 3, 1999 under
the Act (the "Registration Statement"); (ii) Amendment No.1 to the Registration
Statement to be filed with the Commission on the date hereof under the Act
("Amendment No.1"); (iii) an executed copy of the Registration Rights Agreement;
(iv) an executed copy of the Indenture; (v) an executed copy of the Subsidiary
Guarantees, the Credit Support Guarantee and the Bond Debt Service Reserve
Guarantee; (vi) the Articles of Incorporation of the Company, EME and each of
the California Subsidiaries, each as amended to date; (vii) the By-Laws of the
Company, EME and each of the California Subsidiaries, each as amended to date;
(viii) certain resolutions adopted by the Board of Directors of the Company
relating to the Exchange Offer, the issuance of the Original Bonds and the
Exchange Bonds, the Indenture and related matters; (ix) certain resolutions
adopted by the Boards of Directors of each of EME and the California
Subsidiaries relating to, among other things the issuance of the Subsidiary
Guarantees by the California Subsidiaries and the issuance of the EME Guarantees
by EME; (x) the Form T-1 of the Trustee filed as an exhibit to the Registration
Statement; and (xi) the form of the Exchange Bonds. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such records of the Company, EME and each of the California Subsidiaries and
such agreements, certificates of public officials, certificates of officers or
other representatives of the Company, EME and each of the
<PAGE>
Edison Mission Holdings Co.
February 8, 2000
Page 3
California Subsidiaries and others, and such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinions
set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. In making our
examination of executed documents or documents to be executed, we have assumed
that the parties thereto, other than the Company, EME and the California
Subsidiaries, had or will have the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on such
parties. As to any facts material to the opinions expressed herein which we have
not independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Company, EME, the
Subsidiary Guarantors and others.
Our opinion set forth herein is limited to California
corporate law and the laws of the State of New York which are normally
applicable to transactions of the type contemplated by the Exchange Offer and,
to the extent that judicial or regulatory orders or decrees or consents,
approvals, licenses, authorizations, validations, filings, recordings or
registrations with governmental authorities are relevant, to those required
under such laws (all of the foregoing being referred to as "Opined on Law"). We
do not express any opinion with respect to the law of any jurisdiction other
than Opined on Law or as to the effect of any such law on the opinions herein
stated.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. When the Exchange Bonds (in the form examined by us) have been duly
executed and authenticated in accordance with the terms of the Indenture and
have been delivered upon consummation of the Exchange Offer against receipt of
Original Bonds surrendered in exchange therefor in accordance with the terms of
the Exchange Offer, the Exchange Bonds will
<PAGE>
Edison Mission Holdings Co.
February 8, 2000
Page 4
constitute valid and binding obligations of the Company, enforce able against
the Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (2) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
2. When the Exchange Bonds (in the form examined by us) have been duly
executed and authenticated in accordance with the terms of the Indenture and
have been delivered upon consummation of the Exchange Offer against receipt of
Original Bonds surrendered in exchange therefor in accordance with the terms of
the Exchange Offer, the Subsidiary Guarantees will constitute valid and binding
obligations of each of the California Subsidiaries, enforceable against the
California Subsidiaries in accordance with their terms, except to the extent
that enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (2) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
3. When the Exchange Bonds (in the form examined by us) have been duly
executed and authenticated in accordance with the terms of the Indenture and
have been delivered upon consummation of the Exchange Offer against receipt of
Original Bonds surrendered in exchange therefor in accordance with the terms of
the Exchange Offer, the EME Guarantees will constitute valid and binding
obligations of EME, enforceable against EME in accordance with their terms,
except to the extent that enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
In rendering the opinion set forth above, we have assumed that
(i) the execution and delivery by the Company of the Indenture and the Exchange
Bonds and the performance by the Company of its obligations thereunder; (ii) the
execution and delivery by each of the California Subsidiaries of the Subsidiary
Guarantees and the performance by each of the California Subsidiaries of their
obligations thereunder; and (iii) the execution and delivery by EME of the EME
Guarantees and the performance by EME of its obligations thereunder, do
<PAGE>
Edison Mission Holdings Co.
February 8, 2000
Page 5
not and will not violate, conflict with or constitute a default under any
agreement or instrument to which the Company, EME or the California Subsidiaries
or their respective properties is subject, except that we do not make this
assumption for those agreements and instruments which have been identified to us
by the Company, EME or the California Subsidiaries as being material to them and
which are listed as exhibits to Amendment No.1.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to Amendment No.1. We also consent to the reference to
our firm under the caption "Legal Matters" in the prospectus included in
Amendment No.1. In giving this consent, we do not thereby admit that we are
included in the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Commission.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
<PAGE>
EXHIBIT 10.56.1
AMENDMENT NO. 1, dated as of May 27, 1999 (this "Amendment"), to the
Guarantee and Collateral Agreement, dated as of March 18, 1999 (the
"AGREEMENT"), among (i) EDISON MISSION HOLDINGS CO ., a California corporation
(the "BORROWER"), (ii) EDISON MISSION FINANCE CO., a California corporation
("Edison Mission Finance"), (iii) HOMER CITY PROPERTY HOLDINGS, INC., a
California corporation ("HOMER CITY HOLDINGS"), (iv) CHESTNUT RIDGE ENERGY
COMPANY, a California corporation ("CHESTNUT RIDGE"), (v) MISSION ENERGY
WESTSIDE, INC., a California corporation ("MEW"), (vi)EME HOMER CITY GENERATION
L.P., a Pennsylvania limited partnership ("EME HOMER CITY"), (vii) EDISON
MISSION ENERGY, a California corporation ("EDISON MISSION ENERGY"); and,
together with the Borrower, Edison Mission Finance, Homer City Holdings,
Chestnut Ridge, MEW and EME Homer City, the "GRANTORS"), and (viii) UNITED
STATES TRUST COMPANY OF NEW YORK, as collateral agent for the Secured Parties
(in such capacity, the "COLLATERAL AGENT").
RECITALS
A. The Borrower has entered into a Credit Agreement, dated as of March
18, 1999 (as the same may be amended, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"; the loans made thereunder, the "LOANS"),
with certain financial institutions (collectively, the "LENDERS") and Citicorp
USA, Inc., as administrative agent for the Lenders (in such capacity, the
"ADMINISTRATIVE AGENT").
B. Pursuant to the Agreement, each Grantor pledged and assigned to the
Collateral Agent for the benefit of the Secured Parties security interests in
certain personal property of such Grantor described in the Agreement.
C. The Borrower wished to issue $300 million in aggregate principal
amount of Senior Secured Bonds due 2019 and $530 million in aggregate principal
amount of Senior Secured Bonds due 2026 (collectively, the "BONDS"; the trustee
to the holders thereof, the "TRUSTEE"), the proceeds of which will be used to
refinance a portion of the Loans and to repay a portion of the Borrower's direct
parent's equity investment in the Borrower.
D. The Grantors have requested, and, upon this Amendment becoming
effective, the Collateral Agent has agreed, that certain provisions of the
Agreement be amended in the manner provided for in this Amendment.
<PAGE>
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITION OF SECURED PARTIES. The definition of "Secured Parties"
in Section 1.1(b) of the Agreement is hereby amended by adding the phrase "the
Trustee," after the phrase "the Lenders," in the first line of such
definition.
2. GRANT AND CONFIRMATION OF GRANT OF SECURITY INTEREST. Each of the
Grantors hereby grants and confirms the grant of the security interest in the
Collateral in favor of the Collateral Agent for the benefit of the Secured
Parties (as defined in this Amendment) to secure such Grantor's Obligations.
Edison Mission Energy hereby grants and confirms the grant of the security
interest in all shares of capital stock of the Borrower in favor of the
Collateral Agent for the benefit of the Secured Parties (as defined in this
Amendment) to secure the Borrower Obligations.
3. COUNTERPARTS. This Amendment may be executed by the parties
hereto in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this letter by
facsimile shall be effective as delivery of a manually executed counterpart
of this Amendment.
4. LIMITED EFFECT. Except as expressly provided herein, all of the
terms and provisions of the Agreement are and shall remain in full force and
effect.
5. SEVERABILITY. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
6. CONDITIONS TO EFFECTIVENESS. The amendment provided for herein
shall become effective on the date the Collateral Agent shall have received
counterparts of this Amendment duly executed and delivered by each Grantor
and consented to by the Administrative Agent and the Trustee.
7. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
2
<PAGE>
MISSION ENERGY WESTSIDE, INC.
By: /s/ Steven D. Eisenberg
----------------------------
Name: Steven D. Eisenberg
Title: Vice President
EME HOMER CITY GENERATION L.P.
By: Mission Energy Westside, Inc.
its General Partner
By: /s/ Steven D. Eisenberg
----------------------------
Name: Steven D. Eisenberg
Title: Vice President
EDISON MISSION ENERGY
By: /s/ Steven D. Eisenberg
----------------------------
Name: Steven D. Eisenberg
Title: Vice President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By: /s/ Christopher J. Grell
----------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
Signature Page to Amendment No. 1 to Guarantee and Collateral Agreement
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
EDISON MISSION HOLDINGS CO.
By: /s/ Steven D. Eisenberg
----------------------------
Name: Steven D. Eisenberg
Title: Vice President
EDISON MISSION FINANCE CO.
By: /s/ Steven D. Eisenberg
----------------------------
Name: Steven D. Eisenberg
Title: Vice President
HOMER CITY PROPERTY HOLDINGS,
INC.
By: /s/ Steven D. Eisenberg
----------------------------
Name: Steven D. Eisenberg
Title: Vice President
CHESTNUT RIDGE ENERGY COMPANY
By: /s/ Steven D. Eisenberg
----------------------------
Name: Steven D. Eisenberg
Title: Vice President
Signature Page to Amendment No. 1 to Guarantee and Collateral Agreement
<PAGE>
Acknowledged and Consented to by:
CITICORP USA, INC., as Administrative Agent
By: /s/ Anita J. Brickell
---------------------------------
Name: Anita J. Brickell
Title: Managing Director
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By: /s/ Christopher J. Grell
---------------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
Signature Page to Amendment No. 1 to Guarantee and Collateral Agreement
<PAGE>
Exhibit 10.56.2
THIS MORTGAGE CONSTITUTES A FIXTURE FILING
UNDER THE PENNSYLVANIA UNIFORM COMMERCIAL CODE
THIS MORTGAGE SECURES FUTURE ADVANCES AND RE-ADVANCES UP
TO A MAXIMUM PRINCIPAL AMOUNT OF $1,100,000,000.00
AT ANY TIME OUTSTANDING PLUS ACCRUED INTEREST
AND OTHER INDEBTEDNESS AS DESCRIBED IN 42 PA.C.S.A. ss.8143
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
(THIS MORTGAGE SECURES FUTURE ADVANCES)
from
EME HOMER CITY GENERATION L.P.
to
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent and Mortgagee
DATED AS OF MARCH 18, 1999
After recording, please return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: Daniel E. Karp, Esq.
<PAGE>
2
$250,000,000. The maximum aggregate principal amount of the Loans outstanding at
any one time shall not exceed $1,100,000,000.00.
D. The Borrower will use the proceeds of the Loans under the Credit
Agreement to make valuable transfers to one or more of its Subsidiaries
(including the Mortgagor) in connection with the acquisition of the Homer City
Electric Generating Station and certain facilities and other assets associated
therewith and ancillary thereto (the "Generating Station"), certain capital
expenditures related to the Generating Station and general working capital
purposes.
