PROVIDE FUNDING FOR PG&E NATIONAL ENERGY GROUP’S LA PALOMA
CONSTRUCTION PROJECT TO PROCEED
BETHESDA, Md. – PG&E National Energy Group, Inc. today
announced that the company and a syndicate of lenders have reached
an agreement to provide funding for the La Paloma Generating plant,
allowing construction to continue at the Kern County, Calif. facility.
PG&E National Energy Group, as guarantor, was required to make
a payment in November against the remaining $369.5 million equity
contributions under the La Paloma Generating credit facility to
fund construction costs. PG&E National Energy Group is a wholly
owned subsidiary of PG&E Corporation (NYSE: PCG).
La Paloma Generating is a 1,121 megawatt natural gas-fired, combined-cycle
generating project. The project is now 99 percent complete.
The agreement announced today is intended to provide funds necessary
to continue construction and is a transitional step until the lenders
look at a more permanent resolution. The financing arrangements
for the project are secured by a first mortgage on the La Paloma
facility. In October 2002, PG&E National Energy Group funded
approximately $4.5 million of construction costs and notified the
lenders under La Paloma Generating’s credit facility that
it would not make further payments of construction costs for the
plant. As reported in an Oct. 21, 2002 filing with the U.S. Securities
and Exchange Commission, PG&E National Energy Group and the
lenders under its 364-day and two-year revolving credit facilities
entered into an amendment to the credit facilities that, among other
amendments, prohibits PG&E National Energy Group from making
any payment for the La Paloma Generating plant and for certain other
projects under construction.
The Administrative Agent for the syndicate lenders is Citibank
The agreement announced today is consistent with PG&E National
Energy Group, Inc.’s previously announced strategy to explore
options to raise cash and reduce its indebtedness, ongoing guarantee
and working capital requirements. These options include, but are
not limited to sales of assets and businesses, debt restructuring,
and reorganization of existing operations.
Headquartered in Bethesda, Md., PG&E National Energy Group
Inc. develops, builds, owns and
operates electric generating and natural gas pipeline facilities
and provides energy trading, marketing and risk-management services.