-----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, NYpvToNd44ep3KULq9Hce4smAvmXYZYfO++FgF20xzoqo+aVBNNRi7dmMIHGnbIJ pIEb2B14gGJC0zHizRhwUA== 0000077231-96-000008.txt : 19960229 0000077231-96-000008.hdr.sgml : 19960229 ACCESSION NUMBER: 0000077231-96-000008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960216 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19960228 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENNSYLVANIA ENTERPRISES INC CENTRAL INDEX KEY: 0000077231 STANDARD INDUSTRIAL CLASSIFICATION: GAS & OTHER SERVICES COMBINED [4932] IRS NUMBER: 231920170 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11325 FILM NUMBER: 96526749 BUSINESS ADDRESS: STREET 1: 39 PUBLIC SQ STREET 2: WILKES BARRE CENTER CITY: WILKES BARRE STATE: PA ZIP: 18711-0601 BUSINESS PHONE: 7178298843 MAIL ADDRESS: STREET 1: 39 PUBLIC SQUARE CITY: WILKES BARRE STATE: PA ZIP: 18711-0601 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): February 16, 1996 Pennsylvania Enterprises, Inc. (Exact name of registrant as specified in its charter Pennsylvania 0-7812 23-1920170 (State or other jurisdiction) (Commission File Number) (IRS Employer Identification No.) Wilkes-Barre Center, 39 Public Square, Wilkes-Barre, Pennsylvania 18711-0601 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (717)829-8843 Not Applicable (Former name or former address, if changed since last report) Page 1 of 15 Pages The Exhibit Index is on Page 15
Item 2. Acquisition or Disposition of Assets. On February 16, 1996, PG Energy Inc. (formerly known as Pennsylvania Gas and Water Company), a Pennsylvania corporation ("PGE"), and a wholly-owned subsidiary of Pennsylvania Enterprises, Inc., a Pennsylvania corporation ("PEI"), consummated the sale of its regulated water operations and certain related assets (the "Water Business") to Pennsylvania-American Water Company, a Pennsylvania corporation ("PAWC"), a wholly-owned subsidiary of American Water Works Company, Inc., a Delaware corporation ("AWWC"), for a purchase price of $409,000,000 (including the assumption of indebtedness), subject to certain adjustments (the "Sale of the Water Business"), as set forth in the Asset Purchase Agreement dated as of April 26, 1995, among PGE, PEI, PAWC and AWWC (the "Asset Purchase Agreement"). Page 2 of 15 Pages
Item 7. Financial Statements and Exhibits. (b) Pro Forma Financial Information
The following PEI unaudited pro forma consolidated financial statements have been prepared based on PEI's consolidated statement of income for the twelve months ended December 31, 1994, and PEI's unaudited consolidated balance sheet as of September 30, 1995, and unaudited consolidated statement of income for the nine months then ended, each as adjusted to reflect the Sale of the Water Business and, based on the Initial Cash Payment (as such term is defined in the Asset Purchase Agreement) as of September 30, 1995, of $256.3 million, PEI's use of the proceeds from the Sale of the Water Business of $201.2 million (after the payment of an estimated $55.1 million of federal and state income taxes on the sale). PEI and PGE intend to use such proceeds together with $1.1 million of net tax benefits resulting from an estimated $9.3 million of transaction costs, and a $6.5 million premium over book value on the Sale of the Water Business, to (i) repay the $50.0 million bridge loan (the "Bridge Loan"), the proceeds of which were used to redeem the $50.0 million principal amount of PGE's 9.57% Series First Mortgage Bonds on October 13, 1995, (ii) repurchase approximately 225,000 shares of PGE's 9% Cumulative Preferred Stock at an aggregate repurchase price of $24.3 million (equivalent to $108.00 per share), which includes an aggregate repurchase premium of $1.8 million (equivalent to $8.00 per share), (iii) repurchase 80,000 shares of PGE's 4.10% Cumulative Preferred Stock at an aggregate repurchase price of $4.0 million (equivalent to $50.00 per share), (iv) defease the $30.0 million principal amount of PEI's 10.125% Senior Notes (the "10.125% Senior Notes") at a total cost of $31.5 million, (v) repurchase 2,000,000 shares of PEI Common Stock at an aggregate repurchase price of $76.0 million (equivalent to $38.00 per share), (vi) pay an estimated $2.8 million of costs in connection with the repurchases referred to in items (ii), (iii) and (v) above and (vii) pay an estimated $7.7 million of transaction costs relative