E. Under Section 8.2.1(e) of the Credit Agreement, the Borrower is
permitted to incur certain indebtedness for the purpose of refinancing the Loans
and other indebtedness of the Borrower ("Refinancing Indebtedness"); under
Section 8.2.1(d)(i) of the Credit Agreement, the Loan Parties are permitted to
incur certain indebtedness in the form of reimbursement obligations relating to
letters of credit, surety bonds and performance bonds used by the Loan Parties
in the ordinary course of their business ("Ordinary Course Letter of Credit
Indebtedness"); under Section 8.2.1 (d)(ii) of the Credit Agreement, the
Borrower is permitted to incur certain indebtedness in the form of reimbursement
obligations relating to Debt Service Reserve Letters of Credit (as defined
below) ("DSR Letter of Credit Indebtedness"); under Section 8.2.1(c) of the
Credit Agreement, the Borrower is permitted to incur certain additional
indebtedness ("Additional Indebtedness"); and, under Section 8.2.1(b) of the
Credit Agreement, the Borrower is permitted to incur certain indebtedness under
Interest Rate Hedging Transactions (as defined below) entered into with respect
to the Loans ("Swap Indebtedness") (the Refinancing Indebtedness, the Ordinary
Course Letter of Credit Indebtedness, the DSR Letter of Credit Indebtedness, the
Additional Indebtedness and the Swap Indebtedness, together with the Loans,
being collectively referred to as the "Senior Debt").
F. In satisfaction of the requirements of the Lenders and the Persons
providing any Refinancing Indebtedness or Additional Indebtedness, the Mortgagor
desires by this Mortgage and the Guarantee and Collateral Agreement to provide a
common pool of collateral as security for their obligations under the Financing
Documents (as defined below).
G. In order to simplify administration of such collateral and to provide
for the orderly enforcement of their respective rights, the Administrative
Agent, the Lenders and the other Secured Parties (as defined in the Guarantee
and Collateral Agreement) have appointed the Collateral Agent to serve as their
common representative, to be the beneficiary under any guarantee intended to
benefit the Secured Parties, and to hold the liens created, or to be created,
under the Financing Documents.
H. Pursuant to the Collateral Agency and Intercreditor Agreement, dated as
of March 18, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Collateral Agency and Intercreditor Agreement"), among the Borrower,
the Administrative Agent, the Collateral Agent and certain other parties, the
Collateral Agent has agreed to serve as a common collateral agent for all
Secured Parties.
<PAGE>
4
THE MORTGAGOR HAS GRANTED, CONVEYED, BARGAINED, SOLD, ALIENED, ENFEOFFED,
RELEASED, CONFIRMED, MORTGAGED AND WARRANTED TO THE MORTGAGEE A LIEN UPON AND A
SECURITY INTEREST IN, AND HEREBY GRANTS, CONVEYS, BARGAINS, SELLS, ALIENS,
ENFEOFFS, RELEASES, CONFIRMS, MORTGAGES AND WARRANTS UNTO THE MORTGAGEE:
(A) the Real Estate;
(B) all the estate, right, title, claim or demand whatsoever of the
Mortgagor, in possession or expectancy, in and to the Real Estate or any part
thereof;
(C) all right, title and interest of the Mortgagor in, to and under all
easements, rights of way, gores of land, streets, ways, alleys, passages, sewer
rights, waters, water courses, water and riparian rights, development rights,
air rights, mineral rights, oil and gas rights and all estates, rights, titles,
interests, privileges, licenses, tenements, hereditaments and appurtenances
belonging, relating or appertaining to the Real Estate, and any reversions,
remainders, rents, issues, profits and revenue thereof and all land lying in the
bed of any street, road or avenue, in front of or adjoining the Real Estate to
the center line thereof;
(D) all of the fixtures, chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings and articles of personal property of
any kind and nature whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in each case, attachments,
components, parts and accessories) currently owned or subsequently acquired by
the Mortgagor and now or subsequently attached to, or contained in or used or
usable in any way in connection with any operation or letting of the Real
Estate, including but without limiting the generality of the foregoing, all
screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs,
storm doors and windows, furniture and furnishings, heating, electrical, and
mechanical equipment, lighting, switchboards, plumbing, ventilating, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
stoves, ranges, laundry equipment, cleaning systems (including window cleaning
apparatus), telephones, communication systems (including satellite dishes and
antennae), televisions, computers, sprinkler systems and other fire prevention
and extinguishing apparatus and materials, security systems, motors, engines,
machinery, pipes, pumps, tanks, conduits, appliances, fittings and fixtures of
every kind and description (all of the foregoing in this paragraph (D) being
referred to as the "Equipment");
(E) all right, title and interest of the Mortgagor in and to all
substitutes and replacements of, and all additions and improvements to, the Real
Estate and the Equipment, subsequently acquired by or released to the Mortgagor
or constructed, assembled or placed by the Mortgagor on the Real Estate,
immediately upon such acquisition, release, construction, assembling or
placement, including, without limitation, any and all building materials whether
stored at the Real Estate or offsite, and, in each such case, without any
further mortgage, conveyance, assignment or other act by the Mortgagor;
<PAGE>
6
insurance policies covering the foregoing property or otherwise on deposit with
or held by the Mortgagee as provided in this Mortgage; and
(K) all proceeds, both cash and noncash, of the foregoing, subject to the
applicable provisions set forth below and in the Credit Agreement;
(All of the foregoing property and rights and interests now owned or held
or subsequently acquired by the Mortgagor and described in the foregoing clauses
(A) through (E) are collectively referred to as the "Premises", and those
described in the foregoing clauses (A) through (K) are collectively referred to
as the ("Mortgaged Property").
TO HAVE AND TO HOLD the Mortgaged Property and the rights and privileges
hereby mortgaged unto the Mortgagee, its successors and assigns for the uses and
purposes set forth, until the Obligations are paid in full and any other
requirements contained in the Financing Documents are performed in full.
PROVIDED ALWAYS, that if the Mortgagor shall promptly and fully pay all of the
Obligations and shall pay and perform all of the other requirements contained in
the Financing Documents, then the estate hereby granted shall cease, terminate
and become void and Mortgagee shall, upon written request from Mortgagor,
execute and deliver to Mortgagor any satisfaction, release or termination
instrument required in connection therewith but shall otherwise remain in full
force and effect.
This Mortgage covers present and future advances and re-advances in
accordance with the terms of the Credit Agreement, in the aggregate amount of
the obligations secured hereby, made by the Lenders for the benefit of, inter
alia, the Mortgagor and the Borrower and the lien of such future advances and
re-advances shall relate back to the date of this Mortgage.
Terms and Conditions
The Mortgagor further represents, warrants, covenants and agrees with the
Mortgagee as follows:
1. Warranty of Title. The Mortgagor warrants the title to the Premises,
subject only to the matters that are set forth in Schedule B of the title
insurance policy or policies being issued to the Mortgagee to insure the lien of
this Mortgage (the "Permitted Exceptions").
2. Performance Obligations. The Mortgagor shall perform all of the
Obligations in accordance with the terms of this Mortgage and the Financing
Documents.
3. Requirements.
(a) The Mortgagor shall promptly comply with, or cause to be complied
with, and conform in all material respects to all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements, and irrespective of the nature of the work to be done, of each of
the United States of America, any State and any municipality, local government
or other political subdivision thereof and any agency, department, bureau,
board, commission or other instrumentality of any of them, now existing or
subsequently created
<PAGE>
8
of any Impositions shall be payable on demand by the Mortgagor to the Mortgagee
together with interest at the Default Rate as set forth above from the date of
payment by Mortgagee.
(c) The Mortgagor shall have the right before any delinquency occurs to
contest or object in good faith to the amount or validity of any imposition by
appropriate legal proceedings, but such right shall not be deemed or construed
in any way as relieving, modifying, or extending the Mortgagor's covenant to pay
any such Imposition at the time and in the manner provided in this Section
unless (i) the Mortgagor has given prior written notice to the Mortgagee of the
Mortgagor's intent so to contest or object to an Imposition, (ii) the Mortgagor
shall demonstrate to the Mortgagee's reasonable satisfaction that the legal
proceedings shall operate conclusively to prevent the sale of the Mortgaged
Property, or any part thereof, to satisfy such Imposition prior to final
determination of such proceedings and (iii) the Mortgagor shall furnish a good
and sufficient bond or surety as requested by and reasonably satisfactory to the
Mortgagee in the amount of the Impositions which are being contested plus any
interest and penalty which may be imposed thereon and which could become a lien
against the Real Estate or any part of the Mortgaged Property.
5. Insurance. (a) The Mortgagor shall maintain or cause to be maintained
on all of the Premises the insurance required to be maintained by Mortgagor
pursuant to Section 8.1.5 of the Credit Agreement.
(b) If the Mortgaged Property, or any part thereof, shall be destroyed or
damaged, the Mortgagor shall give immediate notice thereof to the Mortgagee. All
insurance proceeds shall be paid to the Mortgagee to be held by the Mortgagee as
collateral to secure the payment and performance of the Obligations.
Notwithstanding the preceding sentence, provided that no Event of Default shall
have occurred and be continuing, the Mortgagor shall have the right to adjust
such loss, and the insurance proceeds relating to such loss shall be paid over
to the Mortgagor; provided that the Mortgagor shall, promptly after any such
damage, repair all such damage regardless of whether any insurance proceeds have
been received or whether such proceeds, if received, are sufficient to pay for
the costs of repair.
(c) In the event of foreclosure of this Mortgage or other transfer of
title to the Mortgaged Property, all right, title and interest of the Mortgagor
in and to any insurance policies then in force shall pass to the purchaser or
grantee.
(d) The Mortgagor may maintain insurance required under this Mortgage by
means of one or more blanket insurance policies maintained by the Mortgagor;
provided, however, that (A) any such policy shall specify, or the Mortgagor
shall furnish to the Mortgagee a written statement from the insurer so
specifying, the maximum amount of the total insurance afforded by such blanket
policy that is allocated to the Premises and the other Mortgaged Property and
any sublimits in such blanket policy applicable to the Premises and the other
Mortgaged Property, (B) each such blanket policy stall include an endorsement
providing that, in the event of a loss resulting from an insured peril,
insurance proceeds shall be allocated to the Mortgaged Property in an amount
equal to the coverages required to be maintained by the Mortgagor as provided
above and (C) the protection afforded under any such blanket policy shall
<PAGE>
10
10. Restoration. The Mortgagor shall use all insurance proceeds and all
condemnation, proceeds and awards to promptly restore the Mortgaged Property to
its condition prior to such casualty or condemnation, (giving effect to the
remaining configuration of the Premises after such condemnation) and in
compliance with all Legal Requirements.
11. Leases. (a) The Mortgagor shall not (i) execute an assignment or
pledge of any Lease relating to all or any portion of the Mortgaged Property
other than in favor of the Mortgagee, or (ii) except as expressly permitted
under the Credit Agreement, without the prior written consent of the Mortgagee,
execute any Lease of the Mortgaged Property or permit to exist any Lease of any
of the Mortgaged Property not already in existence prior to the date of this
Mortgage.
(b) As to any Lease consented to by the Mortgagee, the Mortgagor shall:
(i) promptly perform all of the provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) promptly enforce all of the provisions of the Lease on the part
of the lessee thereunder to be performed;
(iii) appear in and defend any action or proceeding arising under or
in any manner connected with the Lease or the obligations of the Mortgagor as
lessor or of the lessee thereunder;
(iv) exercise, within 10 days after a written request by the
Mortgagee, any right to request from the lessee a certificate with respect to
the status thereof;
(v) simultaneously deliver to the Mortgagee copies of any notices of
default which the Mortgagor may at any time forward to or receive from the
lessee;
(vi) promptly deliver to the Mortgagee a fully executed counterpart
of the Lease; and
(vii) promptly deliver to the Mortgagee, upon the Mortgagee's
request, an assignment of the Mortgagor's interest under such Lease.
(c) The Mortgagor shall deliver to the Mortgagee, within 10 days after a
written request by the Mortgagee, which request shall not be made by Mortgagee
more frequently than twice in any twelve month period, a written statement,
certified by the Mortgagor as being true, correct and complete, containing the
names of all lessees and other occupants of the Mortgaged Property, the terms of
all Leases and the spaces occupied and rentals payable thereunder and a list of
all Leases which are then in default, including the nature and magnitude of the
default; such statement shall be accompanied by credit information with respect
to the lessees and such other information as the Mortgagee may reasonably
request.
