UNITED STATES
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
December 23, 2003
Date of report (Date of earliest event reported)
COGENTRIX ENERGY, INC.
(exact name of registrant as specified in its charter)
| NORTH CAROLINA | 33-74254 | 56-1853081 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
9405 Arrowpoint Boulevard, Charlotte, North Carolina 28273-8110
(Address of Principal Executive Offices) (Zip Code)
(704) 525-3800
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Item 5. Other Events
Senior Notes and Potential Transactions –As separately reported on the Form 8-K filed December 23, 2003 of Cogentrix Energy, Inc. (the “Company”), on December 19, 2003, GS Power Holdings LLC, a wholly owned subsidiary of The Goldman Sachs Group, Inc. (“Goldman Sachs”), purchased 100% of the outstanding common stock of the Company (the “Acquisition”). As a result of the Acquisition, the Company is required to offer to purchase all of its outstanding 8.75% Senior Notes due 2008 (the “Securities”) at a purchase price in cash equal to 101% of the principal amount thereof plus accrued interest (the “Change of Control Offer”). The Company commenced the Change of Control Offer on December 23, 2003 and will hold the Change of Control Offer open until January 23, 2004, unless extended. The Company’s outstanding 8.10% Senior Notes due 2004 (“2004 Notes”) mature on March 15, 2004. The Company expects to repay the 2004 Notes upon maturity.
The Company intends to utilize borrowings under the October 28, 2003 credit facility among Cogentrix Delaware Holdings, Inc., Goldman Sachs Credit Partners L.P., an affiliate of Goldman Sachs, Australia and New Zealand Banking Group Limited and Citicorp USA, Inc. (the “CDH Credit Facility”) (or borrowings made in connection with the refinancing of the CDH Credit Facility) and/or other loans from affiliates of Goldman Sachs as may be necessary to finance the purchase of the Securities validly tendered in the Change of Control Offer and the repayment of the 2004 Notes upon their maturity. There can be no assurance, however, that adequate funds will be available or as to the terms of any such financings.
The Company and Goldman Sachs currently are evaluating strategic options for the Company, which may include debt and equity financings, refinancings and asset sales. The Company and Goldman Sachs currently are evaluating the outstanding indebtedness of the Company and its subsidiaries, including the Securities, to determine whether to refinance, repay, purchase, redeem or retire, or seek to modify the existing terms of, any such indebtedness. There can be no assurance that any of these options will be pursued and, if any of these options is pursued, that the related transaction will be completed on commercially reasonable terms or at all.
Whether or not the Change of Control Offer is consummated or any Securities are validly tendered to the Company pursuant to the Change of Control Offer, the Company or its affiliates may from time to time acquire the Securities, other than pursuant to the Change of Control Offer, through open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as they may determine, which may be more or less than the prices to be paid pursuant to the Change of Control Offer and could be for cash or other consideration. There can be no assurance, however, that any of these options will be pursued or that any will be completed successfully.
Any questions relating to the Change of Control Offer or requests for copies of the Company’s offer to purchase Securities with respect to the Change of Control Offer and any other documents relating thereto may be directed to the Company’s representative, Goldman, Sachs & Co., Credit Liability Management, 85 Broad Street, New York, New York 10004 (toll free: (800) 828-3182).
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Item 9. Regulation FD Disclosure
In connection with the Change of Control Offer, the Company is providing holders of the Securities with the following information, which has not been previously publicly disclosed.
