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
Date of Report (Date of earliest event reported):
September 25, 1998
BANGOR HYDRO-ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
MAINE 0-505 01-0024370
(State of Incorporation) (Commission File No.) (IRS Employer ID No.)
33 STATE STREET, BANGOR, MAINE 04401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 207-945-5621
Current Report, Form 8-K Date of Report
Bangor Hydro-Electric Company October 6, 1998
Item 5. Other Events Agreement of Sale of Company's Generating Assets.
On September 25, 1998, the Company and PP&L Global, Inc., a Pennsylvania
corporation and a subsidiary of PP&L Resources, Inc., reached an agreement
for PP&L Global to acquire most of the Company's electric generating assets
with a combined base load capacity of 89.2 megawatts and certain transmission
rights for a sale price of $89 million. The proposed sale is a result of the
Company s effort to comply with Maine's electric utility restructuring
legislation, which took effect in September 1997. The Company began seeking
proposals from prospective bidders to purchase its generation and generation-
related assets in early 1998 and as part of the auction process, received
final bids from various bidders in August 1998.
The electric utility restructuring law requires all of Maine's investor-
owned electric utilities to divest all of their non-nuclear generation assets
and generation-related business before March 1, 2000. The law was enacted to
foster competition in an open market in which retail consumers will choose
among competitive energy providers of the electricity that flows through the
wires. The management of the "wires" or transmission and distribution
business will remain the regulated function of the existing utilities. For
further information on the Company's plan to divest its generating assets,
refer to the Company's Form 10-K for the year ended December 31, 1997 and
Form 10-Q for the quarter ended June 30, 1998.
Pursuant to the agreement, the Company has agreed to sell to PP&L Global
(i) its Ellsworth, Howland, Milford, Medway, Orono, Stillwater and Veazie
hydroelectric facilities, which are all situated along the Penobscot River
Basin and Union River in Maine, (ii) the 50% ownership interest owned by
Penobscot Hydro Co., Inc., a wholly owned subsidiary of the Company, in
Bangor-Pacific Hydro Associates, which owns a 13 megawatt hydroelectric
generating facility located in Enfield and Howland, Maine, (iii) the
Company's 8.33% joint ownership interest in the William F. Wyman Unit No. 4
oil-fired steam plant located in Yarmouth, Maine, (iv) the Company's designs,
applications and other rights with respect to the potential development of
the Basin Mills hydroelectric project, to be located in Bradley and Orono,
Maine, (v) the Company's designs, applications and other rights with respect
to the potential development of a high-voltage transmission line from
Orrington, Maine, to New Brunswick, Canada, and (vi) certain of the Company's
rights to transmission capacity, including its rights to capacity on the
Maine Electric Power Company transmission line and its rights as a
participant in the regional utilities' agreements with Hydro Quebec.
The sale is subject to certain closing conditions as set forth in the
agreement, including receipt of approvals by federal and state regulatory
agencies, which the Company expects may take six to twelve months. In
addition, third-party consents to the sale of certain of the assets will be
required, and the Company cannot predict whether or on what terms such
consents can be obtained. The Company anticipates that most of the net
after-tax proceeds from the sale will be used to retire outstanding debt.
The Company expects that a portion of the sale value will be applied to
reduce the Company's stranded costs for regulatory purposes, which should
lower the amounts that would otherwise be collected in the future from
customers.
Certain statements contained in this Report on Form 8-K may be
considered forward-looking as defined in the federal Private Securities
Litigation Reform Act of 1995. These statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those anticipated in the forward-looking statements. These include, but are
not limited to, the possibility that a state and/or federal regulatory agency
will deny approval or impose conditions on its approval of the sale which are
unfavorable to the Company or unacceptable to the buyer; that other closing
conditions are not met to an extent that the assets ultimately sold are
reduced from those described above or the sale is not completed at all; and
that regulatory decisions are made in respect of the asset sale, or
otherwise, that would reduce the Company's ability to recover its stranded
costs.
Item 7. Exhibits
(2) Asset Purchase Agreement dated as of September 25, 1998 between the
Company, Penobscot Hydro Co., Inc. and PP&L Global, Inc. (schedules
and exhibits omitted, but will be furnished supplementally to the
Commission upon request).
(99) Joint Press Release of the Company and PP&L Global, Inc., dated
September 28, 1998.
BANGOR HYDRO-ELECTRIC COMPANY
By: /s/ Frederick S. Samp
Frederick S. Samp
Chief Financial Officer
Dated: October 6, 1998