<PAGE>
12
13. Mortgagee's Right to Perform. If the Mortgagor fails to perform any of
the covenants or agreements of the Mortgagor, the Mortgagee, without waiving or
releasing the Mortgagor from any obligation or default under this Mortgage, may,
at any time (but shall be under no obligation to) pay or perform the same, and
the amount or cost thereof, with interest at the Default Rate from the date of
payment by Mortgagee, shall immediately be due from the Mortgagor to the
Mortgagee and the same shall be secured by this Mortgage and shall be a lien on
the Mortgaged Property prior to any right, title to, interest in or claim upon
the Mortgaged Property attaching subsequent to the lien of this Mortgage. No
payment or advance of money by the Mortgagee under this Section shall be deemed
or construed to cure the Mortgagor's default or waive any right or remedy of the
Mortgagee.
14. Hazardous Material. (a) Mortgagor hereby represents and warrants to
Mortgagee those representations, to the extent applicable to it, set forth in
Section 7.14 of the Credit Agreement.
(b) Mortgagor covenants that it will perform the obligations, to the
extent applicable to it, set forth in Section 8.1.8 of the Credit Agreement.
15. Events of Default. The occurrence of an Event of Default under the
Credit Agreement shall constitute an Event of Default hereunder.
16. Remedies. (a) Upon the occurrence of any Event of Default, in addition
to any other rights and remedies the Mortgagee may have pursuant to the
Financing Documents, or as provided by law, either or both of the following
actions may be taken: (i) with the consent of the Required Secured Parties (as
defined in the Collateral Agency and Intercreditor Agreement), the Mortgagee
may, or upon the request of the Required Secured Parties, the Mortgagee shall,
by notice to the Mortgagor declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate: and (ii) with the
consent of the Required Secured Parties, the Mortgagee may, or upon the request
of the Required Secured Parties, the Mortgagee shall, by notice to the
Mortgagor, declare the Loans (with accrued interest thereon) and all other
amounts owing under the Credit Agreement and the other Financing Documents to be
due and payable forthwith. Except as expressly provided above in Section 15 and
in this Section, presentment, demand, protest and all other notices of any kind
are hereby expressly waived. In addition, upon the occurrence of any Event of
Default, the Mortgagee may immediately take such action, without notice or
demand, as it deems advisable to protect and enforce its rights against the
Mortgagor and in and to the Mortgaged Property, including, but not limited to,
the following actions, each of which may be pursued concurrently or otherwise,
at such time and in such manner as the Mortgagee may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and
remedies of the Mortgagee:
(i) The Mortgagee may, to the extent permitted by applicable law, (A)
institute and maintain an action of mortgage foreclosure against all or any part
of the Mortgaged Property, (B) institute and maintain an action on the
Obligations, (C) sell all or part of the Mortgaged Property (the Mortgagor
expressly granting to the Mortgagee the power of sale), or (D) take such other
action at law or in equity for the enforcement of this Mortgage or any of the
Financing Documents as the law may allow. The Mortgagee may proceed in any such
<PAGE>
14
without any prior proceedings and my include the costs of the Mortgagee.
Judgment may be entered pursuant to the foregoing authority on the basis of an
affidavit made on the Mortgagee's behalf and setting forth the relevant facts,
of which facts such affidavit shall be conclusive evidence, and if a true copy
of this Mortgage is filed in any action for such judgment it shall not be
necessary to file the original of this Mortgage.
17. Right of the Mortgage to Credit Sale. Upon the occurrence of any sale
made under this Mortgage, whether made under the power of sale or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, the
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof. In
lieu of paying cash therefor, the Mortgagee may make settlement for the purchase
price by crediting upon the Obligations or other sums secured by this Mortgage
the net sales price after deducting therefrom the expenses of sale and the cost
of the action and any other sums which the Mortgagee is authorized to deduct
under this Mortgage. In such event, this Mortgage, the Credit Agreement, the
Guarantee and Collateral Agreement and document evidencing expenditures secured
hereby may be presented to the person or persons conducting the sale in order
that the amount so used or applied may be credited upon the Obligations as
having been paid.
18. Appointment of Receiver. If an Event of Default shall have occurred
and be continuing, the Mortgagee as a matter of right and without notice to the
Mortgagor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged Property or any other collateral as
security for the Obligations or the interest of the Mortgagor therein, shall
have the right to apply to any court having jurisdiction to appoint a receiver
or receivers or other manager of the Mortgaged Property, and the Mortgagor
hereby irrevocably consents to such appointment and waives notice of any
application therefor (except as may be required by law). Any such receiver or
receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of the Mortgagee in case of entry as
provided in this Mortgage, including, without limitation and to the extent
permitted by law, the right to enter into leases of all or any part of the
Mortgaged Property, and shall continue as such and exercise all such powers
until the date of confirmation of sale of the Mortgaged Property unless such
receivership is sooner terminated.
19. Extension, Release, etc. (a) Without affecting the lien or charge of
this Mortgage upon any portion of the Mortgaged Property not then or theretofore
released as security for the full amount of the Obligations, the Mortgagee may,
from time to time and without notice, agree to (i) release any person liable for
the Obligations, (ii) extend the maturity or alter any of the terms of the
Obligations or any guaranty thereof, (iii) grant other indulgences, (iv) release
or reconvey, or cause to be released or reconveyed at any time at the
Mortgagee's option any parcel, portion or all of the Mortgaged Property, (v)
take or release any other or additional security for any obligation herein
mentioned, or (vi) make compositions or other arrangements with debtors in
relation thereto. If at any time this Mortgage shall secure less than all of the
principal amount of the Obligations, it is expressly agreed that any repayments
of the principal amount of the Obligations shall not reduce the amount of the
lien of this Mortgage until the lien amount shall equal the principal amount of
the Obligations outstanding.
<PAGE>
16
form reasonably satisfactory to the Mortgagee, covering all or any part of the
Mortgaged Property and will further execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, any financing statement, affidavit,
continuation statement or certificate or other document as the Mortgagee may
reasonably request in order to perfect, preserve, maintain, continue or extend
the security interest under and the priority of this Mortgage and such security
instrument. The Mortgagor further agrees to pay to the Mortgagee on demand all
costs and expenses incurred by the Mortgagee in connection with the preparation,
execution, recording, filing and re-filing of any such document and all
reasonable costs and expenses of any record searches for financing statements
the Mortgagee shall reasonably require. If the Mortgagor shall fail to furnish
any financing or continuation statement within 10 days after written request by
the Mortgagee, then pursuant to the provisions of the Code, the Mortgagor hereby
authorizes the Mortgagee, without the signature of the Mortgagor, to execute and
file any such financing and continuation statements. The filing of any financing
or continuation statements in the records relating to personal property or
chattels shall not be construed as in any way impairing the right of the
Mortgagee to proceed against any personal property encumbered by this Mortgage
as real property, as set forth above.
21. Assignment of Rents. The Mortgagor hereby assigns to the Mortgagee the
Rents as further security for the payment and performance of the Obligations,
and the Mortgagor grants to the Mortgagee the right to enter the Mortgaged
Property for the purpose of collecting the same and to let the Mortgaged
Property or any part thereof, and to apply the Rents on account of the
Obligations. The foregoing assignment and grant is present and absolute and
shall continue in effect until the Obligations are paid and performed in full
and all Commitments are terminated, but the Mortgagee hereby waives the right
to enter the Mortgaged Property for the purpose of collecting the Rents and the
Mortgagor shall be entitled to collect, receive, use and retain the Rents until
the occurrence and continuance of an Event of Default under this Mortgage; such
right of the Mortgagor to collect, receive, use and retain the Rents may be
revoked by the Mortgagee upon the occurrence and continuance of any Event of
Default under this Mortgage by giving not less than five days' written notice of
such revocation to the Mortgagor; in the event such notice is given, the
Mortgagor shall pay over to the Mortgagee, or to any receiver appointed to
collect the Rents and any lease security deposits. The Mortgagor shall not
accept prepayments of installments of Rent to become due for a period of more
than one month in advance (except for security deposits and estimated payments
of percentage rent, if any).
22. Trust Funds. All lease security deposits of the Real Estate shall be
treated as trust funds not to be commingled with any other funds of the
Mortgagor. Within 10 days after request by the Mortgagee which request shall not
be made more frequently than twice in any twelve month period, the Mortgagor
shall furnish the Mortgagee reasonably satisfactory evidence of compliance with
this subsection, together with a statement of all lease security deposits by
lessees and copies of all Leases not previously delivered to the Mortgagee,
which statement shall be certified by the Mortgagor.
23. Additional Rights. The holder of any subordinate lien on the Mortgaged
Property shall have no right to terminate any Lease whether or not such Lease is
subordinate to this Mortgage nor shall any holder of any subordinate lien join
any tenant under any Lease in any action to foreclose the lien or modify,
interfere with, disturb or terminate the rights of any tenant
<PAGE>
18
28. Remedies Not Exclusive. The Mortgagee shall be entitled to enforce
payment and performance of the Obligations and to exercise all rights and powers
under this Mortgage or under any of the other Financing Documents or other
agreement or any laws now or hereafter in force, notwithstanding some or all of
the Obligations may now or hereafter be otherwise secured, whether by mortgage,
security agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Mortgage nor its enforcement, shall prejudice or in any
manner affect the Mortgagee's right to realize upon or enforce any other
security now or hereafter held by the Mortgagee, it being agreed that Mortgagee
shall be entitled to enforce this Mortgage and any other security now or
hereafter held by Mortgagee in such order and manner as the Mortgagee may
determine in its absolute discretion. No remedy herein conferred upon or
reserved to the Mortgagee is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the
Financing Documents to the Mortgagee or to which it may otherwise be entitled,
may be exercised, concurrently or independently, from time to time and as often
as may be deemed expedient by the Mortgagee. In no event shall the Mortgagee, in
the exercise of the remedies provided in this Mortgage (including, without
limitation, in connection with the assignment of Rents to the Mortgagee, or the
appointment of a receiver and the entry of such receiver on to all or any part
of the Mortgaged Property), be deemed a "mortgagee in possession," and the
Mortgagee shall not in any way be made liable for any act, either of commission
or omission, in connection with the exercise of such remedies.
29. Multiple Security. If (a) the Premises shall consist of one or more
parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Mortgage, the Mortgagee shall now or
hereafter hold one or more additional mortgages, liens, deeds of trust or other
security (directly or indirectly) for the Obligations upon other property in the
State in which the Premises are located (whether or not such property is owned
by the Mortgagor or by others) or (c) both the circumstances described in
clauses (a) and (b) shall be true, then to the fullest extent permitted by law,
the Mortgagee may, at its election, commence or consolidate in a single
foreclosure action all foreclosure proceedings against all such collateral
securing the Obligations (including the Mortgaged Property), which action may be
brought or consolidated in the courts of any county in which any of such
collateral is located. The Mortgagor acknowledges that the right to maintain a
consolidated foreclosure action is a specific inducement to the Mortgagee to
extend the Obligations and the Mortgagor expressly and irrevocably waives any
objections to the commencement or consolidation of the foreclosure proceedings
in a single action and any objections to the laying of venue or based on the
grounds of forum non conveniens which it may now or hereafter have. The
Mortgagor further agrees that if the Mortgagee shall be prosecuting one or more
foreclosure or other proceedings against a portion of the Mortgaged Property or
against any collateral other than the Mortgaged Property, which collateral
directly or indirectly secures the Obligations, or if the Mortgagee shall have
obtained a judgment of foreclosure and sale or similar judgment against such
collateral, then, whether or not such proceedings are being maintained or
judgments were obtained in or outside the State in which the Premises are
located, the Mortgagee may commence or continue foreclosure proceedings and
exercise its other remedies granted in this Mortgage against all or any part of
the Mortgaged Property and the Mortgagor waives any objections to the
commencement or continuation of a foreclosure of this Mortgage or exercise of
any other
<PAGE>
20
State of New York, without regard to principles of conflict of law, and for
purposes of consistency, the Mortgagor agrees that in any in personam proceeding
related to this Mortgage the rights of the parties to this Mortgage shall also
be governed by and construed in accordance with the laws of the State of New
York governing contacts made and to be performed in that State, without regard
to principle of conflict of law.
