-----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, AgBaKmYd21NjEJt2mxtP5FUj7CDAr/oNnr4iIz79PV6M5GF9wGOE8B+8JhHKD5+P 01ZRoLLKaqGfMIpyFmJiPQ== 0001017062-99-000859.txt : 19990514 0001017062-99-000859.hdr.sgml : 19990514 ACCESSION NUMBER: 0001017062-99-000859 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON MISSION ENERGY CENTRAL INDEX KEY: 0000930835 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 954031807 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24890 FILM NUMBER: 99619475 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVE STREET 2: STE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 7147525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVE STREET 2: STE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FORMER COMPANY: FORMER CONFORMED NAME: MISSION ENERGY CO DATE OF NAME CHANGE: 19941003 10-Q 1 FORM 10-Q - PERIOD ENDED MARCH 31, 1999 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 --------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to __________________ Commission File Number 1-13434 EDISON MISSION ENERGY (Exact name of registrant as specified in its charter) CALIFORNIA 95-4031807 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 18101 VON KARMAN AVENUE IRVINE, CALIFORNIA 92612 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (949) 752-5588 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO _______ ------ Number of shares outstanding of the registrant's Common Stock as of May 13, 1999: 100 shares (all shares held by an affiliate of the registrant). TABLE OF CONTENTS
Item Page - ---- ---- PART I - FINANCIAL INFORMATION 1. Financial Statements................................................ 1 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................... 13 PART II - OTHER INFORMATION 5. Other Information................................................... 23 6. Exhibits and Reports on Form 8-K.................................... 23 PART III Signatures.......................................................... 24
PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS)
(Unaudited) Three Months Ended March 31, ------------------------------------- 1999 1998 ----------------- ------------------ OPERATING REVENUES Electric revenues $ 196,853 $ 198,797 Equity in income from energy projects 60,745 17,567 Equity in income from oil and gas 3,642 5,465 Operation and maintenance services 8,516 10,077 -------------- ------------- Total operating revenues 269,756 231,906 -------------- ------------- OPERATING EXPENSES Fuel 54,075 48,637 Plant operations 34,371 29,598 Operation and maintenance services 6,470 7,391 Depreciation and amortization 24,146 22,782 Administrative and general 36,497 24,172 -------------- ------------- Total operating expenses 155,559 132,580 -------------- ------------- Income from operations 114,197 99,326 -------------- ------------- OTHER INCOME (EXPENSE) Interest and other income 7,792 13,776 Interest expense (44,519) (45,725) Dividends on preferred securities (3,233) (3,297) -------------- ------------- Total other income (expense) (39,960) (35,246) -------------- ------------- Income before income taxes 74,237 64,080 Provision for income taxes 16,301 26,380 -------------- ------------- INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE $ 57,936 $ 37,700 Cumulative effect on prior years of change in accounting for start-up costs (13,840) - -------------- ------------- NET INCOME $ 44,096 $ 37,700 ============== =============
The accompanying notes are an integral part of these consolidated financial statements. 1 EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS)
(Unaudited) Three Months Ended March 31, ----------------------------- 1999 1998 ----------- ---------- NET INCOME $ 44,096 $ 37,700 Other comprehensive income (expense), net of tax: Foreign currency translation adjustments, net of income tax benefit (expense) of $1,378 and $(1,099) in 1999 and 1998, respectively (12,625) 8,315 ----------- ---------- COMPREHENSIVE INCOME $ 31,471 $ 46,015 =========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 2 EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