PRO FORMA CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company as of September 30, 2003, on an actual basis and as adjusted to give effect to the Acquisition and related transactions. This table should be read together with the consolidated financial statements of the Company, including the related notes, available in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, the Company’s Quarterly Reports on Form 10-Q for the periods ending March 31, 2003, June 30, 2003 and September 30, 2003 and each Form 8-K filed by the Company since December 31, 2002 (collectively, the “Referenced Filings”), each of which are incorporated by reference.
| September 30, 2003 | ||||||||
| Actual | As Adjusted | |||||||
| (In thousands) | ||||||||
Cash and cash equivalents: | ||||||||
Cogentrix (consolidated) | $ | 110,922 | $ | 107,302 | (a)(c)(f) | |||
Cogentrix Energy (parent only) | 7,747 | 4,292 | (a)(f) | |||||
Cogentrix Delaware Holdings | 25,024 | 25,024 | ||||||
Short-term debt: | ||||||||
Senior Notes due 2004 | $ | 39,721 | $ | 39,721 | (b) | |||
Current portion of non-recourse project financing debt | 44,768 | 43,279 | (c) | |||||
Non-recourse project financing debt in default, currently callable | 544,344 | 544,344 | ||||||
Non-recourse project financing debt in default, currently callable included in liabilities of discontinued operations | 482,305 | 482,305 | ||||||
Long-term debt: | ||||||||
Non-recourse project financing debt, net of current portion | 765,358 | 765,061 | (c) | |||||
Corporate Credit Facility | 116,767 | 116,767 | (d) | |||||
CDH Credit Facility | — | — | (d) | |||||
Senior Notes due 2008 | 355,000 | 355,000 | (e) | |||||
Total long-term debt | 1,237,125 | 1,236,828 | ||||||
Total indebtedness | 2,348,263 | 2,346,477 | ||||||
Shareholder’s Equity: | ||||||||
Common Stock, no par value, 300,000 shares authorized; 282,000 issued and outstanding | 130 | 130 | ||||||
Notes receivable from shareholders | (7,406 | ) | — | (a) | ||||
Accumulated other comprehensive loss | (12,868 | ) | (12,868 | ) | ||||
Accumulated earnings | 268,270 | 236,711 | (c)(f) | |||||
Total shareholder’s equity | 248,126 | 223,973 | ||||||
Total capitalization | $ | 2,596,389 | $ | 2,570,450 | ||||
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| (a) | Reflects the repayment of notes receivable from shareholders in connection with the Acquisition in the aggregate amount of $7.4 million. |
| (b) | The Company expects to repay the Senior Notes due 2004 when they mature on March 15, 2004, which the Company intends to finance with borrowings under the CDH Credit Facility (or borrowings made in connection with the refinancing of the CDH Credit Facility). |
| (c) | Reflects the disposition of substantially all of the assets of ReUse Technology, Inc. (the “ReUse Disposition”), which was a condition precedent to the closing of the Acquisition. The ReUse Disposition was consummated on December 19, 2003. Reflects a pre-tax loss of approximately $6.9 million (after-tax loss of approximately $4.2 million). |
| (d) | Does not reflect the repayment of the Company’s previously existing corporate credit facility (the “Corporate Credit Facility”) and the execution of the CDH Credit Facility on October 28, 2003. In connection with the Acquisition, Goldman Sachs Credit Partners L.P. assumed the rights and obligations of the administrative agent and lenders under the CDH Credit Facility and the CDH Credit Facility was amended to permit the Acquisition. The Company expects to refinance the CDH Credit Facility, subject to prevailing market conditions. |
| (e) | Does not reflect the repurchase of Securities in connection with the Change of Control Offer. |
| (f) | Reflects a pre-tax loss of approximately $45.3 million (after-tax loss of approximately $27.4 million) of an aggregate of approximately $59.3 million of severance, change of control and release payments and retention and transaction bonuses (collectively, the “Severance Payments”) owed by the Company in connection with the Acquisition and the ReUse Disposition (the remaining approximately $14.0 million of Severance Payments had been accrued by the Company on or prior to September 30, 2003 and is reflected in the Company’s actual capitalization as of such date). The Company paid approximately $11.2 million of Severance Payments upon consummation of the Acquisition. The remaining Severance Payments are due and payable in the following amounts at the following times: approximately $11.0 million is due and payable within 60 days of the consummation of the Acquisition; approximately $5.7 million is due and payable within 180 days of the consummation of the Acquisition; and approximately $31.3 million is due and payable on January 5, 2005. |
