PROVIDE LIMITED FUNDING FOR PG&E NATIONAL ENERGY GROUP’S
CONSTRUCTION PROJECTS TO PROCEED
BETHESDA, Md. – PG&E National Energy Group, Inc. today
announced that a syndicate of lenders has again agreed to provide
limited funding to the company’s subsidiary, GenHoldings I
LLC. This will allow construction to continue at power plants in
Arizona, Michigan and New York. PG&E National Energy Group is
a wholly owned subsidiary of PG&E Corporation (NYSE: PCG).
PG&E National Energy Group recently did not repay $431 million
in principal due under its corporate revolving credit facility,
triggering a cross-default under its unsecured senior notes and
various guarantees, including a guarantee to fund equity commitment
obligations under the GenHoldings credit facility.
Notwithstanding the defaults, PG&E National Energy Group continues
to negotiate with key lenders and bondholders to restructure the
company’s obligations. Today’s agreement is a transitional
step while lenders look at a more permanent resolution as part of
the global restructuring effort.
PG&E National Energy Group guarantees the obligation of its
subsidiary, GenHoldings I LLC, to make equity contributions under
GenHoldings’ credit facility to fund construction of the Harquahala
power plant in Tonopah, Ariz., the Covert plant in Covert, Mich.,
and the Athens Generating plant in Athens, N.Y. This credit facility
is secured by these projects in addition to the Millennium power
plant in Charlton, Mass.
In August and September 2002, PG&E National Energy Group funded
approximately $150 million of GenHoldings’ equity commitment.
GenHoldings’ remaining equity commitment is $355 million.
In October 2002, PG&E National Energy Group notified the lenders
under the GenHoldings I LLC credit facility that it did not intend
to make further equity contributions on behalf of GenHoldings. Later
in the month, the lending syndicate agreed to fund the October payment,
allowing construction to continue.
As of Sept. 30, 2002, construction on Athens was 70 percent complete;
Covert, 61 percent complete; and Harquahala, 69 percent complete.
Headquartered in Bethesda, Md., PG&E National Energy Group develops,
builds, owns and operates electric generating and natural gas pipeline
facilities and provides energy trading, marketing and risk-management
This news release discusses certain matters that may be considered
“forward-looking” statements within the meaning of Section
27A of the Securities Act of 1933, as amended, including statements
regarding the intent, belief or current expectations of PG&E National
Energy Group and its management. Actual future results could differ
materially from those expressed or implied in any forward-looking
statements. PG&E National Energy Group describes in its filings
with the U.S. Securities and Exchange Commission some of the key factors
that could cause actual results to differ materially.