to the Sale of the Water Business. The repayment of the Bridge Loan referred to in item (i) above was made on February 16, 1996. The repurchases referred to in items (ii), (iii) and (v) are currently expected to be made during April, 1996. Since these repurchases involve voluntary sales to PEI and PGE by the holders of the respective securities, the number and price of the securities purchased may vary depending on market conditions at the time of the repurchases. The defeasance of the 10.125% Senior Notes referred to in item (iv) is currently planned for June 17, 1996, the earliest date on which those securities may be defeased. The proceeds from the Sale of the Water Business which will be used for the repurchases referred to in items (ii), (iii) and (v) and the defeasance referred to in item (iv) have been temporarily invested by PEI and PGE pending their use for such purposes. The unaudited pro forma consolidated financial statements also reflect the redemption, primarily utilizing bank borrowings, of PGE's 8% Series First Mortgage Bonds, of which (a) $3,325,000 principal amount of the 8% Series First Mortgage Bonds were redeemed on July 10, 1995, in connection with the Sale of the Water Business, at an aggregate redemption price of $3,336,305, which included an aggregate redemption premium of $11,305, and (b) $210,000 principal amount of the 8% Series First Mortgage Bonds were redeemed on each of June 1, 1994, and June 1, 1995, pursuant to annual sinking fund requirements of such bonds, as if such transactions had occurred at the beginning of the period of the respective financial statements. Additionally, the unaudited pro forma consolidated statement of income for the twelve months ended December 31, 1994, reflects (i) the redemption of 150,000 shares of PGE's 8.90% Cumulative Preferred Stock at an aggregate redemption price of $15,445,500 (equivalent to $102.97 per share), which includes an aggregate redemption premium of $445,500 (equivalent to $2.97 per share), as if it had occurred at the beginning of the period (such shares, the proceeds from the issuance of which were used to provide capital for the Water Business, were redeemed on December 16, 1994, utilizing bank borrowings and would have been redeemed in connection with the Sale of the Water Business had such shares Page 3 of 15 Pages
not been redeemed on December 16, 1994), and (ii) the redemption of 150,000 shares of PGE's 9.50% Cumulative Preferred Stock at an aggregate redemption price of $15,534,375 (equivalent to $103.5625 per share), which includes an aggregate redemption premium of $534,375 (equivalent to $3.5625 per share), as if it had occurred at the beginning of the period (such shares were redeemed on May 31, 1994, utilizing proceeds from a $20 million term loan to PEI). The following PEI unaudited pro forma consolidated statements of income reflect the results of PEI's continuing operations as if the transactions described herein had occurred at the beginning of the respective periods. The PEI unaudited pro forma consolidated balance sheet as of September 30, 1995, reflects the financial position of PEI as if the transactions described herein had occurred on such date. Each of the PEI unaudited pro forma consolidated statements of income and consolidated balance sheet include estimates of transaction costs which may differ from the costs ultimately incurred. These PEI unaudited pro forma consolidated financial statements should be read in conjunction with PEI's consolidated financial statements and the notes thereto included in PEI's latest annual report on Form 10-K. The PEI unaudited pro forma financial statements have been included herein as required by the rules of the Securities and Exchange Commission and are provided for comparative purposes only. The PEI unaudited pro forma financial statements do not purport to be indicative of the results which would have been obtained if the Sale of the Water Business had been effected on the date or dates indicated or which may be obtained in the future. No pro forma adjustment has been made to reflect any interest income that may be earned on the Initial Cash Payment. Page 4 of 15 Pages
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Statement of Income for the Twelve Months Ended December 31, 1994