4
SELECTED UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
The following selected unaudited pro forma consolidated financial information has been derived from the application of pro forma adjustments to the Company’s financial statements for the year ended December 31, 2002 and as of and for the nine months ended September 30, 2003, and gives effect to the Acquisition and related transactions as if they had occurred as of January 1, 2002, in the case of statement of income data, and as of September 30, 2003, in the case of balance sheet data. The adjustments necessary to fairly present this unaudited pro forma consolidated financial information, which the Company believes are reasonable, have been made based on available information and are described in the accompanying notes. The Acquisition and related transactions would not have had a material continuing impact on the Company’s pro forma consolidated cash flows from operating activities. The selected unaudited pro forma consolidated financial information is for informational purposes only and should not be considered indicative of actual results that would have been achieved had the Acquisition and related transactions been consummated on the dates indicated and does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. We cannot assure you that the assumptions used in the preparation of the selected unaudited pro forma consolidated financial information will prove to be correct. The following selected unaudited pro forma consolidated financial information should be read together with the consolidated financial statements of the Company, including the related notes, available in the Referenced Filings.
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 2003
(In thousands)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||
| ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ | 110,922 | $ | (3,620 | )(a)(b)(c) | $107,302 | ||||||
Restricted cash | 75,544 | — | (a) | 75,544 | ||||||||
Accounts receivable | 74,918 | (926 | )(a) | 73,992 | ||||||||
Inventories | 32,974 | — | 32,974 | |||||||||
Assets of discontinued operations | 483,197 | — | 483,197 | |||||||||
Other current assets | 9,861 | (338 | )(a) | 9,523 | ||||||||
Total current assets | 787,416 | (4,884 | ) | 782,532 | ||||||||
NET INVESTMENT IN LEASES | 492,921 | — | 492,921 | |||||||||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated | 1,125,638 | (1,561 | )(a) | 1,124,077 | ||||||||
LAND AND IMPROVEMENTS | 12,119 | (4,936 | )(a) | 7,183 | ||||||||
DEFERRED FINANCING COSTS, net of accumulated | 44,322 | (36 | )(a) | 44,286 | ||||||||
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 373,984 | — | 373,984 | |||||||||
TURBINES AND OTHER EQUIPMENT | 145,863 | — | 145,863 | |||||||||
OTHER ASSETS | 65,896 | (437 | )(a) | 65,459 | ||||||||
| $ | 3,048,159 | $ | (11,854 | ) | $ | 3,036,305 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Current portion of long-term debt | $ | 84,489 | $ | (1,489 | )(a) | $ | 83,000 | |||||
Non-recourse project financing debt in default, currently callable | 544,344 | — | 544,344 | |||||||||
Accounts payable | 32,218 | (613 | )(a) | 31,605 | ||||||||
Accrued compensation | 11,530 | 2,709 | (c) | 14,239 | ||||||||
Accrued interest payable | 22,321 | — | 22,321 | |||||||||
Liabilities of discontinued operations | 491,120 | — | 491,120 | |||||||||
Other accrued liabilities | 41,578 | 1,310 | (a) | 42,888 | ||||||||
Total current liabilities | 1,227,600 | 1,917 | 1,229,517 | |||||||||
LONG-TERM DEBT | 1,237,125 | (297 | )(a) | 1,236,828 | ||||||||
DEFERRED INCOME TAXES | 163,546 | (20,605 | )(a)(c) | 142,941 | ||||||||
MINORITY INTERESTS | 129,540 | — | 129,540 | |||||||||
OTHER LONG-TERM LIABILITIES | 42,222 | 31,284 | (a)(c) | 73,506 | ||||||||
| 2,800,033 | 12,299 | 2,812,332 | ||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||
SHAREHOLDERS’ EQUITY: | ||||||||||||
Common stock, no par value, 300,000 shares authorized; 282,000 shares issued and outstanding | 130 | — | 130 | |||||||||
Notes receivable from shareholders | (7,406 | ) | 7,406 | (b) | — | |||||||
Accumulated other comprehensive loss | (12,868 | ) | — | (12,868 | ) | |||||||
Accumulated earnings | 268,270 | (31,559 | ) | 236,711 | ||||||||
| 248,126 | (24,153 | ) | 223,973 | |||||||||
| $ | 3,048,159 | $ | (11,854 | ) | $ | 3,036,305 | ||||||
The accompanying notes to unaudited pro forma consolidated balance sheet
are an integral part of this unaudited pro forma consolidated balance sheet.
