Securities and Exchange Commission
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act 1934
Date of Report February 23, 1999
(Date of earliest event reported)
CalEnergy Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9874 94-2213782
(State of other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
302 South 36th Street, Suite 400, Omaha, NE 68131
(Address of principal executive offices) Zip Code
Registrant's Telephone Number, including area code: (402) 341-4500
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
On February 23, 1999, the Registrant announced that it has
signed an agreement to sell 50% of its ownership interests in CE
Generation LLC to an affiliate of El Paso Energy Corporation for
an aggregate consideration of $259.6 million, subject to certain
adjustments. A copy of the press release issued by CalEnergy is
attached hereto as Exhibit 1 and is incorporated herein by
reference.
Certain information included in this report contains forward-
looking statements made pursuant to the Private Securities
Litigation Reform Act of 1995 ("Reform Act"). Such statements
are based on current expectations and involve a number of known
and unknown risks and uncertainties that could cause the actual
results and performance of the Registrant to differ materially
from any expected future results or performance, expressed or
implied, by the forward-looking statements including expectations
regarding the future results of operations of Registrant and
MidAmerican Energy Holdings Company and the combined company, the
intended financing of the merger and receipt of regulatory
approvals. In connection with the safe harbor provisions of the
Reform Act, the Registrant has identified important factors that
could cause actual results to differ materially from such
expectations, including development uncertainty, operating
uncertainty, acquisition uncertainty, uncertainties relating to
doing business outside of the United States, uncertainties
relating to geothermal resources, uncertainties relating to
domestic and international (and in particular, Indonesian)
economic and political conditions and uncertainties regarding the
impact of regulations, changes in government policy, industry
deregulation and competition. Reference is made to all of the
Registrant's SEC Filings, including the Proxy Statement and the
Registrant's Report on Form 8-K dated March 6, 1998, incorporated
herein by reference, for a description of such factors. The
Company assumes no responsibility to update forward-looking
information contained herein.
Item 7. Financial Statements and Exhibits
Exhibit 1 - Press Release dated February 23, 1999.
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.
CalEnergy Company, Inc.
By: \s\ Douglas L. Anderson
Douglas L. Anderson
Assistant Secretary and
Assistant General Counsel
Dated: February 23, 1999
FOR IMMEDIATE RELEASE
CalEnergy Agrees to Sell 50% of its Ownership Interests
in 14 Generating Facilities to El Paso Energy
OMAHA, NEBRASKA, February 23, 1999 -- CalEnergy Company,
Inc. ("CalEnergy" or the Company) (NYSE: CE; PCX; London)
announced today that the Company has signed an agreement to sell
50% of its ownership interests in CE Generation LLC (CE
Generation) (the holding company for 14 of CalEnergy's U.S.
generating facilities) to an affiliate of El Paso Energy
Corporation (NYSE: EPG) (El Paso Energy) for an aggregate
consideration of $259.6 million, subject to certain adjustments.
The price is comprised of $236.1 million in cash along with the
assumption of 50% of CalEnergy's required project equity
contributions totaling $23.5 million for the two CE Generation
facilities currently in construction and 50% of CE Generation and
project level debt. In addition, prior to closing the sale to El
Paso Energy, CalEnergy expects to receive approximately $395
million in net proceeds from a $400 million debt issuance by CE
Generation. The sale to El Paso Energy, which is not subject to
financing, is scheduled to close on March 3, 1999.
CE Generation, a Delaware limited liability company and
wholly owned subsidiary of CalEnergy, was formed for the purpose
of owning 100% of CalEnergy's interests in 12 U.S. power
generation projects which are qualifying facilities (QFs) under
PURPA and two additional generating facilities currently in
construction at the Salton Sea. Collectively, the 14 power
projects have a combined electric generating capacity of
approximately 896 net megawatts and include ten geothermal
projects near the Imperial Valley in southern California and four
natural gas-fired cogeneration projects in New York,
Pennsylvania, Texas and Arizona.
CalEnergy is selling a 50% ownership interest in CE
Generation in advance of the Company's proposed merger with
MidAmerican Energy Holdings Company in order to comply with the
Federal Energy Regulatory Commission's December 17, 1998 ruling
to ensure the generating facilities which are QFs will maintain
their status as qualifying facilities under federal regulatory
requirements.
"As we evaluated strategic business partners, El Paso Energy
surfaced as a premier energy company already engaged in
developing new alliances among energy providers," said David L.
Sokol, Chairman of the Board and Chief Executive Officer of
CalEnergy. "We believe this new business relationship will bring
about many new opportunities for both companies."
Mr. Sokol added, "We are very pleased that the aggregate net
proceeds from our qualifying facility divestitures (including the
sale of Coso and the receipt of CE Generation debt proceeds)
-more-
CalEnergy Company, Inc.
February 23, 1999
Page -2-
exceeds $859 million and we retain 50% of our ownership
interest in 14 U.S. generating facilities. Additionally, we now
look forward to completing the pending MidAmerican Energy merger
promptly."
"The CE Generation assets are located in key locations
around the U.S., making them an excellent fit in our overall plan
to develop power generation capabilities along our coast-to-coast
pipelines," according to Greg G. Jenkins, president of El Paso
Energy Marketing Company. "Combining our fuel management,
marketing and risk management capabilities with CE Generation's
proven operational expertise creates a strong partnership that
further enhances the value of these generating assets."
CalEnergy Company, Inc. is a global energy company that
manages and owns interests in approximately 5,000 net megawatts
of power generation facilities in operation, construction and
development worldwide. The Company develops and produces energy
from diversified fuel sources including geothermal, natural gas
and hydroelectric. Through its subsidiary Northern Electric,
CalEnergy supplies and distributes electricity and gas to
approximately 2.0 million customers in the United Kingdom.
CalEnergy conducts business in the U.S., U.K., the Philippines,
Indonesia, Poland and Australia and employs more than 4,400
people worldwide. For the year ended December 31, 1998,
CalEnergy generated revenues of nearly $2.7 billion and at
December 31, 1998 had assets of approximately $9.1 billion.
With over $10 billion in assets, El Paso Energy Corporation
provides energy solutions through five business units: Tennessee
Gas Pipeline Company, El Paso Natural Gas Company, El Paso Field
Services Company, El Paso Energy Marketing Company and El Paso
Energy International Company. The company owns the nation's only
integrated coast-to-coast natural gas pipeline system and has
operations in interstate natural gas transmission, gas gathering
and processing, energy marketing, and international
infrastructure development. Visit El Paso Energy's web site at
www.epenergy.com.
Press Contacts:
CalEnergy Company, Inc El Paso Energy Corporation
Craig Hammett - Senior Vice Paula Delaney, Media Relations
President & CFO 402-341-4500 713-420-6885
Patti McAtee - Director, Corp. Bridget McEvoy, Investor Relations
Communications 402-341-4500 713-420-5597
Kate Inverarity - Brunswick,
Media Relations 212-333-3810