33. Certain Definitions. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Mortgage shall be used interchangeably in singular or plural form and the word
"Mortgagor" shall mean "each Mortgagor or any subsequent owner or owners of the
Mortgaged Property or any part thereof or interest therein," the word
"Mortgagee" shall mean "Mortgagee or any successor collateral agent for the
Secured Parties," the words "Guarantee and Collateral Agreement" shall mean "the
Guarantee and Collateral Agreement, the Credit Agreement or any other evidence
of indebtedness secured by this Mortgage," the word "person" shall include any
individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, or other entity, and the words "Mortgaged
Property" shall include any portion of the Mortgaged Property or interest
therein. Whenever the context may require, any pronoun used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa. The captions in this
Mortgage are for convenience or reference only and in no way limit or amplify
the provisions hereof.
34. Industrial Plant Mortgage. This Mortgage is intended to be an
assembled industrial plant mortgage within the broadest interpretation of the
"assembled industrial plant mortgage doctrine" under the laws of the
Commonwealth of Pennsylvania.
35. Future Advances. This Mortgage is executed and delivered to secure,
among other things, future advances and re-advances in accordance with the
Credit Agreement. It is understood and agreed that this Mortgage secures present
and future advances and re-advances in accordance with the Credit Agreement made
for the benefit of the Mortgagor and that the lien of such future advances and
re-advances shall relate back to the date of this Mortgage, and the Mortgagor
and the Mortgagee intend that this Mortgage be an Open-End Mortgage as described
in 42 Pa.C.S.A. ss.8143 and as such be entitled to all benefits under 42
Pa.C.S.A ss.8143.
36. Purchase Money Mortgage. This is a purchase money mortgage and shall
be entitled to all benefits as such under the lien priority provisions of the
Pennsylvania Judicial Code, 42 Pa.C.S.A. ss.8141, as amended.
37. Receipt of Copy. The Mortgagor acknowledges tat it has received a true
copy of this Mortgage.
<PAGE>
This Mortgage has been duly executed by the Mortgagor on March 18, 1999
and is intended to be effective as of March 18, 1999.
ATTEST EME HOMER CITY GENERATION L.P.,
[corporate seal] a Pennsylvania limited partnership
By: /s/ Kevin M. Smith By: MISSION ENERGY WESTSIDE, INC.,
------------------------------ a California corporation,
Name: Kevin M. Smith its general partner
Title: Treasurer
By: /s/ Steven D. Eisenberg
--------------------------------
Name: Steven D. Eisenberg
Title: Vice President
The address of the within-named Mortgagee is:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
For the Mortgagee
----------------------------------------
Print Name: Daniel E. Karp as counsel
for Collateral Agent
<PAGE>
Exhibit 10.56.3
EXECUTION COPY
AMENDMENT NO. 1, dated as of May 27, 1999 (this "Amendment"), to the
Open-End Mortgage, Security Agreement and Assignment of Leases and Rents, dated
as of March 18, 1999 (the "Mortgage"), by EME HOMER CITY GENERATION L.P., a
Pennsylvania limited partnership (the "Mortgagor"), having its principal office
at c/o Edison Mission Holdings Co., 18101 Von Karman Avenue, Suite 1700, Irvine,
California, to UNITED STATES TRUST COMPANY OF NEW YORK, as collateral agent to
the Secured Parties (as defined in the Credit Agreement referred to below) (in
such capacity, the "Mortgagee"), having an address at 114 West 47th Street, 25th
Floor, New York, New York 10036, Attn: Corporate Trust Division.
W I T N E S S E T H :
A. The Mortgagor executed and delivered the Mortgage to the
Mortgagee on March 18, 1999, and recorded such Mortgage on March 23, 1999, in
Book 601, Page 341, in the Records Office of Indiana County, Pennsylvania.
B. Pursuant to Section 8.2.1(e) of the Credit Agreement, dated as of
March 18, 1999 (the "Credit Agreement"), among Edison Mission Holdings Co., a
California corporation, the financial institutions from time to time parties
thereto and Citicorp USA, Inc., as Administrative Agent, the Mortgagor intends
to issue $300 million in aggregate principal amount of Senior Secured Bonds due
2019 and $530 million in aggregate principal amount of Senior Secured Bonds due
2026 (collectively the "Bonds"), the proceeds of which will be used, in part, to
repay the $800 million outstanding aggregate principal amount of the 364-Day
Term Loans (as defined in the Credit Agreement).
C. The Mortgagor has requested and the Mortgagee has agreed that the
maximum amount of the advances provided for in the Mortgage be increased by $30
million, from $1,100,000,000, to $1,130,000,000, in order to reflect the $30
million increase in the principal amount of Senior Debt (as defined in the
Credit Agreement) caused by the issuance of the Bonds.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Amendment of Cover Page. The second caption on the cover page of
the Mortgage is hereby amended by deleting the amount "$1,100,000,000.00" in the
second line and substituting in lieu thereof "$1,130,000,000.00."
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed by the
Mortgagor and the Mortgagee as of the day and year first above written.
ATTEST: EME HOMER CITY GENERATION L.P.,
a Pennsylvania limited partnership
By: /s/ Michelle Johnson By: MISSION ENERGY WESTSIDE, INC.,
------------------------------ a California corporation, its general
Name: Michelle Johnson partner
Title: Assistant Secretary
By: /s/ Steven D. Eisenberg
---------------------------------
Name: Steven D. Eisenberg
Title: Vice President
[corporate seal]
ATTEST: UNITED STATES TRUST COMPANY
OF NEW YORK, as Mortgagee
By: By:
------------------------------- --------------------------------------
Name: Lisa A. Geary Name: Christopher J. Grell
Title: Assistant Secretary Title: Assistant Vice President
[corporate seal]
<PAGE>
Acknowledged and Consented to by:
ATTEST: CITICORP USA, INC., as Administrative
Agent
By: /s/ By: /s/ Anita J. Brickell
------------------------------- --------------------------------------
Name: Name: Anita J. Brickell
Title: Assistant Secretary Title: Attorney-in-Fact
[corporate seal]
ATTEST: UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: By:
------------------------------- --------------------------------------
Name: Name: Christopher J. Grell
Title: [Assistant] Title: Assistant Vice President
[Secretary]
[Treasurer]
[corporate seal]
<PAGE>
Exhibit 10.58.1
AMENDMENT NO. 1, dated as of May 27, 1999 (this "AMENDMENT"), to the
Security Deposit Agreement, dated as of March 18, 1999 (the "AGREEMENT"),
among (i) EDISON MISSION HOLDINGS CO., a California corporation (the
"BORROWER"), (ii) EDISON MISSION FINANCE CO., a California corporation
("EDISON MISSION FINANCE"), (iii) HOMER CITY PROPERTY HOLDINGS, INC., a
California corporation ("HOMER CITY HOLDINGS"), (iv) CHESTNUT RIDGE ENERGY
COMPANY, a California corporation ("CHESTNUT RIDGE"), (v) MISSION ENERGY
WESTSIDE, INC., a California corporation ("MEW"), (vi) EME HOMER CITY
GENERATION L.P., a Pennsylvania limited partnership ("EME HOMER CITY"; and,
together with the Borrower, Edison Mission Finance, Homer City Holdings,
Chestnut Ridge and MEW, the "LOAN PARTIES"), and (vii) UNITED STATES TRUST
COMPANY OF NEW YORK, as collateral agent for certain senior secured creditors
of the Borrower (in such capacity, the "COLLATERAL AGENT").
RECITALS
A. The Borrower has entered into a Credit Agreement, dated as of
March 18, 1999 (as the same may be amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; the loans made
thereunder, the "LOANS"), with certain financial institutions (collectively,
the "LENDERS") and Citocorp USA, Inc., as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
B. Pursuant to the Agreement, certain accounts of the Loan Parties
were established with the Collateral Agent, together with instructions for
deposits into, and payments from, each such account and each Loan Party
pledged and assigned to the Collateral Agent certain security interests
related to such accounts for the benefit of the senior secured creditors to
the Borrower.
C. The Borrower wishes to issue $300 million in aggregate principal
amount of Senior Secured Bonds due 2019 and $530 million in aggregate
principal amount of Senior Secured Bonds due 2026 (collectively, the
"BONDS"; the trustee to the holders thereof, the "TRUSTEE"), the proceeds of
which will be used to refinance a portion of the Loans and to repay a portion
of the Borrower's direct parent's equity investment in the Borrower.
D. The Loan Parties have requested, and, upon this Amendment
becoming effective, the Collateral Agent has agreed, that certain provisions
of the Agreement be amended in the manner provided for in this Amendment.
<PAGE>
2
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. AMENDMENT TO DEFINITION OF "NET CASH PROCEEDS." The definition of
"Net Cash Proceeds" is hereby amended by deleting the current definition in
its entirety and substituting in lieu thereof the following:
"NET CASH PROCEEDS" means (a) in connection with any Recovery
Event, the proceeds thereof in the form of cash and cash equivalents of
such Recovery Event, net of any expenses reasonably incurred in
respect of such Recovery Event, including attorneys' fees, amounts
required to be applied to the repayment of Indebtedness secured by a
Lien expressly permitted under the Credit Agreement and the other
Financing Documents on any asset which is the subject of such Recovery
Event (other than any Lien pursuant to a Security Document) and net of
taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and
any tax sharing arrangements), to the extent that, in the case of
Recovery Events relating to property or casualty insurance claims, the
amount of such proceeds exceeds $5,000,000 with respect to any asset of
any Loan Party and (b) in connection with any issuance or sale of debt
securities or other incurrence of Indebtedness, the cash proceeds
received from such issuance, sale or incurrence, net of attorneys'
fees, investment banking fees, accountants' fees, underwriting
discounts, commissions, administrative agency fees, upfront fees,
arrangement fees and other customary fees and expenses actually
incurred in connection therewith.
2. AMENDMENT TO DEFINITION OF "SECURED PARTIES." The definition of
"Secured Parties" is hereby amended by deleting the current definition in its
entirety and substituting in lieu thereof the following:
"SECURED PARTIES" means the Collateral Agent, the Administrative
Agent, the Lenders, the Trustee, each Person that provides any
Refinancing Indebtedness, Ordinary Course Letter of Credit
Indebtedness, DSR Letter of Credit Indebtedness, Additional
Indebtedness or Swap Indebtedness and each Person that serves as
indenture trustee, collateral agent, lenders' representative or in any
similar capacity for Person that provide any Senior Debt.
3. AMENDMENT TO SECTION 3.4. Section 3.4 of the Agreement is hereby
amended by deleting the current section in its entirety and substituting in
lieu thereof the following:
SECTION 3.4 PRINCIPAL ACCOUNTS. (a) The Loan Parties agree
that, until the 364-Day Term Loans have been repaid in full, all Net
Cash Proceeds of any Refinancing Indebtedness shall be deposited into
the Loan Principal Account. IF, notwithstanding the foregoing, any Loan
Party shall receive any such proceeds, it shall immediately deliver
such proceeds in the exact form received (duly indorsed, if
appropriate, in a manner satisfactory to the Collateral Agent) to the
Collateral Agent for
<PAGE>
3
deposit into the Loan Principal Account. The Collateral Agent shall have
the right to receive all such Net Cash Proceeds directly from the
Persons owing the same. All such Net Cash Proceeds received by the
Collateral Agent shall be deposited into the Loan Principal Account.