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
| (a) | Reflects the ReUse Disposition, which was required as a condition precedent to the closing of the Acquisition and was consummated on December 19, 2003. Reflects a pre-tax loss of approximately $6.9 million (after-tax loss of approximately $4.2 million). |
| (b) | Reflects the repayment of notes receivable from shareholders in connection with the Acquisition in the aggregate amount of $7.4 million. |
| (c) | Reflects a pre-tax loss of approximately $45.3 million (after-tax loss of approximately $27.4 million) of an aggregate of approximately $59.3 million of Severance Payments owed by the Company in connection with the Acquisition and the ReUse Disposition (the remaining approximately $14.0 million of Severance Payments had been accrued by the Company on or prior to September 30, 2003 and is reflected in the Company’s actual capitalization as of such date). The Company paid approximately $11.2 million of Severance Payments upon consummation of the Acquisition. The remaining Severance Payments are due and payable in the following amounts at the following times: approximately $11.0 million is due and payable within 60 days of the consummation of the Acquisition; approximately $5.7 million is due and payable within 180 days of the consummation of the Acquisition; and approximately $31.3 million is due and payable on January 5, 2005. |
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended September 30, 2003
(In thousands)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||
OPERATING REVENUES: | ||||||||||||
Electric | $ | 221,270 | $ | — | $ | 221,270 | ||||||
Steam | 22,998 | — | 22,998 | |||||||||
Lease | 73,791 | — | 73,791 | |||||||||
Service | 59,355 | — | 59,355 | |||||||||
Other | 13,427 | (2,502 | )(a) | 10,925 | ||||||||
| 390,841 | (2,502 | ) | 388,339 | |||||||||
Income from unconsolidated investment in power projects | 40,842 | — | 40,842 | |||||||||
Gain on sale of project interest, net of transaction costs | 60,479 | — | 60,479 | |||||||||
OPERATING EXPENSES: | ||||||||||||
Fuel | 107,634 | (20 | )(a) | 107,614 | ||||||||
Cost of service | 55,231 | — | 55,231 | |||||||||
Operations and maintenance | 70,262 | (1,322 | )(a) | 68,940 | ||||||||
General, administrative and development expenses | 29,326 | — | 29,326 | |||||||||
Acquisition-related costs, net of recoveries | 95 | — | 95 | |||||||||
Depreciation and amortization | 44,976 | (118 | )(a) | 44,858 | ||||||||
| 307,524 | (1,460 | ) | 306,064 | |||||||||
Operating income | 184,638 | (1,042 | ) | 183,596 | ||||||||
OTHER INCOME (EXPENSE): | ||||||||||||
Interest expense | (93,192 | ) | 97 | (a) | (93,095 | ) | ||||||
Investment income and other, net | 3,484 | (7 | )(a) | 3,477 | ||||||||
Income before minority interests in income, provision for income taxes, discontinued operations and cumulative effect of changes in accounting principle | 94,930 | (952 | ) | 93,978 | ||||||||
Minority interest in income | (5,883 | ) | — | (5,883 | ) | |||||||
Income before provision for income taxes, discontinued operations and cumulative effect of changes in accounting principle | 89,047 | (952 | ) | 88,095 | ||||||||
Provision for income taxes | (34,703 | ) | 373 | (a) | (34,330 | ) | ||||||
Income before discontinued operations and cumulative effect of changes in accounting principle | 54,344 | (579 | ) | 53,765 | ||||||||
Discontinued operations, net of tax benefit | (29,085 | ) | — | (29,085 | ) | |||||||
Cumulative effect of changes in accounting principle, net of benefit for income taxes | (1,038 | ) | — | (1,038 | ) | |||||||
NET INCOME | $ | 24,221 | $ | (579 | ) | $ | 23,642 | |||||
The accompanying notes to unaudited consolidated statements of income
are an integral part of this unaudited pro forma consolidated statement of income.