Adjustments Pro Forma Before Sale to Reflect After Sale of Water Sale of Water of Water Business Business (1) Business (In thousands of dollars, except per share amounts) OPERATING REVENUES $ 167,992 $ - $ 167,992 Cost of gas 98,653 - 98,653 OPERATING MARGIN 69,339 - 69,339 OTHER OPERATING EXPENSES Operation 22,652 - 22,652 Maintenance 4,436 - 4,436 Depreciation 6,667 - 6,667 Income taxes 4,290 1,640 (2) 5,930 Taxes other than income taxes 10,807 - 10,807 Total other operating expenses 48,852 1,640 50,492 OPERATING INCOME 20,487 (1,640) 18,847 OTHER INCOME, NET 258 226 (3) 484 INCOME BEFORE INTEREST CHARGES 20,745 (1,414) 19,331 INTEREST CHARGES: Interest on long-term debt 12,591 (3,839) (2) 8,752 Other interest 1,223 8 (2) 1,231 Allowance for borrowed funds used during construction (21) - (21) Total interest charges 13,793 (3,831) 9,962 INCOME FROM CONTINUING OPERATIONS BEFORE SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 6,952 2,417 9,369 SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 4,639 (4,224) (4) 415 INCOME FROM CONTINUING OPERATIONS APPLICABLE TO COMMON STOCK $ 2,313 $ 6,641 $ 8,954 COMMON STOCK Earnings per share of common stock from continuing operations: Before premium on redemption of subsidiary's preferred stock $ .43 $ 2.59 Premium on redemption of subsidiary's preferred stock (.18) - (5) Earnings per share of common stock from continuing operations $ .25 $ 2.59 Weighted average number of shares outstanding 5,456,568 (2,000,000) (6) 3,456,568 Page 5 of 15 Pages
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES Notes to Unaudited Pro Forma Consolidated Statement of Income for the Twelve Months Ended December 31, 1994
(1) Adjustments reflect the Sale of the Water Business as if it had taken place at the beginning of the period. (2) Represents the adjustments to interest on long-term debt and amortization of debt expense, and the related income tax effect, necessary to reflect the interest on indebtedness, including $15.4 million of bank borrowings utilized to redeem the $15.0 million principal amount of PGE's 8.90% Cumulative Preferred Stock and $15.5 million of bank borrowings utilized to redeem the $15.0 million principal amount of PGE's 9.50% Cumulative Preferred Stock, outstanding after (a) application of proceeds from the Sale of the Water Business to (i) repay the Bridge Loan, the proceeds of which were used to redeem the $50.0 million principal amount of PGE's 9.57% Series First Mortgage Bonds on October 13, 1995, and (ii) defease the $30.0 million principal amount of the 10.125% Senior Notes and (b) the redemption in connection with the Sale of the Water Business and pursuant to annual sinking fund requirements of $3.7 million principal amount of PGE's 8% Series First Mortgage Bonds outstanding as of January 1, 1994. The adjustments to interest on long-term debt may be summarized as follows: (Thousands of dollars) Interest on long-term debt for the twelve months ended December 31, 1994: Allocated to continuing operations, as per accompanying unaudited pro forma consolidated statement of income $ 12,591 Allocated to discontinued operations 12,309 24,900 Deduct: Interest on debt assumed by PAWC $ 9,347 Interest on debt redeemed, repaid or to be defeased in connection with the Sale of the Water Business 9.57% Series First Mortgage Bonds* 4,785 10.125% Senior Notes 3,038 8% Series First Mortgage Bonds 290 (17,460) Add: Interest on bank borrowings to reflect the redemption of $15.0 million principal of PGE's 8.90% Cumulative Preferred Stock and the payment of a $445,500 premium in connection therewith as if it occurred at the beginning of the period instead of December 16, 1994 780 Interest on bank borrowings to reflect the redemption of $15.0 million principal of PGE's 9.50% Cumulative Preferred Stock and the payment of a $534,375 premium in connection therewith as if it occurred at the beginning of the period instead of May 31, 1994 341 Interest on PGE's bank borrowings to reflect the redemption of PGE's 8% Series First Mortgage Bonds as if it occurred at the beginning of the period 191 1,312 Pro forma interest on long-term debt, as per accompanying unaudited pro forma consolidated statement of income $ 8,752 Page 6 of 15 Pages
* The Bridge Loan that PGE utilized for redemption of the 9.57% Series First Mortgage Bonds on October 13, 1995, has not been reflected in this summary since it had no effect on the net adjustment to interest on long-term debt. Page 7 of 15 Pages