(b) The Loan Parties agree that all Net Cash Proceeds of any
Additional Indebtedness that is incurred for the purpose of (i)
prepaying any Loans, Refinancing Indebtedness, Ordinary Course Letter of
Credit Indebtedness, DSR Letter of Credit Indebtedness or Additional
Indebtedness or (ii) repaying any Loans, Refinancing Indebtedness or
Additional Indebtedness at its scheduled maturity, shall be deposited
into the Principal Account related to the Indebtedness that is being
prepaid or repaid. If, notwithstanding the foregoing, any Loan Party
shall receive any such proceeds, it shall immediately deliver such
proceeds in the exact form received (duly indorsed, if appropriate, in a
manner satisfactory to the Collateral Agent) to the Collateral Agent for
deposit into such related Principal Account. The Collateral Agent shall
have the right to receive all such Net Cash Proceeds directly from the
Persons owing the same. All such Net Cash Proceeds received by the
Collateral Agent shall be deposited into such related Principal Account.
(c) The Loan Parties agree that all Net Cash Proceeds of any
Additional Indebtedness other than the type described in paragraph (b)
above shall be deposited into the Revenue Account.
4. AMENDMENT TO SECTION 4.1(a). Section 4.1(a) of the Agreement is
hereby amended by deleting the current clauses beginning with the words
"third" and "fourth" in their entirety and substituting in lieu thereof the
following:
THIRD, (i) into each Accrued Interest Account, the Accrued Interest
Amount calculated for such Accrued Interest Account, together with the
amount of all deficiencies, if any, with respect to deposits of Accrued
Interest Amounts required in all prior months, as certified in such
Request Letter, (ii) into each Principal Account (other than (A) the
Loan Principal Account and any other Principal Account established in
respect of non-amortizing Senior Debt, (B) any DSR Letter of Credit
Indebtedness Principal Account relating to non-amortizing DSR Letter of
Credit Indebtedness (or, so long as any Loans or related Commitments
remain outstanding, any DSR Letter of Credit Indebtedness Principal
Account relating to any DSR Letter of Credit Indebtedness), (C) any
Ordinary Course Letter of Credit Indebtedness Principal Accounts
established for non-amortizing Ordinary Course Letter of Credit
Indebtedness and (D) any Swap Indebtedness Termination Payment Account),
an amount equal to 1/6th of the principal amount, if any, which is
payable on or within six months following such Monthly Transfer Date on
account of the Senior Debt with respect to which such Principal Account
was established, together with the amount of all deficiencies, if any,
with respect to deposits of principal required in all prior months, as
certified in such Request Letter,
<PAGE>
4
(iii) into each Ordinary Course Letter of Credit Indebtedness Principal
Account, the amount certified in such Request Letter to be sufficient to
repay in full the related non-amortizing Ordinary Course Letter of
Credit Indebtedness then outstanding, (iv) into each Swap Indebtedness
Termination Payment Account, the amount certified in such Request Letter
to be sufficient to repay in full the related termination payment then
due and payable and (v) to the Administrative Agent, the amount
specified in the Request Letter to be applied to the repayment of
Revolving Loans;
FOURTH, into each DSR Letter of Credit Indebtedness Principal
Account relating to non-amortizing DSR Letter of Credit Indebtedness
(or, so long as any Loans or related Commitments remain outstanding,
each DSR Letter of Credit Indebtedness Principal Account relating to any
DSR Letter of Credit Indebtedness), the amount certified in such Request
Letter to be sufficient to repay in full the related DSR Letter of
Credit Indebtedness then outstanding.
5. GRANT, AND CONFIRMATION OF GRANT, OF SECURITY INTEREST. Each of
the Loan Parties hereby grants and confirms the grant of the security
interest in: (i) the Revenues and each of the Accounts (except as provided in
clauses (b), (c), (d), (e), (f) and (g) of Section 2.4 of the Agreement) and
all cash, cash equivalents, instruments, investments and other securities on
deposit therein and all Proceeds of the foregoing in favor of the Collateral
Agent for the benefit of the Secured Parties (as defined in Amendment No. 1
to the Guarantee and Collateral Agreement); and (ii) the Refinancing
Indebtedness Accrued Interest Account, the Refinancing Indebtedness
Principal Account and the Refinancing Indebtedness Debt Service Reserve
Account related to each class of Refinancing Indebtedness, and all cash, cash
equivalents, instruments, investments and other securities on deposit therein
and all Proceeds of the foregoing in favor of the Collateral Agent for the
exclusive benefit of the Persons that provide such class of Refinancing
Indebtedness; in each case, to secure the Obligations.
6. SECURITIES INTERMEDIARY. The Securities Intermediary hereby agrees
that, upon its execution of this Amendment, it shall be bound by all of the
provisions of the Agreement as amended by this Amendment.
7. COUNTERPARTS. This Amendment may be executed by the parties
hereto in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this letter by
facsimile shall be effective as delivery of a manually executed counterpart
of this Amendment.
8. LIMITED EFFECT. Except as expressly provided herein, all of the
terms and provisions of the Agreement are and shall remain in full force and
effect.
9. SEVERABILITY. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such
<PAGE>
5
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
10. CONDITIONS TO EFFECTIVENESS. The amendment provided for herein
shall become effective on the date the Collateral Agent shall have received
counterparts of this Amendment duly executed and delivered by each Loan Party
and consented to by the Administrative Agent and the Trustee.
11. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
EDISON MISSION HOLDINGS CO.
By: /s/ Steven D. Eisenberg
--------------------------
Name: Steven D. Eisenberg
Title: Vice President
EDISON MISSION FINANCE CO.
By: /s/ Steven D. Eisenberg
--------------------------
Name: Steven D. Eisenberg
Title: Vice President
HOMER CITY PROPERTY HOLDINGS, INC.
By: /s/ Steven D. Eisenberg
--------------------------
Name: Steven D. Eisenberg
Title: Vice President
CHESTNUT RIDGE ENERGY COMPANY
By: /s/ Steven D. Eisenberg
--------------------------
Name: Steven D. Eisenberg
Title: Vice President
MISSION ENERGY WESTSIDE, INC.
By: /s/ Steven D. Eisenberg
--------------------------
Name: Steven D. Eisenberg
Title: Vice President
<PAGE>
EME HOMER CITY GENERATION L.P.
By: Mission Energy Westside, Inc.,
its General Partner
By: /s/ Steven D. Eisenberg
--------------------------
Name: Steven D. Eisenberg
Title: Vice President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By: /s/ Christopher J. Grell
--------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Securities Intermediary
By: /s/ Christopher J. Grell
--------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
<PAGE>
Acknowledged and Consented to by:
CITICORP USA, INC., as Administrative Agent
By: /s/ Anita J. Brickell
----------------------------
Name: Anita J. Brickell
Title: Attorney-in-Fact
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By: /s/ Christopher J. Grell
----------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
<PAGE>
Exhibit 10.59.1
EXECUTION COPY
AMENDMENT NO. 1, dated as of May 27, 1999 (this "AMENDMENT"), to the
Credit Support Guarantee, dated as of March 18, 1999, (the "GUARANTEE") made
by EDISON MISSION ENERGY, a California corporation (the "GUARANTOR"), in
favor of UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent for
certain senior secured creditors of the Borrower (in such capacity, the
"COLLATERAL AGENT").
RECITALS
A. Edison Mission Holdings Co. (the "BORROWER") has entered into a
Credit Agreement, dated as of March 18, 1999 (as the same may be amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT",
the loans made thereunder, the "LOANS"), with certain financial institutions
(collectively, the "LENDERS") and Citicorp USA, Inc., as administrative agent
for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
B. Pursuant to the Guarantee, the Guarantor has provided credit
support for the Borrower's senior secured indebtedness in the form of a
guarantee in the amount of $35 million.
C. The Borrower wishes to issue $300 million in aggregate principal
amount of Senior Secured Bonds due 2019 and $530 million in aggregate
principal amount of Senior Secured Bonds due 2026 (collectively, the "BONDS";
the trustee to the holders thereof, the "TRUSTEE"), the proceeds of which
will be used to refinance a portion of the Loans and to repay a portion of
the Guarantor's equity investment in the Borrower.
D. To meet the requirements of Section 8.2.1(e) of the Credit
Agreement, the Guarantor has requested, and, upon this Amendment becoming
effective, the Collateral Agent has agreed, that the amount of the guarantee
provided for in the Guarantee be amended in the manner provided for in this
Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. AMENDMENT OF DEFINITIONS. The definition of the term "Guarantee
Cap" contained in Section 1(b) of the Guarantee is hereby amended by deleting
the current definition in its entirety and substituting in lieu thereof the
following:
"GUARANTEE CAP" means forty-two million U.S. Dollars
(U.S.$42,000,000).
2. COUNTERPARTS. This Amendment may be executed by the parties
hereto in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to
<PAGE>
2
constitute one and the same instrument. Delivery of an executed counterpart
of a signature page to this letter by facsimile shall be effective as
delivery of a manually executed counterpart of this Amendment.
3. LIMITED EFFECT. Except as expressly provided herein, all of the
terms and provisions of the Guarantee are and shall remain in full force and
effect.
4. SEVERABILITY. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
5. CONDITIONS TO EFFECTIVENESS. The amendment provided for herein
shall become effective on the date the Collateral Agent shall have received
counterparts of this Amendment duly executed and delivered by the Guarantor
and consented to by the Administrative Agent and the Trustee.
6. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
EDISON MISSION ENERGY
By: /s/ Steven D. Eisenberg
------------------------------
Name: Steven D. Eisenberg
Title: Vice President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By: /s/ Christopher J. Grell
------------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
Acknowledged and Consented to by:
CITICORP USA, INC., as Administrative Agent
By: /s/ Anita J. Brickell
---------------------------------
Name: Anita J. Brickell
Title: Attorney-In-Fact
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By: /s/ Christopher J. Grell
---------------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
<PAGE>
Exhibit 10.60.1
EXECUTION COPY
AMENDMENT NO. 1, dated as of May 27, 1999 (this "AMENDMENT"), to the
Debt Service Reserve Guarantee, dated as of March 18, 1999 (the "GUARANTEE"),
made by EDISON MISSION ENERGY, a California corporation (the "GUARANTOR"), in
favor of UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral Agent (in
such capacity, the "COLLATERAL AGENT") for certain senior secured creditors
of Edison Mission Holdings Co., a California corporation (the "BORROWER").
RECITALS
A. The Borrower has entered into a Credit Agreement, dated as of
March 18, 1999 (as the same may be amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; the loans made
thereunder, the "LOANS"), with certain financial institutions (collectively,
the "LENDERS") and Citicorp USA, Inc., as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
B. Under Section 8.2.7 of the Credit Agreement, the Borrower has
agreed not to make any Restricted Payments (as therein defined) unless, INTER
ALIA, the Debt Service Reserve Requirements (as therein defined) is satisfied.
C. The Debt Service Reserve Requirement may be satisfied by cash,
certain letters of credit, a guarantee by the Guarantor or a combination
thereof.
D. The Borrower wishes to issue $300 million in aggregate principal
amount of Senior Secured Bonds due 2019 and $530 million in aggregate
principal amount of Senior Secured Bonds due 2026 (collectively, the "BONDS";
the trustee to the holders thereof, the "TRUSTEE"), the proceeds of which
will be used to repay a portion of the Loans, which, in turn, will have the
effect of reducing the amount of the Debt Service Reserve Requirement.
E. To reflect such reduction in the amount of the Debt Service
Reserve Requirement, the Guarantor has requested, and, upon this Amendment
becoming effective, the Collateral Agent has agreed, that the amount of the
guarantee provided for in the Guarantee be amended in the manner provided for
in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. AMENDMENT OF DEFINITIONS. The definition of the term "Guarantee
Amount" contained in Section 1(b) of the Guarantee is hereby amended by
deleting the current definition in its entirety and substituting in lieu
thereof the following:
<PAGE>
"GUARANTEE CAP" means three million U.S. Dollars (U.S.$3,000,000).
2. COUNTERPARTS. This Amendment may be executed by the parties
hereto in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this letter by
facsimile shall be effective as delivery of a manually executed counterpart
of this Amendment.
3. LIMITED EFFECT. Except as expressly provided herein, all of
the terms and provisions of the Guarantee are and shall remain in full force
and effect.