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2002
(In thousands)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||
OPERATING REVENUES: | ||||||||||||
Electric | $ | 384,660 | $ | — | $ | 384,660 | ||||||
Steam | 30,590 | — | 30,590 | |||||||||
Lease | 115,605 | — | 115,605 | |||||||||
Service | 51,303 | — | 51,303 | |||||||||
Gain on sales of project interests, net of transaction costs and other revenues | 18,339 | (3,535 | )(a) | 14,804 | ||||||||
| 600,497 | (3,535 | ) | 596,962 | |||||||||
Income from unconsolidated investment in power projects | 42,417 | — | 42,417 | |||||||||
OPERATING EXPENSES: | ||||||||||||
Fuel | 152,403 | — | 152,403 | |||||||||
Cost of service | 52,427 | — | 52,427 | |||||||||
Operations and maintenance | 98,992 | (2,947 | )(a) | 96,045 | ||||||||
General, administrative and development expenses | 59,277 | — | 59,277 | |||||||||
Merger related costs, net of recoveries | 7,410 | — | 7,410 | |||||||||
Loss on impairment of assets | 29,982 | — | 29,982 | |||||||||
Depreciation and amortization | 68,823 | (159 | )(a) | 68,664 | ||||||||
| 469,314 | (3,106 | ) | 466,208 | |||||||||
OPERATING INCOME | 173,600 | (429 | ) | 173,171 | ||||||||
OTHER INCOME (EXPENSE): | ||||||||||||
Interest expense | (122,297 | ) | 204 | (a) | (122,093 | ) | ||||||
Investment income and other, net | 2,709 | 32 | (a) | 2,741 | ||||||||
Income before minority interests in income, provision for income taxes, cumulative effect of a change in accounting principle and extraordinary gain on early extinguishment of debt | 54,012 | (193 | ) | 53,819 | ||||||||
Minority interests in income | (16,147 | ) | — | (16,147 | ) | |||||||
Income before provision for income taxes, cumulative effect of a change in accounting principle and extraordinary gain on early extinguishment of debt | 37,865 | (193 | ) | 37,672 | ||||||||
Provision for income taxes | (14,962 | ) | 78 | (a) | (14,884 | ) | ||||||
Income before cumulative effect of a change in accounting principle and extraordinary gain on early extinguishment of debt | 22,903 | (115 | ) | 22,788 | ||||||||
Cumulative effect of a change in accounting principle, net of tax of $378 | 596 | — | 596 | |||||||||
Extraordinary gain on early extinguishment of debt, net of tax of $1,883 | 2,884 | — | 2,884 | |||||||||
NET INCOME | $ | 26,383 | $ | (115 | ) | $ | 26,268 | |||||
The accompanying notes to unaudited consolidated statements of income
are an integral part of this unaudited pro forma consolidated statement of income.
9
COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
| (a) | Reflects the ReUse Disposition, which was required as a condition precedent to the closing of the Acquisition and was consummated on December 19, 2003. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
COGENTRIX ENERGY, INC. | ||
(registrant) | ||
By: | /S/ ROBERT S. MANCINI | |
| Name: Robert S. Mancini | ||
| Title: Co-President and Chief Commercial Officer | ||
Date: December 23, 2003
