-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PknaXxpDfkvi87VEMvf5X1TIATlB9uWWcErcb9yWNZUkDUP055s7NgnpALZEpsdD g/xxEpFHZpbFmoRlA8C5fg== 0000049816-98-000036.txt : 19981215 0000049816-98-000036.hdr.sgml : 19981215 ACCESSION NUMBER: 0000049816-98-000036 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981214 ITEM INFORMATION: FILED AS OF DATE: 19981214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ILLINOIS POWER CO CENTRAL INDEX KEY: 0000049816 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 370344645 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-03004 FILM NUMBER: 98768834 BUSINESS ADDRESS: STREET 1: 500 S 27TH ST STREET 2: C/O HARRIS TRUST & SAVINGS BANK CITY: DECATUR STATE: IL ZIP: 62525-1805 BUSINESS PHONE: 2174246600 FORMER COMPANY: FORMER CONFORMED NAME: ILLINOIS IOWA POWER CO DATE OF NAME CHANGE: 19660822 8-K 1 8-K FILING TO SEC ON 12/14/98 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) December 14, 1998 Commission Registrants; State of Incorporation; IRS Employer File Number Address; and Telephone Number Identification No. 1-11327 Illinova Corporation 37-1319890 (an Illinois Corporation) 500 S. 27th Street Decatur, IL 62525 (217) 424-6600 1-3004 Illinois Power Company 37-0344645 (an Illinois Corporation) 500 S. 27th Street Decatur, IL 62525 (217) 424-6600 Total number of sequentially numbered pages is 10. Item 7. Exhibits - -------------------------------------------------------------------------------- (c) Exhibits (99.1) Letter to the Financial Community, dated December 9, 1998 (99.2) Press Release, dated December 9, 1998 (99.3) Press Release, dated December 11, 1998 2 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. ILLINOVA CORPORATION (Registrant) By /s/ Charles E. Bayless --------------------------- Charles E. Bayless Chairman, President, and Chief Executive Officer on behalf of Illinova Corporation Date: December 14, 1998 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. ILLINOIS POWER COMPANY (Registrant) By /s/ Charles E. Bayless --------------------------- Charles E. Bayless Chairman, President, and Chief Executive Officer on behalf of Illinois Power Company Date: December 14, 1998 3 Exhibit Index The following Exhibits are hereby filed as part of this Current Report on Form 8-K: Exhibit Number Description 99.1 Letter to the Financial Community, dated December 9, 1998 99.2 Press Release, dated December 9, 1998 99.3 Press Release, dated December 11, 1998 4 EX-99 2 EX-99.1 LETTER TO FINANCIAL COMMUNITY, 12/9/98 December 9, 1998 Members of the Financial Community: Attached is a press release announcing the decision of Illinois Power Company's Board of Directors to exit the nuclear business and proceed with a quasi-reorganization that will affect reported 1998 financial results. Also included in the release are an update of the Company's securitization efforts and an affirmation of Illinova's growth strategy. The Board's decisions to exit the nuclear business and to execute a quasi-reorganization are consistent with the strategy the Company has outlined over the past several months. While this decision is a significant financial milestone for the Company, we must still complete work on several important issues before finalizing the detailed accounting entries, including, most significantly, the size and amortization of a regulatory asset and the value of the Company's fossil generation. Future financial results will also be influenced by the specific exit strategy ultimately chosen by the Board and the timing of its implementation. Please also note the attached invitation to attend one of two meetings to be hosted by Illinova next Wednesday, December 16, in New York. Please contact Bob Schultz (217-424-8780), Eric Weekes (217-362-7635), Cindy Steward (217-362-7633), Greg Gudeman (217-424-8715) or me if you have any questions. Sincerely, /s/ Larry F. Altenbaumer - ------------------------ Larry F. Altenbaumer EX-99 3 EX-99.2 PRESS RELEASE DATED 12/9/98 For release: Dec. 9, 1998, 4 p.m. CST TRANSACTIONS TO GIVE ILLINOVA FRESH START Utility takes aggressive moves to exit nuclear business, reposition itself as growth-oriented energy company DECATUR, Ill. (Dec. 9, 1998) -- Illinova Corp. today announced it will exit its nuclear business, proceed with an accounting restructuring, and pursue other strategic opportunities for positioning itself as a competitive leader in new energy markets. The decisions came at the company's board of directors meeting earlier today in Chicago. The company has not yet determined the specific path for exiting the Clinton Power Station, its 950-megawatt nuclear generating facility. The most likely alternatives are selling the plant or shutting it down. To date, a number of companies have expressed interest in purchasing the plant. Illinova Chairman, President and CEO Charles E. Bayless said today's board actions are "watershed decisions. "We've set in motion processes that will give Illinova a fresh start, both financially and from a business strategy perspective," he said. "I am excited about the opportunities we've identified, but