(Unaudited) March 31, December 31, 1999 1998 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 387,119 $ 459,178 Accounts receivable - trade 94,042 74,403 Accounts receivable - affiliates 5,679 13,871 Inventory 55,463 13,000 Prepaid expenses and other 37,684 46,864 ------------ ------------ Total current assets 579,987 607,316 ------------ ------------ INVESTMENTS Energy projects 1,210,409 1,163,597 Oil and gas 64,980 62,949 ------------ ------------ Total investments 1,275,389 1,226,546 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT 4,921,468 3,125,747 Less accumulated depreciation and amortization 269,600 250,934 ------------ ------------ Net property, plant and equipment 4,651,868 2,874,813 ------------ ------------ OTHER ASSETS Goodwill 297,230 308,051 Restricted cash and other 126,757 141,390 ------------ ------------ Total other assets 423,987 449,441 ------------ ------------ TOTAL ASSETS $6,931,231 $5,158,116 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. 3 EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
(Unaudited) March 31, December 31, 1999 1998 ------------- --------------- LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable - affiliates $ 13,595 $ 8,339 Accounts payable and accrued liabilities 126,182 99,062 Accrued incentive compensation 112,652 112,652 Interest payable 37,306 56,708 Short-term obligations 1,525,574 29,930 Current maturities of long-term obligations 198,570 194,586 ---------- ---------- Total current liabilities 2,013,879 501,277 ---------- ---------- LONG-TERM OBLIGATIONS NET OF CURRENT MATURITIES 2,575,715 2,366,430 ---------- ---------- LONG-TERM DEFERRED LIABILITIES Deferred taxes and tax credits 604,980 613,009 Deferred revenue 505,489 490,471 Other 92,137 79,369 ---------- ---------- Total long-term deferred liabilities 1,202,606 1,182,849 ---------- ---------- TOTAL LIABILITIES 5,792,200 4,050,556 ---------- ---------- COMPANY - OBLIGATED MANDATORILY REDEEMABLE SECURITY OF PARTNERSHIP HOLDING SOLELY PARENT DEBENTURES 150,000 150,000 ---------- ---------- COMMITMENTS AND CONTINGENCIES (Note 5) SHAREHOLDER'S EQUITY Common stock, no par value; 10,000 shares authorized; 100 shares issued and outstanding 64,130 64,130 Additional paid-in capital 629,406 629,406 Retained earnings 278,441 234,345 Accumulated other comprehensive income 17,054 29,679 ---------- ---------- TOTAL SHAREHOLDER'S EQUITY 989,031 957,560 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $6,931,231 $5,158,116 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
(Unaudited) Three Months Ended March 31, ------------------------------ 1999 1998 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 44,096 $ 37,700 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income from energy projects (60,745) (17,567) Equity in income from oil and gas (3,642) (5,465) Distributions from energy projects 28,888 37,264 Depreciation and amortization 24,146 22,782 Deferred taxes and tax credits 3,142 24,904 Cumulative effect on prior years of change in accounting for start-up costs 13,840 -- (Increase) decrease in accounts receivable (11,947) 7,251 Decrease in prepaid expenses and other 10,297 2,958 Increase in accounts payable and accrued liabilities 34,455 15,390 Decrease in interest payable (19,402) (2,306) Other, net (4,025) (19,548) ----------- ----------- Net cash provided by operating activities 59,103 103,363 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on long-term obligations 234,878 20,133 Payments on long-term obligations (22,583) (22,832) Short-term financing, net 1,496,522 - ----------- ----------- Net cash provided by (used in) financing activities 1,708,817 (2,699) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Investments in energy projects (6,184) (227) Loans to energy projects (14,815) (15,400) Purchase of generating station (1,800,355) -- Purchase of common stock of acquired companies - (4,109) Capital expenditures (27,512) (28,209) Decrease in restricted cash 27,527 32,956 Other, net (12,787) (1,478) ----------- ----------- Net cash used in investing activities (1,834,126) (16,467) ----------- ----------- Effect of exchange rate changes on cash (5,853) 2,631 ----------- ----------- Net increase (decrease) in cash and cash equivalents (72,059) 86,828 Cash and cash equivalents at beginning of period 459,178 585,883 ----------- ----------- Cash and cash equivalents at end of period $ 387,119 $ 672,711 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 5 EDISON MISSION ENERGY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 NOTE 1. GENERAL All adjustments, including recurring accruals, have been made that are necessary to present fairly the consolidated financial position and results of operations for the periods covered by this report. The results of operations for the three months ended March 31, 1999, are not necessarily indicative of the operating results for the full year. Edison Mission Energy's (EME) significant accounting policies are described in Note 2 to EME's Consolidated Financial Statements as of December 31, 1998 and 1997, included in its 1998 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1999. EME follows the same accounting policies for interim reporting purposes. This quarterly report should be read in connection with such financial statements. Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. NOTE 2. INVESTMENTS The following table presents summarized financial information of the investments in energy projects and oil and gas accounted for by the equity method:
(In thousands) (Unaudited) Three Months Ended March 31, ------------------------- 1999 1998 -------- -------- ENERGY PROJECTS Operating Revenues $442,844 $343,057 Income from Operations 172,246 59,931 Net Income 140,951 36,321 OIL AND GAS Operating Revenues $ 43,167 $ 57,465 Income from Operations 8,172 15,688 Net Income 7,274 12,480
6 NOTE 3. ACQUISITION In March 1999, EME Homer City Generation L.P. EME Homer City, an indirect, wholly owned affiliate of EME, completed a transaction with GPU, Inc., New York State Electric & Gas Corporation and their respective affiliates to acquire the 1,884-MW Homer City Electric Generating Station and certain facilities and other assets associated therewith (collectively, Homer City). Consideration for Homer City consisted of a cash payment of approximately $1.8 billion, which was partially financed by $1.5 billion of new loans (see Note 4). Pursuant to the Asset Purchase Agreement, EME guarantees all obligations of EME Homer City under the Asset Purchase Agreement. The acquisition was accounted for utilizing the purchase method. EME's consolidated statement of income for the three months ended March 31, 1999 reflects the operations of Homer City beginning on March 18, 1999. NOTE 4. FINANCIAL INSTRUMENTS In March 1999, Edison Mission Energy Holdings Co. (EME Holdings), parent company of EME Homer City, closed a $1.1 billion financing and EME closed a $700 million financing. The EME Holdings financing consists of (1) an $800 million, 364-day interest only term loan, (2) a $250 million, five-year interest only construction term loan and (3) a $50 million, five-year interest only revolving loan. These loans are structured on a limited-recourse basis, in which the lenders look primarily to the cash generated by EME Holdings and its subsidiaries to repay the debt and have taken a security interest in the assets of EME Holdings and its subsidiaries. The EME financing consists of a $700 million, 364-day interest only revolving credit facility, structured on a recourse, unsecured basis. The proceeds of EME Holdings' $800 million loan and EME's $700 million loan combined with cash and corporate revolver borrowings totaling approximately $300 million, were used to finance the acquisition of Homer City. NOTE 5. COMMITMENTS AND CONTINGENCIES FIRM COMMITMENTS FOR ASSET PURCHASES
PROJECTS U.S. ($ IN MILLIONS) - -------- -------------------- Commonwealth Edison Co. (i) $ 5,000 Contact Energy Ltd. (Contact) (ii) 625
(i) A wholly owned subsidiary of EME executed an Asset Sale Agreement to purchase the fossil-fuel generating assets of Commonwealth Edison Co., totaling 9,772 MW located in the midwestern United States. The closing of the transaction is subject to receipt of various state and federal regulatory approvals and is expected to be completed by year end 1999. 7 (ii) A wholly owned subsidiary of EME executed a Sale and Purchase Agreement to purchase 40% of Contact. Contact owns and operates hydroelectric, geothermal and natural gas-fired power generating plants in New Zealand with a total generating capacity of 2,371 MW. Contact also supplies gas and electricity to customers in New Zealand and has minority interests in two power projects in Australia. The acquisition is conditional on the New Zealand government completing an initial public offering of the remaining 60% of Contact, planned for May 1999. FIRM COMMITMENTS TO CONTRIBUTE PROJECT EQUITY
PROJECTS LOCAL CURRENCY U.S. ($ IN MILLIONS) - -------- -------------- -------------------- ISAB (i) 244 billion Italian Lira $ 136 Paiton (ii) 35 EcoElectrica (iii) 34 Tri Energy (iv) 25 Doga (v) 4
