SEC FILE NO. 70-7727
and
SEC FILE NO. 70-8593
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CERTIFICATE PURSUANT TO
RULE 24
OF PARTIAL COMPLETION OF
TRANSACTIONS
FirstEnergy Corp.
------------------------------------------
:
In the matter of :
FirstEnergy, Corp. : Certificate Pursuant
: to Rule 24 of Partial
: Completion of
: Transactions
SEC File No. 70-7727 :
SEC File No. 70-8593 :
(Public Utility Holding Company Act :
of 1935) :
------------------------------------------
TO THE MEMBERS OF THE SECURITIES AND EXCHANGE COMMISSION:
In August 2000, FirstEnergy Corp. (FirstEnergy) entered into an agreement
to merge with GPU, Inc., (GPU) under which FirstEnergy would acquire all of the
outstanding shares of GPU, Inc.'s common stock for approximately $4.5 billion in
cash and FirstEnergy common stock. The merger became effective on November 7,
2001 and is being accounted for by the purchase method. As of November 7, 2001
GPU merged with and into FirstEnergy and ceased its separate existence. This
filing excludes the activity for the period of merger close (November 7, 2001)
through December 31, 2001 for FirstEnergy Generation Corp. which is an exempt
wholesale generator (EWG).
The undersigned, FirstEnergy hereby certifies pursuant to Rule 24 of the
Rules and Regulations under the Public Utility Holding Company Act of 1935 (the
Act), that certain of the transactions proposed in the Applications, as amended,
filed in SEC File No. 70-7727 and SEC File No. 70-8593, respectively, have been
carried out in accordance with the Commission's Orders dated December 19, 2000,
December 22, 1997, November 16, 1995, June 14, 1995, December 28, 1994,
September 12, 1994, December 18, 1992, and June 26, 1990 with respect to the
transactions proposed in the Application, as amended, in SEC File No. 70-7727,
and the Commission's Orders dated December 26, 2000, December 22, 1997, November
5, 1997, March 6, 1996, January 19, 1996 and July 6, 1995 with respect to the
transactions proposed in the Application, as amended, in SEC File No. 70-8593,
as follows.
The following is reported in accordance with Supplemental Order dated
November 16, 1995 for SEC File No. 70-7727.
1. Guarantees Issued
-----------------
As successor-by-merger to GPU, FirstEnergy assumed all obligations of GPU
under the following guarantees which were outstanding during the period October
1, 2001 through December 31, 2001:
(a) Guaranty dated September 1, 1999 for up to $21.3 million in
connection with the conversion of a construction loan to a term loan for
the Termobarranquilla (TEBSA) project in Colombia. This guarantee expires
four years after the loan conversion date (September 2003).
(b) Guarantee of the obligations of GPUI Colombia Ltd., and
International Power Advisors, Inc. (the Operators), both of which are
subsidiaries of GPU Power, Inc. (GPU Power), which is a wholly-owned subsidiary
of FirstEnergy, under the operations and maintenance agreement (O&M Agreement)
in the TEBSA project. The liability of the Operators under the O&M Agreement is
$5.8 million.
(c) Guaranty to General Electric Capital Corporation of amounts up to
the lesser of six months average rent (approximately $8.1 million) or $10
million, to the extent Lake Cogen, Ltd. fails to pay rent when due under
the terms of the project lease or chooses not to renew the lease after its
initial 11-year term, which expires in August 2004. Lake Cogen, Ltd. is a
former subsidiary of GPU International, Inc., which was sold by GPU to
Aquila Energy Corporation (Aquila) in December 2000. Aquila has indemnified
FirstEnergy for any losses which FirstEnergy may incur under this guaranty.
2. Services obtained from associated companies
-------------------------------------------
None.
3. Services provided to associated companies
-----------------------------------------
None.
4. Investments by FirstEnergy in Exempt Wholesale Generators
----------------------------------------------------------
and Foreign Utility Companies, and Percentage of Equity Ownership
-----------------------------------------------------------------
Set forth below is a summary of the direct or indirect investments as
defined in SEC Rule 53(a) by FirstEnergy, as of December 31, 2001 in EWGs and
foreign utility companies (FUCOs), as well as the percentage of equity
ownership.