(3) Represents elimination of the amortization of capital stock expense, net of the related tax effect, relative to PGE's 9.50% Cumulative Preferred Stock ($90,000) and PGE's 8.90% Cumulative Preferred Stock ($136,000). (4) Represents elimination of preferred stock dividends of (i) $2.0 million to reflect the repurchase of 225,000 shares of PGE's 9% Cumulative Preferred Stock, (ii) $328,000 to reflect the repurchase of 80,000 shares of PGE's 4.10% Cumulative Preferred Stock, (iii) $591,000 on the $15.0 million principal amount of PGE's 9.50% Cumulative Preferred Stock from January 1, 1994 to May 31, 1994, the date of redemption of such stock and (iv) $1.3 million on the $15.0 million principal amount of PGE's 8.90% Cumulative Preferred Stock from January 1, 1994 to December 16, 1994, the date of redemption of such stock. (5) Reflects elimination of the premiums on the redemption of PGE's 8.90% Cumulative Preferred Stock ($445,500) and 9.50% Cumulative Preferred Stock ($534,375) from the calculation of the earnings per share of PEI Common Stock. (6) Represents the reduction in the number of shares of PEI's Common Stock outstanding resulting from the application of the proceeds from the Sale of the Water Business to repurchase 2,000,000 shares of PEI's Common Stock at an average price of $38.00 per share. Page 8 of 15 Pages
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Statement of Income for the Nine Months Ended September 30, 1995
Adjustments Pro Forma Before Sale to Reflect After Sale of Water Sale of Water of Water Business Business (1) Business (In thousands of dollars, except per share amounts) OPERATING REVENUES $ 105,540 $ - $ 105,540 Cost of gas 59,147 - 59,147 OPERATING MARGIN 46,393 - 46,393 OTHER OPERATING EXPENSES Operation 16,342 - 16,342 Maintenance 3,732 - 3,732 Depreciation 5,361 - 5,361 Income taxes 447 1,402 (2) 1,849 Taxes other than income taxes 7,934 - 7,934 Total other operating expenses 33,816 1,402 35,218 OPERATING INCOME 12,577 (1,402) 11,175 OTHER INCOME, NET 550 - 550 INCOME BEFORE INTEREST CHARGES 13,127 (1,402) 11,725 INTEREST CHARGES: Interest on long-term debt 10,232 (3,356) (2) 6,876 Other interest 1,485 (22) (2) 1,463 Allowance for borrowed funds used during construction (40) - (40) Total interest charges 11,677 (3,378) 8,299 INCOME FROM CONTINUING OPERATIONS BEFORE SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 1,450 1,976 3,426 SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 2,073 (1,765) (3) 308 INCOME FROM CONTINUING OPERATIONS APPLICABLE TO COMMON STOCK $ (623) $ 3,741 $ 3,118 COMMON STOCK: Earnings per share of common stock from continuing operations $ (.11) $ .84 Weighted average number of shares outstanding 5,715,294 (2,000,000) (4) 3,715,294 Page 9 of 15 Pages
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES Notes to Unaudited Pro Forma Consolidated Statement of Income for the Nine Months Ended September 30, 1995
(1) Adjustments reflect the Sale of the Water Business as if it had taken place at the beginning of the period. (2) Represents the adjustments to interest on long-term debt and amortization of debt expense, and the related income tax effect, necessary to reflect the interest on indebtedness outstanding during the period after (a) application of proceeds from the Sale of the Water Business to (i) repay the Bridge Loan, the proceeds of which were used to redeem the $50.0 million principal amount of PGE's 9.57% Series First Mortgage Bonds on October 13, 1995, and (ii) defease the $30.0 million principal amount of the 10.125% Senior Notes and (b) the redemption in connection with the Sale of the Water Business and pursuant to annual sinking fund requirements of $3.5 million principal amount of PGE's 8% Series First Mortgage Bonds outstanding as of January 1, 1995. The adjustments to interest on long-term debt may be summarized as follows: (Thousands of dollars) Interest on long-term debt for the nine months ended September 30, 1995: Allocated to continuing operations, as per accompanying unaudited pro forma consolidated statement of income $ 10,232 Allocated to discontinued operations 9,679 19,911 Deduct: Interest on debt assumed by PAWC $ 7,141 Interest on debt redeemed, repaid or to be defeased in connection with the Sale of the Water Business 9.57% Series First Mortgage Bonds* 3,589 10.125% Senior Notes 2,278 8% Series First Mortgage Bonds 147 (13,155) Add: Interest on PGE's bank borrowings to reflect the redemption of PGE's 8% Series First