(i) ISAB is a 512-MW integrated gasification combined cycle power plant under construction near Siracusa in Sicily, Italy. A wholly owned subsidiary of EME owns a 49% interest. Equity will be contributed at commercial operation, which is currently scheduled for late 1999. (ii) Paiton is a 1,230-MW coal-fired power plant under construction in East Java, Indonesia. A wholly owned subsidiary of EME owns a 40% interest. Equity contributions are currently being made and will continue until commercial operation, which is currently scheduled for 1999. (iii) EcoElectrica is a 540-MW liquefied natural gas combined-cycle cogeneration facility under construction in Penuelas, Puerto Rico. A wholly owned subsidiary of EME owns a 50% interest. Equity will be contributed at commercial operation, which is currently scheduled for late 1999. (iv) Tri Energy is a 700-MW gas-fired power plant under construction in the Ratchaburi Province, Thailand. A wholly owned subsidiary of EME owns a 25% interest. Equity will be contributed at commercial operation, which is currently scheduled for mid-2000. (v) Doga is a 180-MW gas-fired power plant under construction near Istanbul, Turkey. A wholly owned subsidiary of EME owns an 80% interest. Equity contributions are currently being made and will continue until commercial operation, which is currently scheduled for the second quarter of 1999. Firm commitments to contribute project equity could be accelerated due to certain events of default as defined in the non-recourse project financing facilities. Management has no reason to believe that these events of default will occur to require acceleration of the firm commitments. 8 CONTINGENT OBLIGATIONS TO CONTRIBUTE PROJECT EQUITY
PROJECTS U.S. ($ IN MILLIONS) - -------- -------------------- Paiton (i) $141 Tri Energy (ii) 20 Doga (ii) 14 Contact (ii) 13 All Other 18
(i) Contingent obligations to contribute additional project equity (Contingent Equity) would be based on events principally related to capital cost overruns during the plant construction, certain partner obligations or events of default. These contingent obligations are to be cancelled (if unused) as of the date of term financing by the Export-Import Bank of the United States. Term financing by the Export-Import Bank of the United States is the subject of a comprehensive set of conditions and is scheduled to be achieved by October 1999. A dispute involving a slope adjacent to the Paiton site will require Contingent Equity to be contributed for amounts not otherwise covered by insurance. EME's share of the total costs related to the slope failure are currently estimated to be between $16 and $44 million. (ii) Contingent obligations to contribute additional equity to the project would be based on events principally related to capital cost overruns during plant construction, certain EME or partner obligations or events of default. Other than as noted above, management is not aware, at this time, of any other contingent obligations or obligations to contribute project equity. OTHER COMMITMENTS AND CONTINGENCIES Certain of EME's subsidiaries entered into indemnification agreements whereby the subsidiaries agreed to repay capacity payments to the projects' power purchasers, in the event the projects unilaterally terminate their performance or reduce their electric power producing capability during the term of the power contract. Obligations under these indemnification agreements as of March 31, 1999, if payment were required, would be $252 million. Management has no reason to believe that the projects will either terminate their performance or reduce their electric power producing capability during the term of the power contracts. Paiton is a 1,230-MW coal-fired power plant under construction in East Java, Indonesia. A wholly owned subsidiary of EME owns a 40% interest and has a $349 million investment at March 31, 1999. Construction on the two-unit Paiton project is nearing completion. The tariff is higher in the early years and steps down over time. The tariff for the Paiton project includes infrastructure to be used in common by other units at the Paiton complex. The plant's output is fully contracted with the state-owned electricity company, PT Perusahaan Listrik Negara (PLN). Payments are in Indonesian Rupiah, with the portion of such payments intended to cover non-Rupiah project costs (including 9 returns to investors) indexed to the Indonesian Rupiah/U.S. dollar exchange rate established at the time of the Power Purchase Agreement in February 1994. PLN's payment obligations are supported by the Government of Indonesia. The projected rate of growth of the Indonesian economy and the exchange rate of Indonesian Rupiah into U.S. dollars have deteriorated significantly since the Paiton project was contracted, approved and financed. The project received substantial