2
First First
Energy's Energy's % Owners not affiliated with
----------------------------
FirstEnergy
-----------
FUCO Investment Equity
Associate or at 12/31/01 Owner- Type of
Company EWG ($000) ship Name of Entity Entity
------- ---- ------ ---- -------------- ------
Exempt Wholesale Generators and Foreign Utility Companies:
---------------------------------------------------------
Empresa EWG 33,000 50% AFP Prevision BBV Foreign
Guaracachi S.A. AFP Futuro de Bolivia Foreign
Guaracachi EWG 50,111* 100% Not Applicable N/A
America, Inc.
GPU Power, Inc. EWG 152,998 100% Not Applicable N/A
EI International EWG 1,098* 100% Not Applicable N/A
GPUI Colombia, EWG 1,318* 100% Not Applicable N/A
Ltda.
Victoria Electric FUCO 166,240 100% Not Applicable N/A
Inc.
Midlands FUCO 929,143 100% Not Applicable N/A
Electricity plc
Austran Holdings FUCO 66,533 100% Not Applicable N/A
Inc.
Termobarranquilla EWG 91,937 29% ABB Energy Ventures, Foreign
S.A. Inc.
Lancaster Steel Foreign
Distral Group Foreign
Corp. Electrica Foreign
De la Costa
Atlantica
EI Barranquilla, EWG 39,906* 100% Not Applicable N/A
Inc.
Barranquilla EWG 49,415* 100% Not Applicable N/A
Lease Holdings, Inc.
Los Amigos EWG 12* 100% Not Applicable N/A
Leasing Company, Ltd.
GPU International EWG (495)* 100% Not Applicable N/A
Asia, Inc.
3
First First
Energy's Energy's %Owners not affiliated with
---------------------------
FirstEnergy
-----------
FUCO Investment Equity
Associate or at 12/31/01 Owner- Type of
Company EWG ($000) ship Name of Entity Entity
------- --- ------- ---- -------------- ------
Exempt Wholesale Generators and Foreign Utility Companies (continued):
----------------------------------------------------------
International Power
Advisors, Inc. EWG 3,316* 100% Not Applicable N/A
Empresa
Distribuidora Electrica
Regional,S.A. FUCO 361,440 100% Not Applicable N/A
Total Aggregate
Investment in
EWGs & FUCOs * $1,415,520
=========
(*) FirstEnergy's aggregate investment does not include the items shown with
asterisks in order to avoid duplication.
As of December 31, 2001, FirstEnergy also owned, directly or indirectly, a
100% interest in each of the following EWGs, in which its aggregate investment
did not exceed $10,000: GPU Power Ireland, Inc.; GPU Power Philippines, Inc.;
Austin Cogeneration Corporation; Austin Cogeneration Partners, L.P.; and Hanover
Energy Corporation.
4
In accordance with Orders dated July 6, 1995 and March 6, 1996 in SEC File
No. 70-8593, and in addition to the reimbursement agreements described in item 1
above, the following is reported:
1. Financial Statements
--------------------
A copy of GPU Capital, Inc.'s (GPU Capital) and GPU Power's unaudited
Consolidated Balance Sheets as of December 31, 2001 and unaudited Consolidated
Statements of Operations for the twelve months ended December 31, 2001 will be
filed separately under a request for confidential treatment pursuant to Rule
104(b).
GPU Capital was incorporated to secure financing to prepay indebtedness of
certain subsidiaries of GPU Electric, Inc. (GPU Electric), and for working
capital purposes including investments and acquisitions. A capital contribution
was made to GPU Capital of all of the issued and outstanding common stock of GPU
Electric, which then became a wholly-owned subsidiary of GPU Capital. GPU
Capital is a wholly-owned subsidiary of FirstEnergy.
GPU Capital and GPU Electric own and operate electric transmission and
distribution systems outside the United States and will be referred to as "GPU
Electric."
2. Investments in Exempt Entities
------------------------------
In 1996, Avon Energy Partners Holdings, Inc. (Avon) was formed to acquire a
50% ownership interest in Midlands Electricity plc (Midlands), an English
regional electric company. A wholly-owned subsidiary of Avon purchased the
outstanding shares of Midlands through a cash tender offer of British pound 1.7
billion (approximately U.S. $2.6 billion). FirstEnergy's interest in Avon is
held by EI UK Holdings, Inc. (EI UK), a wholly-owned subsidiary of GPU Electric.
