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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: December 22, 2003
(Date of Earliest Event Reported: December 10, 2003)
EL PASO CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-14365 76-0568816
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
El Paso Building
1001 Louisiana Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 420-2600
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ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
On December 15, 2003, we announced our long-range plan for the company.
Following the announcement of the plan, several events have occurred as a result
of an analysis of the plan and in connection with our short-term achievement of
some of the goals outlined under the plan. This Current Report on Form 8-K
discusses those and other updating events.
Rating Downgrade by Standard & Poor's
On December 15, 2003, citing risks associated with the execution of our
long-range plan, Standard & Poor's downgraded the company's corporate credit
rating from B+ to B while holding its outlook on El Paso at negative. S&P also
downgraded its rating of our senior unsecured debt from B to B- and our
preferred stock from CCC+ to CCC.
Divestiture of our LNG business
On December 17, 2003, we sold the assets and intellectual property
related to our Energy Bridge LNG business to Excelerate Energy, LLC, as well as
terminated a $120 million Letter of Credit obligation to Exmar NV. The letter of
credit was initially entered into in connection with ships being constructed for
use in our then developing LNG business.
Under the agreement with Excelerate, we paid Excelerate approximately
$75 million, consisting of $90 million to terminate the letter of credit with
Exmar in favor of Excelerate, offset by $15 million paid to us by Excelerate for
the assets and intellectual property rights of our LNG business. We will be
required to pay an additional $5 million to Excelerate if certain conditions are
not met. With this transaction, we will have substantially terminated all of our
obligations with respect to our LNG business, and as a result of these
transactions, we expect to incur a fourth quarter charge of approximately $75
million.
Announced Debt Reductions
On December 17, 2003, we gave irrevocable notice to the holders of our
Mustang term loan to redeem all amounts outstanding under that loan. The
outstanding balance of $414 million will be paid from existing cash on December
23, 2003 and will free up a significant amount of assets that collateralized
that financing arrangement, including approximately $90 million of cash on
deposit in restricted accounts, our ownership of Colorado Interstate Gas
Company and oil and natural gas properties. Subsequent to the retirement of the
term loan, our ownership interests in Colorado Interstate Gas Company will
continue to be pledged to the lenders under our revolving credit agreement.
On December 19, 2003, we redeemed the preferred securities held by a
third party in our Coastal Securities subsidiary for approximately $100 million.
This redemption was accomplished with existing cash.
Western Energy Settlement Developments
On December 10, 2003, the California Superior Court in San Diego County
issued its order approving the Master Settlement Agreement related to our
Western Energy Settlement. If that order is not appealed, it will become final
by the middle of February 2004, permitting the Western Energy Settlement to
become effective at that time.
Assignment of Elba Island Contractual Rights
On December 22, we announced we had assigned the contractual rights to
all of our upstream and downstream gas purchase and gas sales contracts at the
Elba Island LNG terminal to BG LNG Services, LLC and BG Gas Marketing LTD. As
part of the overall transaction, we also released our long-term capacity rights
at the Elba facility to BG LNG Services. The total consideration for the
transaction was $127 million, of which $77 million has been received. The
remaining $50 million is conditioned upon events affecting gas off-take
arrangements.
A copy of our press release related to this announcement is attached to
this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by
reference.
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 thereunto duly authorized.
EL PASO CORPORATION
By: /s/ JEFFREY I. BEASON
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Jeffrey I. Beason
Senior Vice President
and Controller
(Principal Accounting Officer)
Dated: December 22, 2003
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release dated December 22, 2003.