finance and insurance support from the Export-Import Bank of the United States, The Export-Import Bank of Japan, the U.S. Overseas Private Investment Corporation and the Ministry of International Trade and Industry of Japan. The Paiton project's senior debt ratings have been reduced from investment grade to speculative grade based on the rating agencies' perceived increased risk that PLN might not be able to honor the electricity sales contract with Paiton. The Government of Indonesia has arranged to reschedule sovereign debt owed to foreign governments and has entered into discussions about rescheduling sovereign debt owed to private lenders. PLN has announced its intentions to commence discussions with independent power producers to renegotiate the power supply contracts, however it is not yet known what form the renegotiation may take. The initial meeting on these renegotiations is scheduled in May 1999. Any material modifications of the contract could also require a renegotiation of the Paiton project's debt agreement. The impact of any such renegotiations with PLN, the Government of Indonesia or the project's creditors on EME's expected return on its investment in Paiton is uncertain at this time, however, management believes that it will ultimately recover its investment in the project. Brooklyn Navy Yard is a 286-MW gas-fired cogeneration power plant in Brooklyn, New York. A wholly owned subsidiary of EME owns 50% of the project. In February 1997, the construction contractor asserted general monetary claims under the turnkey agreement against Brooklyn Navy Yard Cogeneration Partners, L.P. (BNY) for damages in the amount of $136.8 million. BNY has asserted general monetary claims against the contractor. In connection with a $407 million non-recourse project refinancing in 1997, EME agreed to indemnify BNY and its partner from all claims and costs arising from or in connection with the contractor litigation, which indemnity has been assigned to the lenders. EME believes that the outcome of this litigation will not have a material adverse effect on its financial position or results of operations. EME's projected construction expenditures that will be funded utilizing non- recourse project financing are $14 million at March 31, 1999. LITIGATION EME is routinely involved in litigation arising in the normal course of business. While the results of such litigation cannot be predicted with certainty, management, based on advice of counsel, does not believe that the final outcome of any pending litigation will have a material adverse effect on EME's financial position or results of operations. 10 ENVIRONMENTAL MATTERS EME is subject to environmental regulation by federal, state and local authorities in the U.S. and foreign regulatory authorities with jurisdiction over projects located outside the U.S. EME believes that it is in substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect its financial position or results of operations. EME completed a partial review of its sites in 1995 and does not believe that a material liability exists as of March 31, 1999. The implementation of Clean Air Act Amendments is expected to result in increased operating expenses; however, these increased operating expenses are not expected to have a material impact on EME's financial position or results of operations. NOTE 6. BUSINESS SEGMENTS EME operates predominately in one line of business, electric power generation, with reportable segments organized by geographic region: Americas, Asia Pacific and Europe, Central Asia, Middle East and Africa. EME's plants are located in different geographic areas, which mitigate the effects of regional markets, economic downturns or unusual weather conditions. These regions take advantage of the increasing globalization of the independent power market. Electric power and steam generated domestically is sold primarily under long-term contracts to electric utilities and industrial steam users located in the U.S. Excluding the U.K. and a project in Australia, electric power generated overseas is sold primarily under long-term contracts to electric utilities located in the country where the power is generated. Projects located in the U.K. and a project in Australia sell their energy and capacity production through a centralized electricity pool. These projects enter into short- and/or long-term contracts to hedge against the volatility of price fluctuations in the pool. Intercompany transactions have been eliminated in the following segment information.