4. SEVERABILITY. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
5. CONDITIONS TO EFFECTIVENESS. The amendment provided for herein
shall become effective on the date the Collateral Agent shall have received
counterparts of this Amendment duly executed and delivered by the Guarantor
and consented to by the Administrative Agent and the Trustee.
6. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
EDISON MISSION ENERGY
By: /s/ Steven D. Eisenberg
---------------------------
Name: Steven D. Eisenberg
Title: Vice President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By: /s/ Christopher J. Grell
---------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
Acknowledged and Consented to by:
CITICORP USA, INC., as Administrative Agent
By: /s/ Anita J. Brickell
--------------------------
Name: Anita J. Brickell
Title: Attorney-in-Fact
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By: /s/ Christopher J. Grell
--------------------------
Name: Christopher J. Grell
Title: Assistant Vice President
<PAGE>
Exhibit 10.60.2
BOND DEBT SERVICE RESERVE GUARANTEE, dated as of May 27, 1999, made
by Edison Mission Energy, a California corporation (the "GUARANTOR"), in
favor of United States Trust Company of New York, as trustee (the "TRUSTEE")
for the equal and ratable benefit of the holders of the Bonds (as defined
below).
RECITALS
A. Pursuant to the Indenture, dated as of May 27, 1999 (the
"INDENTURE"), among Edison Mission Holdings Co. (the "COMPANY") and the
Trustee, the Company issued on May 27, 1999 $300 million in aggregate
principal amount of 8.137% Senior Secured Bonds due 2019 (the "INITIAL CLASS A
BONDS") and $530 million in aggregate principal amount of 8.734% Senior
Secured Bonds due 2026 (the "INITIAL CASS B BONDS" and, together with the
Initial Class A Bonds, the "INITIAL BONDS").
B. Pursuant to the Exchange and Registration Rights Agreement, dated
May 27, 1999 (the "Registration Rights Agreement"), among the Company, the
Guarantor, the Subsidiary Guarantors (as defined below) and the Initial
Purchasers (as defined below), the Initial Class A Bonds and the Initial
Class B Bonds may be exchanged for registered 8.137% Senior Secured Bonds due
2019 (the NEW CLASS A BONDS") and registered 8.734% Senior Secured Bonds due
2026 (the "NEW CLASS B BONDS" and, together with the New Class A Bonds, the
"BONDS"), respectively.
C. Pursuant to Section 4.20 of the Indenture, the Company is
required to satisfy the Bond Debt Service Reserve Requirement (as therein
defined) by cash, certain letters of credit, this Guarantee or a combination
thereof.
D. The Guarantor is the parent company of the Company and wishes to
enter into this Guarantee so that the Company may meet the Bond Debt Service
Reserve Requirement.
NOW, THEREFORE, in consideration of the premises, the Guarantor hereby
agrees with the Trustee, for the benefit of the Holders, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined in
the Indenture and used herein shall have the meanings given to them in the
Indenture.
(b) The following terms shall have the following meanings:
"BOND FINANCING DOCUMENTS" means the Indenture, the Registration Rights
Agreement, the Bonds and the Security Documents.
<PAGE>
2
"DSR CREDIT INSTRUMENT" means a letter of credit issued by a commercial
bank whose long-term unsecured debt securities are rated "A2" and "A" or
better by Moody's and S&P, respectively.
"GUARANTEE" means this Bond Debt Service Reserve Guarantee.
"GUARANTOR" has the meaning set forth in the PREAMBLE.
"GUARANTEE AMOUNT" means thirty-five million three-hundred fifty
thousand six hundred U.S. Dollars (U.S. $35,350,600)
"HOLDER" means a Person in whose name a Bond is registered.
"INITIAL CLASS A BONDS" has the meaning set forth in the PREAMBLE.
"INITIAL CLASS B BONDS" has the meaning set forth in the PREAMBLE.
"INITIAL PURCHASERS" means Lehman Brothers Inc., Credit Suisse First
Boston Corporation, Salomon Smith Barney Inc. and SG Cowen Securities Corp.
"NEW CLASS A BONDS" has the meaning set forth in the PREAMBLE.
"NEW CLASS B BONDS" has the meaning set forth in the PREAMBLE.
"OBLIGATIONS" means the collective reference to the unpaid principal of
and interest on the Bonds and all other obligations and liabilities of the
Company to the Trustee and the Holders (including interest accruing pursuant
to Section 2.12 of the Indenture), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, any Bond Financing
Document or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, guarantee
obligations, fees, indemnities, costs, expenses or otherwise (including all
fees and disbursements of counsel to the Trustee or to the Holders that are
required to be paid by the Company or the Guarantor pursuant to the terms of
this Guarantee or any other Bond Financing Document).
"SECURITY DEPOSIT AGREEMENT" means the Security Deposit Agreement,
dated as of March 18, 1999, as amended, among the Company, its Subsidiaries
and the United States Trust Company of New York, as collateral agent.
"SUBSIDIARY GUARANTORS" means Edison Mission Finance Co., a California
corporation, Homer City Property Holdings, Inc., a California corporation,
Chestnut Ridge Energy Company, a California corporation, Mission Energy
Westside, Inc., a California corporation and EME Homer City Generation L.P.,
a Pennsylvania limited partnership.
<PAGE>
3
"TRUSTEE" has the meaning set forth in the RECITALS.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a whole
and not to any particular provision of this Guarantee, and section and
paragraph references are to this Guarantee unless otherwise specified.
(d) Each reference in this Guarantee to a Bond Financing Document or
other agreement shall be deemed to refer to such Bond Financing Document or
other agreement as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof.
(e) Any term defined by reference to an agreement, instrument or other
document shall have the meaning so assigned to it whether or not such
agreement, instrument or document is in effect.
(f) Each reference in this Guarantee to a Person shall refer to such
Person and its successors and assigns.
(g) Each reference in this Guarantee to a Requirement of Law shall be
deemed to refer to such Requirement of Law as the same may be amended,
supplemented or otherwise modified from time to time.
(h) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. GUARANTEE. (a) The Guarantor hereby unconditionally and irrevocably
guarantees to the Trustee, for the benefit of the Holders, the prompt and
complete payment and performance by the Company when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.
Notwithstanding the aggregate amounts of the Obligations at any time or from
time to time payable or to be payable by the Company to the Trustee or to any
Holder, the aggregate maximum liability of the Guarantor hereunder shall in
no event exceed the Guarantee Amount. The Guarantor agrees that the
Obligations may at any time and from time to time exceed the amount of the
liability of the Guarantor hereunder without impairing this Guarantee or
affecting the rights and remedies of the Trustee or any Holder hereunder.
(b) Notwithstanding the Guarantee Amount, the Guarantor further agrees
to pay or reimburse each Holder and the Trustee for all its costs and
expenses incurred in collecting against the Guarantor under this Guarantee or
otherwise enforcing or preserving any rights under this Guarantee, including
the fees and disbursements of counsel to each Holder and of counsel to the
Trustee. Unless a demand for payment shall have been made hereunder and be
unsatisfied, this Guarantee may be terminated in its entirety, or amended to
reduce the Guarantee Amount, upon
<PAGE>
4
three (3) Business Days' notice by the Guarantor to the Trustee, PROVIDED
that the Bond Debt Service Reserve Requirement is then otherwise satisfied
pursuant to Section 4.20 of the Indenture.
(c) No payment made by the Company or any other Person or received or
collected by the Trustee from the Company or any other Person by virtue of
any action or proceeding or any set-off or appropriation or application, at
any time or from time to time, in reduction of or in payment of the
Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by or collected from the Guarantor
in respect of the Obligations), remain liable for the Obligations up to the
Guarantee Amount until the Obligations are paid or redeemed in full.
3. RIGHT OF SET-OFF. The Guarantor hereby irrevocably authorizes the
Trustee and each Holder at any time and from time to time (i) upon the
occurrence and continuance beyond the applicable grace period, if any, of an
Event of Default of the kind described in clause (h) or (i) of Section 6.1 of
the Indenture, or (ii) upon the occurrence and continuance beyond the
applicable grace period, if any, of any other Event of Default and at the
discretion of the Holders of at least 33-1/3% (in the case of any Event of
Default specified in clause (a) of Section 6.1 of the Indenture) or 50% (in
the case of any other Event of Default) in aggregate principal amount of the
Bonds then outstanding, without notice to the Guarantor, any such notice
being expressly waived by the Guarantor, to set-off and appropriate and apply
any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Trustee or
such Holder to or for the credit or the account of the Guarantor, or any part
thereof in such amounts as the Trustee or such Holder may elect, against and
on account of the obligations and liabilities of the Guarantor to the Trustee
or such Holder hereunder and claims of every nature and description of the
Trustee or such Holder against the Guarantor, in any currency, whether
arising hereunder, under the Indenture, any other Bond Financing Document or
otherwise, as the Trustee or such Holder may elect, whether or not the
Trustee or any Holder has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
Trustee and each Holder shall notify the Guarantor promptly of any such
set-off and the application made by the Trustee or such Holder of the
proceeds thereof, PROVIDED that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the
Trustee and each Holder under this paragraph are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which
the Trustee or such Holder may have.
4. NO SUBROGATION. Notwithstanding any payment or payments made by the
Guarantor hereunder, or any set-off or application of funds of the Guarantor
by the Trustee or any Holder, the Guarantor shall not be entitled to be
subrogated to any of the rights of the Trustee or any Holder against the
Company or against any collateral security or guarantee or right of offset
held
<PAGE>
5
by the Trustee or any Holder for the payment of the Obligations, nor shall
the Guarantor seek or be entitled to seek any contribution or reimbursement
from the Company in respect of payments made by the Guarantor hereunder,
until all amounts owing to the Trustee and the Holders by the Company on
account of the Obligations are paid or redeemed in full. If any amount shall
be paid to the Guarantor on account of such subrogation rights at any time
when all of the Obligations shall not have been paid in full and any payment
made by or collected from the Guarantor in respect of the Obligations is less
than the Guarantee Amount applicable at such time, such amount shall be held
by the Guarantor in trust for the Trustee and the Holders, segregated from
other funds of the Guarantor, and shall, forthwith upon receipt by the
Guarantor, be turned over to the Trustee in the exact form received by the
Guarantor (duly indorsed by the Guarantor to the Trustee, if required), to be
applied against the Obligations, whether matured or unmatured, in such order
as the Trustee may determine.
5. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS: WAIVER OF RIGHTS.
The Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against the Guarantor, and without notice to or
further assent by the Guarantor, any demand for payment of any of the
Obligations made by the Trustee or any Holder may be rescinded by the Trustee
or such Holder, and any of the Obligations continued, and the Obligations, or
the liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released
by the Trustee or any Holder, and the Bond Financing Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, and any collateral
security, guarantee or right of offset at any time held by the Trustee or any
Holder for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Trustee nor any Holder shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by
it as security for the Obligations or for this Guarantee or any property
subject thereto. When making any demand hereunder against the Guarantor, the
Trustee or any Holder may, but shall be under no obligation to, make a
similar demand on the Company or any other guarantor, and any failure by the
Trustee or any Holder to make any such demand or to collect any payments from
the Company or any such other guarantor or any release of the Company or such
other guarantor shall not relieve the Guarantor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the Trustee or any
Holder against the Guarantor. For the purposes hereof "demand" shall include
the commencement and continuance of any legal proceedings.
6. GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Trustee or any Holder
upon this Guarantee or acceptance of this Guarantee; the Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Company or the Guarantor, on the one
hand, and the Trustee and the Holders, on the other, shall likewise be
conclusively presumed to have been had or consummated
<PAGE>
6
in reliance upon this Guarantee. The Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon
the Company or the Guarantor with respect to the Obligations. This Guarantee
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity, regularity or enforceability of
any Bond Financing Document, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Trustee or any Holder, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by the Company against
the Trustee or any Holder, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Company or the Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Company for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance. When pursuing its rights
and remedies hereunder against the Guarantor, the Trustee and any Holder may,
but shall be under no obligation to, pursue such rights and remedies as it may
have against the Company or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Trustee or any Holder to pursue such other
rights or remedies or to collect any payment from the Company or any such
other Person or to realize upon such collateral security or guarantee or to
exercise any such right of offset, or any release of the Company or any such
other Person or of any such collateral security, guarantee or right of offset,
shall not relieve the Guarantor of any liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Trustee or any Holder against the
Guarantor. This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantor
and shall inure to the benefit of the Trustee and the Holders until all the
Obligations and the obligations of the Guarantor under this Guarantee shall
have been satisfied by payment or redemption in full.
7. REINSTATEMENT. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if, at any time, payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or
returned by the Trustee or any Holder upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Company or any substantial part of its
property, or otherwise, all as though such payments had not been made.
8. PAYMENTS. The Guarantor hereby agrees that the Obligations will be paid
to the Trustee without set-off or counterclaim in Dollars at the office of
the Trustee, for deposit in the "Homer City Refinancing Indebtedness Debt
Reserve Account", account no. 09045500, or to such other place as the Trustee
may specify in writing.
<PAGE>
7
9. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants
to the Trustee and the Holders that:
(a) The Guarantor (i) is a corporation validly organized and
existing and in good standing under the laws of the state of its
incorporation, (ii) is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the nature of
its business requires such qualification and (iii) has all requisite
corporate power and authority and holds all material requisite
governmental approvals to enter into and perform its obligations under
this Guarantee and to conduct its business substantially as currently
conducted by it, except, with respect to clause (ii) and (iii) above,
where the failure to be so qualified or be in good standing or the
failure to obtain such governmental approvals would not,
individually or in the aggregate, cause a material adverse effect;
(b) The execution, delivery and performance by the Guarantor of this
Guarantee are within the Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not:
(i) contravene the Guarantor's organizational documents.
(ii) contravene any material requirement of law or contractual
obligation binding on or affecting the Guarantor; or
(iii) result in, or require the creation or imposition of,
any Lien on any of the Guarantor's properties;
(c) No governmental approval is required for the Guarantor to
execute and perform its obligations under this Guarantee, except for those
which have been duly obtained or effected. No material governmental
approval is required for the Guarantor to carry on its business, except for
those which have been duly obtained or effected;
(d) The Guarantor is in compliance with all requirements of law and
contractual obligations applicable to it, except to the extent that the
failure to comply therewith would not have a material adverse effect; and
(e) This Guarantee constitutes the legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms
(except as may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and general
principles of equity).
10. AUTHORITY OF TRUSTEE. The Guarantor acknowledges that the rights and
responsibilities of the Trustee under this Guarantee with respect to any
action taken by the Trustee or the exercise or non-exercise by the Trustee of
any option, right, request, judgement or other right or remedy provided for
herein or resulting or arising out of this Guarantee shall, as
<PAGE>
8
between the Trustee and the Holders, be governed by the Indenture, but, as
between the Trustee and the Guarantor, the Trustee shall be conclusively
presumed to be acting as agent for the Holders with full and valid authority
so to act or refrain from acting, and the Guarantor shall not be under any
obligation, or entitlement, to make any inquiry respecting such authority.
11. NOTICES. All notices, requests and demands to or upon the Trustee,
the Holders or the Guarantor to be effective shall be in writing (or by
telex, fax or similar electronic transfer confirmed in writing) and shall be
deemed to have been duly given or made (i) when delivered by hand or (ii) if
given by mail, when deposited in the mails by certified mail, return receipt
requested, or (iii) if by telex, fax or similar electronic transfer, when
sent and receipt has been confirmed, addressed as follows:
(a) if to the Trustee, at the address or transmission number for
notices provided in the Indenture; and
(b) if to the Guarantor, at its address or transmission number for
notices set forth under its signature below.
The Trustee, the Holders and the Guarantor may change its address and
transmission numbers for notices by notice in the manner provided in this
Section.
12. SEVERABILITY. Any provision of this Guarantee which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. INTEGRATION. This Guarantee represents the agreement of the
Guarantor with respect to the subject matter hereof and there are no
promises, undertakings, representations or warranties by the Trustee or any
Holder relative to subject matter hereof not expressly set forth or referred
to in this Guarantee. This Guarantee supersedes any and all prior
agreements and understandings, oral or written, relative or with respect to
the subject matter hereof.
14. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) Except
as provided in Section 2(b), none of the terms or provisions of this
Guarantee may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Guarantor and the Trustee, PROVIDED
that any provision of this Guarantee may be waived by the Trustee and the
Holders in a letter or agreement executed by the Trustee or by telex or
facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Holder shall by any act (except by a
written instrument pursuant to PARAGRAPH (a)), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any
<PAGE>
9
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Trustee or any Holder, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Trustee or any Holder of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Trustee or such Holder would otherwise have on any
future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
15. SECTION HEADINGS. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
16. GOVERNING LAW. This Guarantee shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.
EDISON MISSION ENERGY
By /s/ Steven D. Eisenberg
--------------------------
Name: Steven D. Eisenberg
Title: Vice President
Address for Notices:
18101 Von Karman Avenue
Suite 1700
Irvine, CA 92612-1046
Attention: Treasurer
Telex: (949) 752-5588
Fax: (949) 752-5624
<PAGE>
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our report on
the consolidated financial statements of Edison Mission Holdings Co., dated
November 5, 1999 included in the prospectus, which is part of this registration
statement and to the incorporation by reference of our report on the
consolidated financial statements of Edison Mission Energy, dated March 15, 1999
included in Edison Mission Energy's Annual Report on Form 10-K for the year
ended December 31, 1998 and to all references to our Firm included in or made a
part of the prospectus, which is part of this registration statement.
/s/ Arthur Andersen LLP
Los Angeles, California
February 7, 2000
<PAGE>
Exhibit 23.2
CONSENT OF THE INDEPENDENT CHARTERED ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-4 of Edison Mission Holdings Co. of our report dated
30 September 1999 relating to the special-purpose combined accounts of Fiddlers
Ferry and Ferrybridge C powers stations for the year ended 30 March 1997, the
year ended 29 March 1998 and the nine month period ended 3 January 1999
appearing in the Current Report on Form 8-K/A of Edison Mission Energy dated
7 February 2000. We also consent to the reference to us using the heading
"Experts" in such Registration Statement.
Your faithfully,
/s/ PricewaterhouseCoopers
- --------------------------
PricewaterhouseCoopers
London, England
7 February 2000
<PAGE>
LETTER OF TRANSMITTAL
EDISON MISSION HOLDINGS CO.
OFFER FOR ALL OUTSTANDING
8.137% SENIOR SECURED BONDS DUE 2019
IN EXCHANGE FOR
8.137% SENIOR SECURED EXCHANGE BONDS DUE 2019 AND
8.734% SENIOR SECURED BONDS DUE 2026
IN EXCHANGE FOR
8.734% SENIOR SECURED EXCHANGE BONDS DUE 2026
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,
PURSUANT TO THE PROSPECTUS, DATED , 2000
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery To: United States Trust Company of New York, EXCHANGE AGENT
<TABLE>
<S> <C>
BY HAND BEFORE 4:30 P.M.: BY REGISTERED OR CERTIFIED MAIL:
United States Trust Company United States Trust Company
of New York of New York
111 Broadway P.O. Box 848
New York, NY 10006 Cooper Station
Attention: Lower Level Corporate New York, NY 10276
Trust Window Attention: Corporate Trust Services
</TABLE>
BY HAND OR OVERNIGHT DELIVERY AFTER 4:30 P.M. ON THE EXPIRATION DATE:
United States Trust Company of New York
770 Broadway, 13(th) Floor
New York, NY 10003
FOR INFORMATION CALL:
(800) 548-6565
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(212) 420-6211
CONFIRM BY TELEPHONE:
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
The undersigned acknowledges that he or she has received the Prospectus,
dated , 2000 (the "Prospectus"), of Edison Mission Holdings Co., a
California corporation (the "Company"), and this Letter of Transmittal (the
"Letter"), which together constitute the Company's offer (the "Exchange Offer")
to exchange (i) an aggregate principal amount of up to $300,000,000 of the
Company's 8.137% Senior Secured Bonds due 2019 (the "Exchange 2019 Bonds"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of the Company's issued and
outstanding 8.137% Senior Secured Bonds due 2019 (the "Original 2019 Bonds")
from the registered holders thereof, and (ii) an aggregate principal amount of
up to $530,000,000 of the Company's 8.734% Senior Secured Bonds due 2026 (the
"Exchange 2026 Bonds" and, together with the Exchange 2019 Bonds, the "Exchange
Bonds"), which have been registered under the Securities Act, for a like
principal amount of the Company's issued and outstanding 8.734% Senior Secured
Bonds due 2026 (the "Original 2026 Bonds" and, together with the Original 2019
Bonds, the "Original Bonds") from the registered holders thereof (together with
the holders of the Original 2019 Bonds, the "Holders").
For each Original Bond accepted for exchange, the Holder of such Original
Bond will receive an Exchange Bond having a principal amount equal to that of
the surrendered Original Bond. The Exchange Bonds will bear interest from the
most recent date to which interest has been paid on the Original Bonds or, if no
interest has been paid on the Original Bonds, from May 27, 1999. Accordingly,
registered Holders of Exchange Bonds on the relevant record date for the first
interest payment date following the consummation of the Exchange Offer will
receive interest accruing from the most recent date to which interest has been
paid or, if no interest has been paid, from May 27, 1999. Original Bonds
accepted for exchange will cease to accrue interest from and after the date of
consummation of the Exchange Offer. Holders of Original Bonds whose Original
Bonds are accepted for exchange will not receive any payment in respect of
accrued interest on such Original Bonds otherwise payable on any interest
payment date the record date for which occurs on or after consummation of the
Exchange Offer.
This Letter is to be completed by a holder of Original Bonds either if
certificates are to be forwarded herewith or if a tender of certificates for
Original Bonds, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Holders of
Original Bonds whose certificates are not immediately available, or who are
unable to deliver their certificates or confirmation of the book-entry tender of
their Original Bonds into the Exchange Agent's account at the Book-Entry
Transfer Facility (a "Book-Entry Confirmation") and all other documents required
by this Letter to the Exchange Agent on or prior to the Expiration Date, must
tender their Original Bonds according to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. See Instruction 1. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Original Bonds to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Original Bonds should be listed on a separate signed schedule affixed hereto.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ORIGINAL BONDS 1 2 3
- ------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
AMOUNT OF PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE ORIGINAL AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* BOND(S) TENDERED**
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------
* Need not be completed if Original Bonds are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Original Bonds
represented by the Original Bonds indicated in column 2. See Instruction 2. Original Bonds tendered hereby must
be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
/ / CHECK HERE IF TENDERED ORIGINAL BONDS ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF TENDERED ORIGINAL BONDS ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution Which Guaranteed Delivery ______________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Bonds. If the undersigned is a broker-dealer that will receive Exchange
Bonds for its own account in exchange for Original Bonds that were acquired as a
result of market-making acitvities or other trading activities, it acknowledges
that such Original Bonds were acquired by such broker-dealer as a result of
market-making or other trading activities and, that it must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, including the delivery of a prospectus
that contains information with respect to any selling holder required by the
Securities Act in connection with any resale of the Exchange Bonds; however, by
so acknowledging and by delivering such a prospectus, the undersigned will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. If the undersigned is a broker-dealer that will receive Exchange
Bonds, it represents that the Original Bonds to be exchanged for the Exchange
Bonds were acquired as a result of market-making activities or other trading
activities.
