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 :
GPU, INC. : 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 includes the activity for the period January 1 through March 31, 2002 for
FirstEnergy Generation Corp. (FirstEnergy Generation) 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
January 1, 2002 through March 31, 2002:
(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 $5.9 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 March 31, 2002 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 3/31/02 Owner- Type of
Company EWG ($000) ship Name of Entity Entity
------- ---- ------ ---- -------------- ------
Exempt Wholesale Generators and Foreign Utility Companies:
---------------------------------------------------------
Empresa EWG 29,339 50% AFP Prevision BBV Foreign
Guaracachi S.A. AFP Futuro de Bolivia Foreign
Guaracachi EWG 50,274* 100% Not Applicable N/A
America, Inc.
GPU Power, Inc. EWG 156,573* 100% Not Applicable N/A
EI International EWG 1,197* 100% Not Applicable N/A
GPUI Colombia, EWG 1,509* 100% Not Applicable N/A
Ltda.
Midlands FUCO 929,143 100% Not Applicable N/A
Electricity plc
Termobarranquilla EWG 92,004 29% ABB Energy Ventures, Foreign
S.A. Inc.
Lancaster Steel Foreign
Distral Group Foreign
Corp. Electrica Foreign
De la Costa
Atlantica
EI Barranquilla, EWG 41,543* 100% Not Applicable N/A
Inc.
Barranquilla EWG 50,257* 100% Not Applicable N/A
Lease Holdings,
Inc.
Los Amigos EWG 12* 100% Not Applicable N/A
Leasing Company,
Ltd.
GPU International EWG 1445* 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 3/31/02 Owner- Type of
Company EWG ($000) ship Name of Entity Entity
------- --- ------- ---- -------------- ------
Exempt Wholesale Generators and Foreign Utility Companies (continued):
----------------------------------------------------------
International Power
Advisors, Inc. EWG 3,592* 100% Not Applicable N/A
Empresa
Distribuidora
Electrica
Regional,S.A. FUCO 361,440 100% Not Applicable N/A
FE Generation Corp.
EWG 642,623 100% Not Applicable N/A
Total Aggregate
Investment in
EWGs & FUCOs * $2,054,549
=========
(*) FirstEnergy's aggregate investment does not include the items shown with
asterisks in order to avoid duplication.
As of March 31, 2002, 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 FirstEnergy Solutions Corp., (FirstEnergy Solutions) GPU
Capital, Inc.'s (GPU Capital) and GPU Power's unaudited Consolidated Balance
Sheets as of March 31, 2002 and unaudited Consolidated Statements of Operations
for the twelve months ended March 31, 2002 will be filed separately under a
request for confidential treatment pursuant to Rule 104(b).
FirstEnergy Solutions is a wholly-owned subsidiary of FirstEnergy and is a
natural gas and power marketer in both the wholesale and retail markets.
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 pounds
(BP) 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 BP 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 BP 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 BP 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 BP
245 million (approximately US $357 million) credit agreement entered into by EI
UK.
In March 2002, FirstEnergy announced that it had finalized terms of a
joint venture agreement with Aquila, Inc. (formerly Utilicorp United) for
5
Aqulla to acquire partial ownership of Avon. Accordingly, on May 8, 2002 Aquila
acquired a 79.9 percent interest in Avon for approximately $1.9 billion
including the assumption of $1.7 billion of debt. FirstEnergy (through GPU
Electric) and Aquilla together will own all of the outstanding shares of Avon
through a jointly owned subsidiary, with each company having a 50 percent voting
interest.
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.
All of the acquisition debt associated with FirstEnergy's ownership of
the above mentioned FUCOs has been retired.
3. Description of Exempt Entities in Which There are Funds Invested
----------------------------------------------------------------
FirstEnergy Generation Corp.
----------------------------
FirstEnergy Generation, incorporated in October 2000, is a wholly owned
subsidiary of First Energy Solutions. FirstEnergy Generation operates fossil
fuel plants and a pumped storage plant, most of which is leased from the
FirstEnergy Solutions companies and sells all of its output at wholesale prices
to FirstEnergy Solutions.
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.
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.
6
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
-------------------------------------------
FirstEnergy Generation received administrative and construction services
from associate companies (primarily FirstEnergy Services Company) in the amount
of $23,340,224 for the three months ended March 31, 2002. GPU Service, Inc.
provided administrative services to GPU Power and GPU Electric in the amount of
$173,347 and $187,047 respectively, for the three months ended March 31, 2002 in
support of operations and management activities.
5. Services Provided to Associated Companies
-----------------------------------------
A description of services provided by FirstEnergy Generation and GPU Power
to associate companies during the period January 1, 2002 through March 31, 2002
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
this reporting period.
7
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 March 31, 2002
is as follows:
(In Thousands)
--------------
FUCOs
Midlands Electricity plc $ 929,143
Emdersa 361,440
---------
Subtotal 1,290,583
---------
EWGs
FE Generation Corp. $ 642,623
Termobarranquilla, S.A. 92,004
Empresa Guaracachi, S.A. 29,339
---------
Subtotal 763,966
---------
Aggregate Investment in FUCOs and EWGs $ 2,054,549
=========
b) As of March 31, 2002
(In Thousands)
FirstEnergy's Aggregate Investment in FUCOs and EWGs is $2,054,549
Aggregate Investment as a Percentage of FirstEnergy and Subsidiary Companies:
Total capitalization $ 24,062,225 8.5%
Net utility plant $ 14,157,833 14.5%
Total consolidated assets $ 37,305,227 5.5%
Market value of common equity $ 8,365,269 24.6%
c) FirstEnergy and Subsidiary Companies
Consolidated Capitalization Ratios as of March 31, 2002
(In Thousands)
Amount %
------ -
Common equity $ 7,436,518 30.9
Cumulative preferred stock 575,114 2.4
Subsidiary-obligated mandatorily
redeemable preferred securities 529,450 2.2
Subsidiary-obligated trust
preferred securities - -
Long-term debt 14,645,710 60.9
Notes payable 875,433 3.6
----------- -----
Total capitalization $ 24,062,225 100.0%
=========== =====
8
d) Market-to-book ratio of FirstEnergy and Subsidiary Companies common stock at
March 31, 2002:
Closing Market Price per Share $ 34.58
Book Value per Share $ 25.40
Market-to Book Ratio of Common Stock 136.1%
e) Analysis of Growth in Retained Earnings for FirstEnergy and
Subsidiary Companies:
(In Thousands)
--------------
Retained Earnings as of 3/31/02 $1,528,572
Retained Earnings as of 12/31/01 1,521,805
---------
Growth in Retained Earnings $ 6,767
=========
Analysis of Growth in Retained Earnings:
----------------------------------------
Income contribution from regulated utility companies $ 136,836
Income contribution from FUCOs/EWGs 52,388
Income contribution from all other companies (17,216)
FirstEnergy Holding and Service companies (55,515)
Cash dividends declared on common stock (109,726)
Growth in Retained Earnings $ 6,767
========
f) Statements of Operations for the period ended March 31, 2002 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.
FirstEnergy Generation Corp.
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: May 30, 2002
10