SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JUNE 14, 1995
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BANGOR HYDRO-ELECTRIC COMPANY
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(Exact name of registrant as specified in its charter)
MAINE 0-505 01-0024370
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(State of Incorporation) (Commission File No.) (IRS Employer ID No.)
33 STATE STREET, BANGOR, MAINE 04401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (207-945-5621)
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Current Report, Form 8-K Date of Report
BANGOR HYDRO-ELECTRIC COMPANY JUNE 14, 1995
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ITEM 5. OTHER EVENTS
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The Company issued the following news release on June 14, 1995:
BANGOR HYDRO DECLARES QUARTERLY DIVIDENDS
AND
REDUCES DIVIDEND ON COMMON STOCK
More Expense Reductions Being Implemented
Bangor, ME - The Board of Directors of Bangor Hydro-Electric Company today
declared the following dividends for the second quarter of 1995:
8.76% Preferred Stock ------------ $2.19 per share
7% Preferred Stock --------------- $1.75 per share
4.25% Preferred Stock ------------ $1.06 per share
4% Preferred Stock --------------- $1.00 per share
Common Stock --------------------- $0.18 per share
The dividends are payable July 20, 1995 to stockholders of record as of the
close of business on June 30, 1995.
The dividend on common stock was reduced by $.15 from the prior quarterly
level of $.33 per share that BHE had been paying since early 1992. This
results in a reduction in the indicated annual rate from $1.32 to $.72.
BHE had announced in March 1995 that a reduction in the common dividend was
likely to occur this year. The reduction has been occasioned by the
continuing pressure on earnings and the necessity to avoid further rate
increases as the Company - along with the rest of the electric utility
industry - adjusts to a more competitive business environment. In addition,
the financing of pending agreements to buy back two high-cost power contracts
with non-utility generators is, in addition to increasing the Company's debt
levels, expected to contain covenants that are likely to restrict the
Company's ability to continue with the high common dividend payout ratios
that the Company has been maintaining in recent years.
Besides the near-term strain on the Company's finances presented by the
challenge of financing the power contract buybacks, BHE is a 7% owner of the
Maine Yankee nuclear plant, which is undergoing an estimated $40 million
repair to its steam generators. The plant is expected back on line later in
1995, and in the meantime BHE is incurring replacement power costs of about
$800,000 per month and will be responsible for its share of the repair
expense.
"As I indicated in March," said Robert S. Briggs, President of BHE, "things
are generally moving in the right direction for our long-term strategy to
meet competitive challenges but, as I have also previously indicated, this
dividend reduction has proved to be a necessary component of the process."
Mr. Briggs cited recent improvements in regulation and the power contract
buybacks as especially beneficial for the Company. He also noted that, while
the necessity for repairs and an extended outage at Maine Yankee is
unfortunate, the prospects for successful repair and a timely return of the
plant to service seem positive.
Mr. Briggs indicated that, especially as a result of the financial impact of
the Maine Yankee outage, the Company's common dividends will probably not be
covered by earnings in 1995, even after taking the dividend reduction into
account. "Beyond 1995, though," said Mr. Briggs, "we presently anticipate
that our common dividend payout, after this reduction, should be at a level
more appropriate for the risks and uncertainties with which our Company must
deal as the transition to greater competition continues."
BHE is also in the process of implementing additional internal cost
reductions. During the remainder of 1995, the Company expects to reduce its
operation & maintenance costs through a combination of workforce reductions
and more cuts in discretionary spending. These cost reductions are expected
to be in the range of $4 million to $5 million (annualized). The workforce
reductions will be accomplished with another early retirement plan and other
severances, and could result in a 13% reduction in the workforce. As with
the prior downsizing programs the Company has implemented, the cost of the
program must be recognized in full at the time it is implemented. The
Company cannot presently estimate that cost, but expects that it will be
recognized and recorded later in 1995.
Bangor Hydro-Electric Company is the second largest electric utility in
Maine. It serves a population of about 195,000 in an area encompassing
approximately 4,875 square miles in eastern and east coastal Maine. The
Company is a member of the New England Power Pool and is interconnected with
other New England utilities to the south and with the New Brunswick Power
Corporation to the north.
Bangor Hydro-Electric Company is listed on the NYSE under the symbol "BGR".
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BANGOR HYDRO-ELECTRIC COMPANY
/s/ Robert C. Weiser
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Robert C. Weiser
Chief Financial Officer