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Original Bonds indicated above. Subject to, and effective upon, the acceptance
for exchange of the Original Bonds tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Original Bonds as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Original Bonds, with full power of substitution, among
other things, to cause the Original Bonds to be assigned, transferred and
exchanged. The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Original
Bonds, and to acquire Exchange Bonds issuable upon the exchange of such tendered
Original Bonds, and that, when the same are accepted for exchange, the Company
will acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim when
the same are accepted by the Company. The undersigned hereby further represents
that any Exchange Bonds acquired in exchange for Original Bonds tendered hereby
will have been acquired in the ordinary course of business of the person
receiving such Exchange Bonds, whether or not such person is the undersigned,
that neither the Holder of such Original Bonds nor any such other person is
participating in, intends to participate in or has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Bonds and that neither the Holder of such Original Bonds nor any such
other person is an "affiliate," as defined in Rule 405 under the Securities Act,
of the Company.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Bonds issued pursuant to the Exchange Offer in
exchange for the Original Bonds may be offered for resale, resold and otherwise
transferred by Holders thereof (other than any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Bonds are acquired
in the ordinary course of such Holders' business and such Holders have no
arrangement with any person to participate in the distribution of such Exchange
Bonds. However, the SEC has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Bonds and has no arrangement or understanding to
participate in a distribution of Exchange Bonds. If any Holder is an affiliate
of the Company, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the Exchange Bonds to be
acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the
applicable interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive Exchange Bonds for its own account in exchange for Original
Bonds, it represents that the Original Bonds to be exchanged for the Exchange
Bonds were acquired by it as a result of market-making activities or other
trading activities and acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Bonds; however, by so acknowledging and by delivering a prospectus
meeting the requirements of the Securities Act, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Original Bonds tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
4
<PAGE>
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the Exchange Bonds (and, if applicable,
substitute certificates representing Original Bonds for any Original Bonds not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Original Bonds, please credit the account indicated above maintained
at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under
the box entitled "Special Delivery Instructions" below, please send the Exchange
Bonds (and, if applicable, substitute certificates representing Original Bonds
for any Original Bonds not exchanged) to the undersigned at the address shown
above in the box entitled "Description of Original Bonds."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL
BONDS" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
ORIGINAL BONDS AS SET FORTH IN SUCH BOX ABOVE.
- ------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
---------------------------------------------
To be completed ONLY if certificates for Original Bonds not exchanged and/or
Exchange Bonds are to be issued in the name of and sent to someone other than
the person or persons whose signature(s) appear(s) on this Letter above, or if
Original Bonds delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility other than the account indicated above.
Issue Exchange Bonds and/or Original Bonds to:
Name(s) ______________________________________________________________________
(PLEASE TYPE OR PRINT)
______________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ______________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
/ / Credit unexchanged Original Bonds delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
___________________________________________________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
--------------------------------------------------------
--------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
---------------------------------------------
To be completed ONLY if certificates for Original Bonds not exchanged and/or
Exchange Bonds are to be sent to someone other than the person or persons
whose signature(s) appear(s) on this Letter above or to such person or persons
at an address other than shown in the box entitled "Description of Original
Bonds" on this Letter above.
Mail Exchange Bonds and/or Original Bonds to:
Name(s) ______________________________________________________________________
(PLEASE TYPE OR PRINT)
______________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ______________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(ZIP CODE)
- -----------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR ORIGINAL BONDS OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS
OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
5
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
X ____________________________________ ____________________________________,
2000
X ____________________________________ ____________________________________,
2000
(SIGNATURE(S) OF OWNER) (DATE)
Area Code and Telephone Number______________________________________________
If a holder is tendering any Original Bonds, this Letter must be signed
by the registered holder(s) as the name(s) appear(s) on the certificate(s)
for the Original Bonds or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature
is by a trustee, executor, administrator, guardian, officer or other person
acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity: __________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: ___________________________________________________
(AUTHORIZED SIGNATURE)
____________________________________________________________________________
(TITLE)
____________________________________________________________________________
(NAME AND FIRM)
Dated: __________________, 2000
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
8.137% SENIOR SECURED BONDS DUE 2019
IN EXCHANGE FOR
8.137% SENIOR SECURED EXCHANGE BONDS DUE 2019 AND
8.734% SENIOR SECURED BONDS DUE 2026
IN EXCHANGE FOR
8.734% SENIOR SECURED EXCHANGE BONDS DUE 2026
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
1. DELIVERY OF THIS LETTER AND BONDS; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders of Original Bonds either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Original Bonds, or Book-Entry Confirmation, as the case may
be, as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Original Bonds tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Original Bonds are not immediately available
or who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Original
Bonds pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution,
(ii) prior to 5:00 P.M., New York City time, on the Expiration Date, the (as
defined below) Exchange Agent must receive from such Eligible Institution a
properly completed and duly executed Letter (or a facsimile thereof) and Notice
of Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Original Bonds and the amount of Original Bonds
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the Expiration
Date, the certificates for all physically tendered Original Bonds, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, and any
other documents required by this Letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Original Bonds, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, must be received by the Exchange Agent within three NYSE trading days
after the Expiration Date.
The method of delivery of this Letter, the Original Bonds and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Original Bonds are sent by mail, it is suggested that the
mailing be registered mail, properly insured, with return receipt requested,
made sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 P.M., New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
7
<PAGE>
2. PARTIAL TENDERS (NOT APPLICABLE TO BONDHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Original Bonds evidenced by a submitted certificate
are to be tendered, the tendering holder(s) should fill in the aggregate
principal amount of Original Bonds to be tendered in the box above entitled
"Description of Original Bonds--Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Original Bonds will be sent
to such tendering holder, unless otherwise provided in the appropriate box on
this Letter, promptly after the Expiration Date. ALL OF THE ORIGINAL BONDS
DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS
OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Original Bonds
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Original Bonds are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Original Bonds are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Original Bonds specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Exchange
Bonds are to be issued, or any untendered Original Bonds are to be reissued, to
a person other than the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Original Bonds or signatures on bond powers
required by this Instruction 3 must be guaranteed by a firm that is a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible Institution,
provided the Original Bonds are tendered: (i) by a registered holder of Original
Bonds (which term, for purposes of the Exchange Offer, includes any participant
in the Book-Entry Transfer Facility system whose name appears on a security
position listing as the holder of such Original Bonds) who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
on this Letter, or (ii) for the account of an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Original Bonds should indicate in the applicable box
the name and address to which Exchange Bonds issued pursuant to the Exchange
Offer and or substitute certificates evidencing
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Original Bonds not exchanged are to be issued or sent, if different from the
name or address of the person signing this Letter. In the case of issuance in a
different name, the employer identification or social security number of the
person named must also be indicated. Bondholders tendering Original Bonds by
book-entry transfer may request that Original Bonds not exchanged be credited to
such account maintained at the Book-Entry Transfer Facility as such bondholder
may designate hereon. If no such instructions are given, such Original Bonds not
exchanged will be returned to the name and address of the person signing this
Letter.
5. TAXPAYER IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
Original Bonds are accepted for exchange must provide the Company (as payor)
with such holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual, is
his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption from backup withholding, such
tendering holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, the Exchange Agent may be required to withhold 31% of the
amount of any reportable payments made after the exchange to such tendering
holder of Exchange Bonds. If withholding results in an overpayment of taxes, a
refund may be obtained.
Exempt holders of Original Bonds (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Original Bonds must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying, under penalties of perjury, that the TIN provided is correct (or
that such holder is awaiting a TIN) and that (i) the holder is exempt from
backup withholding, or (ii) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
a failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding. If the tendering holder of Original Bonds is a nonresident alien or
foreign entity not subject to backup withholding, such holder must give the
Exchange Agent a completed Form W-8, Certificate of Foreign Status. These forms
may be obtained from the Exchange Agent. If the Original Bonds are in more than
one name or are not in the name of the actual owner, such holder should consult
the W-9 Guidelines for information on which TIN to report. If such holder does
not have a TIN, such holder should consult the W-9 Guidelines for instructions
on applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and
write "applied for" in lieu of its TIN. Note: Checking this box and writing
"applied for" on the form means that such holder has already applied for a TIN
or that such holder intends to apply for one in the near future. If the box in
Part 2 of the Substitute Form W-9 is checked, the Exchange Agent will retain 31%
of reportable payments made to a holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent with his or her TIN within sixty (60) days of the Substitute
Form W-9, the Exchange Agent will remit such amounts retained during such sixty
(60) day period to such holder and no further amounts will be retained or
withheld from payments made to the holder thereafter. If, however, such holder
does not provide its TIN to the Exchange Agent within such sixty (60) day
period, the Exchange Agent will remit such previously withheld amounts to the
Internal Revenue Service as backup withholding and will withhold 31% of all
reportable payments to the holder thereafter until such holder furnishes its TIN
to the Exchange Agent.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Original Bonds to it or its order pursuant to the Exchange Offer. If,
however, Exchange Bonds and/or substitute Original Bonds not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than
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the registered holder of the Original Bonds tendered hereby, or if tendered
Original Bonds are registered in the name of any person other than the person
signing this Letter, or if a transfer tax is imposed for any reason other than
the transfer of Original Bonds to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL BONDS SPECIFIED IN THIS
LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Original Bonds, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Original
Bonds for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Original
Bonds nor shall any of them incur any liability for failure to give any such
notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL BONDS.
Any holder whose Original Bonds have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. WITHDRAWAL RIGHTS.
Tenders of Original Bonds may be withdrawn at any time prior to 5:00 P.M.,
New York City time, on the Expiration Date.
For a withdrawal of a tender of Original Bonds to be effective, a written
notice of withdrawal must be received by the Exchange Agent at the address set
forth above prior to 5:00 P.M., New York City time, on the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
tendered the Original Bonds to be withdrawn (the "Depositor"), (ii) identify the
Original Bonds to be withdrawn (including certificate number or numbers and the
principal amount of such Original Bonds), (iii) contain a statement that such
holder is withdrawing his election to have such Original Bonds exchanged,
(iv) be signed by the holder in the same manner as the original signature on the
Letter by which such Original Bonds were tendered (including any required
signature guarantees) or be accompanied by documents of transfer to have the
Trustee with respect to the Original Bonds register the transfer of such
Original Bonds in the name of the person withdrawing the tender and (v) specify
the name in which such Original Bonds are registered, if different from that of
the Depositor. If Original Bonds have been tendered pursuant to the procedure
for book-entry transfer set forth in "The Exchange Offer--Book-Entry Transfer"
section of the Prospectus, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Original Bonds and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Original Bonds so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer and no Exchange Bonds will be
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issued with respect thereto unless the Original Bonds so withdrawn are validly
retendered. Any Original Bonds that have been tendered for exchange but which
are not exchanged for any reason will be returned to the Holder thereof without
cost to such Holder (or, in the case of Original Bonds tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus, such Original Bonds will
be credited to an account maintained with the Book-Entry Transfer Facility for
the Original Bonds) as soon as practicable after withdrawal, rejection of tender
or termination of the Exchange Offer. Properly withdrawn Original Bonds may be
retendered by following the procedures described above at any time on or prior
to 5:00 P.M., New York City time, on the Expiration Date.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
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TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN:
FORM W-9 TIN IN THE BOX AT RIGHT AND SOCIAL SECURITY NUMBER OR
DEPARTMENT OF THE TREASURY CERTIFY BY SIGNING AND EMPLOYER IDENTIFICATION NUMBER
INTERNAL REVENUE SERVICE DATING BELOW.
PART 2 -- TIN APPLIED FOR / /
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct TIN (or I am
waiting for a number to be issued to me),
PAYOR'S REQUEST FOR (2) I am not subject to backup withholding either because: (a) I
TAXPAYER IDENTIFICATION am exempt from backup withholding, or (b) I have not been
NUMBER ("TIN") notified by the Internal Revenue Service (the "IRS") that I
AND CERTIFICATION am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding and
(3) any other information provided on this form is true and
correct.
SIGNATURE DATE ,
</TABLE>
You must cross out item 9 (2) of the above certification if you have been
notified by the IRS that you are subject to backup with holding because of
underreporting of interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange,
31 percent of all reportable payments made to me thereafter will be withheld
until I provide a number.
SIGNATURE ____________________________________________ DATE _________________
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