SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 26, 1998
TRIGEN ENERGY CORPORATION
Delaware 1-13264 13-3378939
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State or other Commission File No. IRS Employer
Jurisdiction of Identification No.
Incorporation
One Water Street
White Plains, NY 10601-1009
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Address of Principal Zip Code
Executive Offices
914-286-6600
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Registrant's telephone number
Item 2. Acquisition or Disposition of Assets
On April 23, 1999, the Pennsylvania Court of Common
Pleas of Philadelphia County approved a settlement agreement
which ends the lawsuit brought by Grays Ferry Cogeneration
Partnership (the "Partnership"), Trigen-Schuylkill
Cogeneration, Inc. and Cogen America Schuylkill Inc. against
PECO Energy Company and Adwin (Schuylkill) Cogeneration,
Inc. The Partnership is the owner of the Grays Ferry
Cogeneration Facility located in Philadelphia, Pennsylvania.
The Partnership, Trigen-Schuylkill and Cogen America
commenced this lawsuit in reaction to the alleged
termination by PECO on March 3, 1998, of the electric power
purchase agreements between the Partnership and PECO (the
"Power Purchase Agreements").
At December 31, 1998, Trigen Energy Corporation ("we")
had an investment of $17.1 million in the Partnership,
representing a one third interest in the Partnership through
our wholly owned subsidiary, Trigen-Schuylkill. Cogen
America and Adwin owned the other two-thirds interests in
the Partnership. Adwin is an indirect wholly owned
subsidiary of PECO.
Based on the settlement agreement, we estimate that we
will recognize after tax income in 1999 from the Partnership
of approximately $12.8 million or $1.07 per diluted share.
If this settlement had not occurred, we expected to
recognize after tax income in 1999 of approximately $5.1
million, or $0.42 per diluted share, from our interest in
the Partnership.
Under the settlement agreement PECO's subsidiary,
Adwin, surrendered its rights to its one-third partnership
interest in the Partnership to the two remaining partners,
Trigen-Schuylkill and Cogen America. As a result, we own
one half of the Partnership and Cogen America owns the other
half.
We will recognize a gain in 1999 based upon the market
value, yet to be determined, of the portion of Adwin's
interest in the Partnership that we received. The book
value of the additional interest in the Partnership we
received is approximately $9.2 million. If the book value
approximated market value, the after tax gain would be $0.41
per diluted share. Our forecast that we will earn $1.07 per
diluted share from the Partnership in 1999 includes this
$0.41 of non-recurring income.
Separately, The Chase Manhattan Bank and Westinghouse
Power Generation, which financed the construction of the
Gray's Ferry Cogeneration Facility, agreed to dismiss their
lawsuits against PECO. The Chase Manhattan Bank also agreed
that they will not charge the Partnership for any default
interest up to the date of settlement of the lawsuit against
PECO. This will result in an additional $.8 million after
tax earnings gain to Trigen or $0.07 per diluted share in
1999 as a result of the reversal of default interest
charges. This $0.07 includes a non-recurring reversal of
1998 default interest expense of $.5 million after tax or
$.04 per diluted share. Our forecast that we will earn
$1.07 per diluted share from the Partnership in 1999
includes this $0.07 of income.
In the year 2001, the energy price under the Power
Purchase Agreements will begin to be based upon a percentage
of a market based index, which may produce substantially
lower revenues than the more favorable rates of the early
contract years. Under the settlement agreement, the
Partnership gained the right to sell to third parties
electric energy and capacity from the facility in excess of
the 150 megawatts which PECO is required to purchase under
the Power Purchase Agreements, subject to a right of first
refusal for PECO. We expect that the ability to sell to
third parties electric energy and capacity above the 150
megawatts under contract to PECO, will result in an
opportunity to improve the financial performance of the
Partnership. The Partnership will now have the ability to
institute capital modifications to the combustion turbine to
increase electric capacity during the summer months when the
price of electric capacity and energy are historically the
highest.
This Report includes historical information as well as
statements regarding our future expectations. The
statements regarding the future (referred to as
"forward-looking statements") include among other things
statements about energy markets in 1999; cost reduction
targets; return on capital goals; development, production
and acceptance of new products and process technologies;
ongoing and planned capacity additions and expansions and
joint ventures. Important factors that could cause actual
results to differ materially from those discussed in such
forward-looking statements include: supply/demand for our
products, competitive pricing pressures, weather patterns,
changes in industry laws and regulations, competitive
technology, failure to achieve our cost reduction targets or
complete construction projects on schedule and Year 2000
computer related difficulties. We believe in good faith
that the forward-looking statements in this Report have a
reasonable basis, including without limitation, management's
examination of historical operating trends, data contained
in our records and other data available from third parties,
but such forward looking statements are not guarantees of
future performance and actual results may differ materially
from any results expressed or implied by such forward
looking statements.
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.
TRIGEN ENERGY CORPORATION
Date: April 26, 1999 By: /s/ Martin S. Stone
Martin S. Stone,
Vice President and
Chief Financial Officer
Index of Exhibits.
Exhibit Description
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2.2 Final Settlement Decree and Order of the Pennsylvania
Court of Common Pleas Philadelphia County, dated April
23, 1999.