At the time of acquisition, EI UK borrowed approximately British pound 342
million (approximately U.S. $586 million) through a five-year bank term loan
facility to fund its investment in Holdings. In addition to the amount invested
by EI UK, Holdings borrowed approximately British pound 1.1 billion (U.S. $1.8
billion) through a non-recourse term loan and revolving credit facility to
provide for the balance of the acquisition price.
In July 1999, GPU Electric acquired the additional 50% ownership interest
in Avon for British pound 452.5 million (approximately US $714 million).
Accordingly, GPU Electric is the sole owner of Midlands' electric distribution
and contracting businesses as well as independent power plants worldwide. The
acquisition was financed at that time through a US $250 million equity
contribution, the issuance of US $50 million of commercial paper by GPU Capital,
and a two-year British pound 245 million (approximately US $357 million) credit
agreement entered into by EI UK.
In March 2002, FirstEnergy announced that it had finalized terms of an
agreement pursuant to which Aquila will acquire a 79.9% interest in Avon for
approximately $1.9 billion including the assumption of $1.6 billion of debt. The
transaction is expected to be completed in April 2002.
5
In December 2001, FirstEnergy disposed of its ownership in GPU GasNet and
related companies, a natural gas transmission business in Australia, through an
initial public offering of GasNet's common stock. The IPO provided net proceeds
of $125 million to FirstEnergy and immediately removed $290 million of
GasNet-related debt from FirstEnergy's consolidated debt.
In 1999, GPU Electric acquired Empresa Distribuidora Electrica Regional,
S.A. (Emdersa), an Argentine holding company, for $375 million. The acquisition
was financed at that time through the issuance of commercial paper by GPU
Capital and a $50 million capital contribution.
A significant portion of the acquisition debt associated with FirstEnergy's
ownership of the above mentioned FUCOs has been refinanced or retired as
follows:
GPU Capital had a $1 billion, 364-day senior revolving credit agreement
which expired in November 2001. In November 2001, all outstanding borrowings
were paid in conjunction with the completion of the FirstEnergy/GPU merger and
the facility was terminated.
GPU Electric had a $150 million credit facility, which was due to expires
in May 2002, to accommodate short-term borrowing needs. In November 2001, this
credit facility was terminated in conjunction with the completion of the
FirstEnergy/GPU merger.
GPU Australia Holdings had a $180 million senior revolving credit facility,
which expired in November 2001. In October 2001, all outstanding borrowings
under this credit facility were paid and the facility was terminated.
EI UK Holdings, Inc. had a British pound 245 million (US $357 million)
credit facility consisting of a two tranches British pound 144 million and
British pound 101 million). In November 2001, all outstanding borrowings were
paid in conjunction with the FirstEnergy/GPU merger and the facility was
terminated.
3. Description of Exempt Entities in Which There are Funds Invested
----------------------------------------------------------------
Empresa Guaracachi, S.A.
------------------------
In July 1995, GPU Power, through Guaracachi America, Inc. acquired from the
Bolivian Government a 50% interest in Empresa Guaracachi, S.A.(EGSA). EGSA has
an aggregate capacity of 338 MW of natural gas-fired and oil-fired generation
facilities located in Bolivia in and around the cities of Santa Cruz, Sucre and
Potosi which represents more than one-third of Bolivia's generation capacity.
Termobarranquilla, S.A.
-----------------------
In October 1995, GPU Power, through EI Barranquilla, Inc., acquired a 29%
interest in Termobarranquilla, S.A., Empresa de Servicios Publicos (TEBSA).
TEBSA has an aggregate capacity of 890 MW of gas-fired generation facilities
located near Barranquilla, Colombia. Electricity generated by these facilities
is sold to Corporacion Electrica de la Costa Atlantica under a long-term (20.5
years) contract.
6
Barranquilla Lease Holdings, Inc. and Los Amigos Leasing Company, Ltd.
