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): April 1, 1997
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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 Employee 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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ITEM 5 OTHER EVENTS
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EMERGENCY RATE REQUEST. On April 1, 1997, the Company filed with the Maine
Public Utilities Commission (the "MPUC") a Petition for Temporary Rates to
increase its rates by an amount that would increase its annual revenues by
$10 million effective June 1, 1997. Under Maine law, a utility must
ordinarily notify the MPUC 60 days in advance of the filing of a request for
a general increase in rates and the MPUC then has 9 months to investigate
that request. The Company provided such a notice to the MPUC on March 3,
1996. However, under certain circumstances, where the MPUC "finds it
necessary to prevent injury to a public utility's business or to the
interests of the people, or if the [MPUC] finds there is an emergency," the
MPUC may allow a utility to implement a requested increase in rates on a
temporary basis pending the conclusion of its investigation of the utility's
request for a general increase in rates.
In making its Petition for a Temporary Increase in Rates, the Company
cited principally the continuing impact on the Company's financial condition
and cash flow of the ongoing outage at the Maine Yankee nuclear power plant,
as to which the Company has a 7% entitlement and purchase power obligation.
The Company also cited potential noncompliance with financial covenants
contained in its bank credit agreement (including the fixed charge coverage
ratio, discussed below, as to which a temporary waiver of noncompliance is in
effect) and the need to maintain adequate borrowing capacity for working
capital purposes, including mandatory debt repayments. The Company cannot
predict the outcome of its Petition but believes that it meets the statutory
standards for emergency rate relief.
BANK CREDIT AGREEMENT COVENANT COMPLIANCE. The Company's credit agreements
with its lending banks and the Finance Authority of Maine contain a number of
covenants keyed to the Company's financial condition and performance. One
such covenant, contained in its Credit Agreement dated June 30, 1995 with a
group of seven banks, requires the Company maintain a consolidated fixed
charge ratio of 1.5 to 1.0 (defined as the ratio of the sum of the Company's
net income, income tax expense and interest expense to the Company's interest
expense, subject to a few minor adjustments) on a rolling four quarter basis.
The Company projected that it would be out of compliance with this covenant
when its first quarter 1997 financial results were final. The Company has
obtained a temporary waiver of the noncompliance effective through May 15,
1997. The Company also projects that later in 1997 or during 1998 it may not
maintain compliance with other financial covenants contained in its lending
agreements. Compliance with these financial covenants is a condition to the
Company's continuing to have access to adequate borrowing capacity for
working capital purposes, including mandatory debt repayments. As indicated
above, the costs of the ongoing outage at Maine Yankee, including replacement
power costs, is a principal factor affecting the Company's financial
condition and cash flow. Because the Company cannot predict how long Maine
Yankee will be out of service, and in order to address the actual and
potential covenant noncompliances, the Company intends to discuss revisions
to the covenant terms with its banks and, as described above, has filed for
rate relief on an accelerated basis. Although the Company believes that
these discussions will be successful, the Company cannot predict the actual
outcome of the bank negotiations, including any conditions the lending banks
may require.
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
Date: April 2, 1997 by /S/ Frederick S. Samp
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Frederick S. Samp
Vice President - Finance & Law
Chief Financial Officer