Mortgage Bonds as if it occurred at the beginning of the period 120 Pro forma interest on long-term debt, as per accompanying unaudited pro forma consolidated statement of income $ 6,876 * The Bridge Loan that PGE utilized for redemption of the 9.57% Series First Mortgage Bonds on October 13, 1995, has not been reflected in this summary since it had no effect on the net adjustment to interest on long-term debt. (3) Represents elimination of preferred stock dividends of $1,519,000 and $246,000 to reflect the repurchase of 225,000 shares of PGE's 9% Cumulative Preferred Stock and 80,000 shares of PGE's 4.10% Cumulative Preferred Stock, respectively, with proceeds from the Sale of the Water Business. (4) Represents the reduction in the number of shares of PEI's Common Stock outstanding resulting from the application of the proceeds from the Sale of the Water Business to repurchase 2,000,000 shares of PEI's Common Stock at an average price of $38.00 per share. Page 10 of 15 Pages
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1995
Adjustments Pro Forma Before Sale to Reflect After Sale of Water Sale of Water of Water Business Business (1) Business (In thousands of dollars) ASSETS UTILITY PLANT: At original cost, less acquisition adjustments of $386,000 $ 293,279 $ - $ 293,279 Accumulated depreciation (76,680) - (76,680) 216,599 - 216,599 OTHER PROPERTY AND INVESTMENTS 4,393 - 4,393 CURRENT ASSETS: Cash and cash equivalents 762 256,291 (2a) (55,050) (2c) (201,241) (3) 1,500 (3d) 6,100 (3i) 8,362 Accounts receivable- Customers 8,118 - 8,118 Others 513 - 513 Reserve for uncollectible accounts (1,086) - (1,086) Accrued utility revenues 1,573 - 1,573 Materials and supplies, at average cost 2,955 - 2,955 Gas held by suppliers, at average cost 20,155 - 20,155 Natural gas transition costs collectible 4,350 - 4,350 Prepaid expenses and other 5,308 - 5,308 42,648 7,600 50,248 DEFERRED CHARGES: Regulatory assets - Deferred taxes collectible 30,174 - 30,174 Natural gas transition costs collectible 1,668 - 1,668 Other 3,062 - 3,062 Unamortized debt expense 2,950 (169) (5) 2,781 Other 3,218 - 3,218 41,072 (169) 40,903 NET ASSETS OF DISCONTINUED OPERATIONS 195,595 (195,595) (2e) - TOTAL ASSETS $ 500,307 $ (188,164) $ 312,143 Page 11 of 15 Pages
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1995
Adjustments Pro Forma Before Sale to Reflect After Sale of Water Sale of Water of Water Business Business (1) Business (In thousands of dollars) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common shareholders' investment $ 161,632 $ (854) (2b) $ (76,000) (3a) (1,800) (3b) 4,000 (3c) (2,750) (3e) (722) (4) (99) (5) (65) (6) (469) (7) 82,873 Preferred stock- Not subject to mandatory redemption, net 33,615 (22,500) (3b) (8,000) (3c) 1,247 (4) 4,362 Subject to mandatory redemption 1,680 - 1,680 Long-term debt 154,900 (30,000) (3d) (50,000) (3f) 100 (6) 75,000 351,827 (187,912) 163,915 CURRENT LIABILITIES: Current portion of long-term debt and preferred stock subject to mandatory redemption 57,491 - 57,491 Note payable to bank 5,000 - 5,000 Accounts payable 14,049 - 14,049 Deferred cost of gas and suppliers refunds, net 2,468 - 2,468 Accrued general business and realty taxes 703 - 703 Accrued income taxes 531 (525) (4) (70) (5) (35) (6) (99) Accrued interest 2,382 - 2,382 Accrued natural gas transition costs 2,158 - 2,158 Other 2,225 6,500 (2d) (7,682) (3g) 780 (7) 1,823 87,007 (1,032) 85,975 DEFERRED CREDITS: Deferred income taxes 47,861 1,091 (3h) (311) (7) 48,641 Accrued natural gas transition costs 1,631 - 1,631 Unamortized investment tax credits 4,982 - 4,982 Operating reserves 2,236 - 2,236 Other 4,763 - 4,763 61,473 780 62,253 TOTAL CAPITALIZATION AND LIABILITIES $ 500,307 $ (188,164) $ 312,143 Page 12 of 15 Pages
PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES Notes to Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1995