----------------------------------------------------------------------
Barranquilla Lease Holdings, Inc., a subsidiary of GPU Power, through its
wholly-owned subsidiary Los Amigos Leasing Company, Ltd. (Leaseco), owns and
leases to TEBSA equipment in generation facilities constructed and operated by
TEBSA. The lease provides for TEBSA to make monthly lease payments to Leaseco
through September 2011.
Midlands Electricity plc (Midlands)
-----------------------------------
Midlands distributes electricity to 2.3 million customers in England in an
area with a population of five million. Midlands also owns an independent power
production business that generates electricity in England and internationally.
Emdersa
-------
Emdersa owns three electric distribution companies that serve three
provinces in northwest Argentina. The three distribution companies serve
approximately 335,000 customers throughout a service territory of approximately
124,300 square miles. The provinces have a total population of about 1.5
million.
4. Services Obtained From Associated Companies
-------------------------------------------
GPU Service, Inc. provided administrative services to GPU Power and GPU
Electric in the amount of $314,771 and $541,391 respectively, for the three
months ended December, 2001, in support of operations and management activities.
5. Services Provided to Associated Companies
-----------------------------------------
A description of services provided by GPU Power to associate companies
during the period October 1, 2001 through December 31, 2001 will be filed
separately under a request for confidential treatment under Rule 104(b). GPU
Electric did not provide any services to associate companies during the period
October 1, 2001 through December 31, 2001.
In accordance with the Commission's Order dated November 5, 1997 in SEC
File No. 70-8593, the following is reported:
a) FirstEnergy's aggregate investment includes all amounts invested,
or committed to be invested, in foreign utility companies (FUCOs) and
exempt wholesale generators (EWGs), for which there is recourse, directly
or indirectly, to the registered holding company. Accordingly,
FirstEnergy's aggregate investment as of December 31, 2001 is as follows:
7
(In Thousands)
--------------
FUCOs
Midlands Electricity plc $ 929,143
Emdersa 361,440
---------
Subtotal 1,290,583
---------
EWGs
Termobarranquilla, S.A. $ 91,937
Empresa Guaracachi, S.A. 33,000
---------
Subtotal 124,937
---------
Aggregate Investment in FUCOs and EWGs $ 1,415,520
=========
b) As of December 31, 2001 (In Thousands) FirstEnergy's Aggregate
Investment in FUCOs and EWGs is $1,415,520
Aggregate Investment as a Percentage of FirstEnergy and Subsidiary Companies:
-----------------------------------------------------------------------------
Total capitalization $ 24,373,265 5.8%
Net utility plant $ 12,428,429 11.4%
Total consolidated assets $ 37,351,513 3.8%
Market value of common equity $ 8,508,755 16.6%
c) FirstEnergy and Subsidiary Companies Consolidated Capitalization
Ratios as of December 31, 2001 (In Thousands)
Amount %
------ -
Common equity $ 7,398,599 32.2
Cumulative preferred stock 756,043 0.7
Subsidiary-obligated mandatorily
redeemable preferred securities 529,450 1.2
Subsidiary-obligated trust
preferred securities - -
Long-term debt 14,841,107 60.1
Notes payable 848,066 3.8
---------- -----
Total capitalization $ 24,373,265 100.0%
=========== =====
d) Market-to-book ratio of FirstEnergy and Subsidiary Companies common
stock at December 31, 2001:
Closing Market Price per Share $ 34.98
Book Value per Share $ 25.29
Market-to Book Ratio of Common Stock 138.3%
e) Analysis of Growth in Retained Earnings for FirstEnergy and Subsidiary
Companies intentionally omitted due to the FirstEnergy/GPU merger in November
2001.
8
f) Statements of Operations for the period ended December 31, 2001 for the
following Project Parents and Exempt Entities will be filed separately under a
request for confidential treatment under Rule 104 (b):
Termobarranquilla, S.A.
GPUI Colombia, Ltda.
Empresa Guaracachi, S.A.
GPU International Australia Pty., Ltd.
Emdersa
Midlands Electricity plc
9
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935,
THE UNDERSIGNED COMPANY HAS DULY CAUSED THIS CERTIFICATE TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
FirstEnergy Corp.
------------------------------
By:/s/ Harvey L. Wagner
Harvey L. Wagner
Vice President and Controller
Date: April 22, 2002
10