I continue to be frustrated by the diversion of attention and resources to the Clinton plant," Bayless said. "Mitigating the risks of being a single-unit nuclear operator is a first step that will clear the way for us to pursue forward-looking business strategies. But before we can move ahead, we must permanently resolve the Clinton issues and get them behind us quickly." ILLINOVA Dec. 9, 1998 Page 2 Accounting restructuring, securitized debt permit fresh start In conjunction with today's decision to dispose of its nuclear assets, the board also moved to effect a quasi-reorganization, whereby a company restates the value of all its assets and liabilities to current market value. The Securities and Exchange Commission last month confirmed for Illinova that such an accounting procedure would be acceptable if the company were to exit the nuclear business. The company will write down to market value the Clinton Station -- whose current book value, net of tax, is approximately $1.6 billion but whose market value is far less -- and write up to market value its fossil generating stations - -- older assets that have been depreciated to a book value of approximately $500 million but whose market value is considerably greater. New valuations will be reflected in the company's year-end balance sheet. The write-down of the company's nuclear assets will result in a charge to earnings and thus a substantial per-share loss for 1998. The write-up of fossil assets will be recorded as a direct increase to equity, but does not affect reported net income. At the end of the quasi-reorganization process, Illinova's retained earnings balance will be $0. Another element of the company's "fresh start" is Illinois Power's issuance later this week of $864 million of securitized debt, an initiative to significantly reduce its cost of capital. The new debt issue is the single largest financing in the company's history. Illinois Power will use the proceeds to refinance its outstanding debt, retire preferred equity, and ILLINOVA Dec. 9, 1998 Page 3 repurchase common equity. In October the Board approved the repurchase of up to 12 million shares of Illinova common stock in conjunction with Illinois Power's upcoming issuance of securitized debt. Board will pursue strategies for growth The board today affirmed its strategy of continuing investments for growth and development in its unregulated subsidiaries, Illinova Generating and Illinova Energy Partners. "Our decisions today will allow Illinova to be more nimble as we reposition ourselves for growth in the quickly changing energy market," Bayless said. In other action, the Illinova board today declared a common stock dividend of 31 cents per share, payable Feb. 1, 1999, to shareholders of record Jan. 11. Illinova Corp., headquartered in Decatur, Ill., is an energy services company with annual revenues of $2.5 billion. Its subsidiaries include Illinois Power, an electric and natural gas utility; Illinova Generating, which invests in, develops and operates independent power projects worldwide; and Illinova Energy Partners, which markets energy and energy-related services in the United States and Canada. EX-99 4 EX-99.3 PRESS RELEASE DATED 12/11/98 For immediate release: Dec. 11, 1998 IP SEES HIGH DEMAND, FAVORABLE RATES FOR TRANSITION BOND OFFERING DECATUR, Ill. -- Illinois Power yesterday successfully priced (sold) $864 million in asset-backed "transition funding" bonds. This was the single largest financial transaction ever executed by Illinois Power. The bonds were sold in seven tranches (groupings) with varying maturity dates and interest rates. The average yield on these bonds was 5.52 percent. "We're very pleased with the rates we were able to obtain and with the broad demand for these bonds," said Eric B. Weekes, Illinois Power Treasurer. The bonds had been rated AAA by four rating agencies (Duff & Phelps Credit Rating Company, Fitch IBCA, Inc., Moody's Investors Service, Inc., and Standard & Poor's). This new funding option was made available to Illinois utilities in late 1997 with enactment of electric deregulation legislation. The aim was to provide utilities a financial tool that could provide lower interest rates for ongoing financing needs. The bonds are secured by the ongoing revenues received by the utility related to electric service. Weekes says the utility will use the bond revenues to redeem Illinois Power common stock (entirely held by its parent, Illinova), debt and preferred stock. Illinova will use the proceeds from the IP common stock repurchase to redeem several million of its own common shares (currently 71 million shares outstanding). The lead underwriter and sole manager of the "book" for the sale of the bonds was Merrill Lynch. Salomon Smith Barney was the co-lead manager. Other co-managers included: Chase Securities Inc.; Donaldson, Lufkin & Jenrette; First Chicago Capital Markets, Inc.; NationsBanc Montgomery Securities LLC; ABN AMRO Incorporated; A.G. Edwards & Sons, Inc.; J.P. Morgan & Co.; and Loop Capital Markets, LLC. -----END PRIVACY-ENHANCED MESSAGE-----