(1) Adjustments reflect the Sale of the Water Business as if it had taken place as of the date of the balance sheet. (2) Represents (a) receipt of cash proceeds of $256.3 million from the Sale of the Water Business, (b) elimination from common shareholders' investment of the $854,000 of estimated income from PGE's water operations during the period from October 1, 1995, to December 31, 1995 (the estimated closing date as of September 30, 1995, for the Sale of the Water Business), that was reflected as of September 30, 1995, as an offset against the estimated loss on the Sale of the Water Business, (c) payment of the estimated federal and state income tax liability of $55.1 million on the Sale of the Water Business, (d) recording of the $6.5 million premium of the purchase price over the book value of the assets acquired by PAWC as a credit to other current liabilities, the account to which it was charged as of September 30, 1995, as an offset against the liability for the estimated expenses on the Sale of the Water Business and (e) elimination of the $195.6 million of net assets of the Water Business. (3) Reflects the application of the proceeds from the Sale of the Water Business of $201.2 million, after the payment of the estimated federal and state income tax liability of $55.1 million on the Sale of the Water Business, in the following manner: (a) the repurchase (for an aggregate consideration of $76.0 million) of 2,000,000 shares of PEI's Common Stock at an average price of $38.00 per share, (b) the repurchase (for an aggregate consideration of $24.3 million) of 225,000 shares of PGE's 9% Cumulative Preferred Stock (having an aggregate book value of $22.5 million) at a price of $108.00 per share, which includes a premium of $8.00 per share ($1.8 million in the aggregate), (c) the repurchase (for an aggregate consideration of $4.0 million) of 80,000 shares of PGE's 4.10% Cumulative Preferred Stock (having an aggregate book value of $8.0 million) at a price of $50.00 per share, which reflects a $4.0 million aggregate ($50.00 per share) discount from book value, (d) the defeasance of the $30.0 million principal amount of PEI's 10.125% Senior Notes at a total cost of $31.5 million, (e) payment of $2.8 million of costs in connection with the repurchase of shares of PEI's common stock and PGE's preferred stock (which will vary depending on the number of shares repurchased), (f) the repayment of the Bridge Loan, the proceeds of which were used to redeem $50.0 million principal amount of PGE's 9.57% Series First Mortgage Bonds on October 13, 1995, (g) payment of $7.7 million of transaction costs relative to the Sale of the Water Business, (h) recording of the $1.1 million net tax benefit resulting from transaction costs and the premium over book value on the Sale of the Water Business and (i) the addition of the remaining proceeds of $6.1 million to the cash accounts of PEI ($5.8 million) and PGE ($350,000). (4) Reflects the write-off of $1.2 million ($722,000 after related income tax benefits of $525,000) of issuance costs relative to the 225,000 shares of PGE's 9% Cumulative Preferred Stock which PGE intends to repurchase with proceeds from the Sale of the Water Business. (5) Reflects the write-off of $169,000 ($99,000 after related income tax benefits of $70,000) of issuance costs relating to PGE's 9.57% Series First Mortgage Bonds which PGE redeemed on October 13, 1995, with proceeds from the Bridge Loan. (6) Reflects the write-off of $100,000 ($65,000 after related income tax benefits of $35,000) of the unamortized discount on the 10.125% Senior Notes, which PEI plans to defease with proceeds from the Sale of the Water Business. (7) Reflects the recording of $780,000 ($469,000 after related income tax benefits of $311,000) of additional transaction costs relative to the Sale of the Water Business, which were not reflected on the balance sheet of PEI as of September 30, 1995. Page 13 of 15 Pages
Item 7. Financial Statements and Exhibits. (c) Exhibits
Asset Purchase Agreement, dated as of April 26, 1995, among PGE, PEI, PAWC and AWWC was filed as Exhibit 2-1 to Pennsylvania Gas and Water Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, File No. 1-3490, and is incorporated herein by reference. Page 14 of 15 Pages
SIGNATURE
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. Dated: February 28, 1996 PENNSYLVANIA ENTERPRISES, INC. By: /s/ John F. Kell, Jr. Name: John F. Kell, Jr. Title: Vice President, Finance Page 15 of 15 Pages
Index to Exhibits Exhibit No. Description
2-1 Asset Purchase Agreement, dated as of April 26, 1995, among Pennsylvania Gas and Water Company, Pennsylvania Enterprises, Inc., Pennsylvania- American Water Company and American Water Works Company, Inc., filed as Exhibit 2-1 to Pennsylvania Gas and Water Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, File No. 1-3490. Page 16 of 15 Pages
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