Europe, (In thousands) Central Asia, Three Months Ended Asia Middle East Corporate/ March 31, 1999 Americas Pacific and Africa Other/(i)/ Total -------------- -------- --------- ---------- -------- ----- Operating revenues $ 83.4 $ 51.0 $ 135.4 $ -- $ 269.8 Net income (loss) 31.2 (5.5) 22.7 (4.3) 44.1 Total assets 2,973.6 1,745.6 2,212.0 -- 6,931.2 March 31, 1998 -------------- Operating revenues $ 29.4 $ 54.1 $ 148.4 $ -- $ 231.9 Net income (loss) 10.2 5.2 27.6 (5.3) 37.7 Total assets 901.3 1,779.5 2,421.5 -- 5,102.3
(i) Includes corporate net interest expense 11 NOTE 7. SUBSEQUENT EVENTS In April 1999, EME entered into agreements to acquire the Ferrybridge and Fiddler's Ferry electric generating plants from the U.K.'s PowerGen for approximately $2 billion. Each plant has a generating capacity of approximately 2,000 MW. The purchase is subject to regulatory approval in accordance with U.K. merger control legislation pursuant to an undertaking given by PowerGen to the U.K. Government last year that allowed PowerGen to buy the East Midlands Electricity Regional Electricity Company. EME plans to finance the acquisition with a combination of debt secured by the project, corporate debt, cash and funding from Edison International. The transaction is expected to close in the second quarter of 1999. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q includes certain forward-looking statements, the realization of which may be affected by certain important factors discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" thereunder and elsewhere herein. GENERAL - ------- Edison Mission Energy (EME) is a leading global power producer. Through its subsidiaries, EME is engaged in the business of developing, acquiring, owning and operating electric power generation facilities worldwide. EME's current investments include 53 projects totaling 12,399 megawatts (MW) of generation capacity, of which 9,237 are in operation and 3,162 are under construction. In addition, three operating projects totaling 16,280 MW of generating capacity are pending acquisition. EME's operating revenues are derived primarily from electric revenues and equity in income from energy projects. Operating revenues also include equity in income from oil and gas investments and revenue attributable to operation and maintenance services. Electric revenues are derived from consolidated results of operations of one domestic and several international entities. Equity in income from energy projects relates to EME's ownership interest of 50% or less voting stock in projects. The equity method of accounting is generally used to account for the operating results of entities over which EME has a significant influence but in which it does not have a controlling interest. With respect to entities accounted for under the equity method, EME recognizes its proportional share of the income or loss of such entities. ACQUISITION - ----------- In March 1999, EME Homer City Generation L.P. (EME Homer City), an indirect, wholly owned affiliate of EME, completed a transaction with GPU, Inc., New York State Electric & Gas Corporation and their respective affiliates to acquire the 1,884-MW Homer City Electric Generating Station and certain facilities and other assets associated therewith (collectively, Homer City). Consideration for Homer City consisted of a cash payment of approximately $1.8 billion. Pursuant to the Asset Purchase Agreement, EME guarantees all obligations of EME Homer City under the Asset Purchase Agreement. The acquisition was accounted for utilizing the purchase method. EME's consolidated statement of income for the three months ended March 31, 1999 reflects the operations of Homer City beginning on March 18, 1999. 13 RESULTS OF OPERATIONS - --------------------- OPERATING REVENUES Operating revenues increased $37.9 million for the first quarter of 1999, compared with the first quarter of 1998, resulting primarily from an increase in equity in income from energy projects. Equity in income from energy projects increased $43.2 million during the first quarter of 1999, compared with the same prior year period. This increase was primarily the result of higher revenues from several cogeneration projects due to a final settlement on energy pricing for prior years and from one cogeneration project as the result of a gain on termination of a power sales agreement. OPERATING EXPENSES Operating expenses increased $23 million for the first quarter of 1999, compared with the same prior year period. This increase was due to higher fuel, plant operations and administrative and general expenses. The increases in fuel expense and plant operations are primarily the result of the acquisition of Homer City in March 1999. The administrative and general expense increase was primarily related to increased project development/acquisition costs. OTHER INCOME (EXPENSE) Interest and other income decreased $6 million for the first quarter of 1999, compared with the first quarter of 1998. The decrease was primarily due to less interest earned on lower cash balances. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE In April 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98- 5, "Reporting on the Costs of Start-Up Activities", which became effective in January 1999. The Statement requires that certain costs related to start-up activities be expensed as incurred and that certain previously capitalized costs be expensed and reported as a cumulative change in accounting principle. The impact of adopting SOP 98-5 on EME's net income was $13.8 million, after-tax. PROVISION FOR INCOME TAXES EME recorded an effective tax provision rate of 22% for the three months ended March 31, 1999, compared with a 41% rate for the same prior year period. The decrease in the 1999 effective tax rate was primarily due to lower foreign income taxes that result from the permanent reinvestment of earnings from foreign affiliates located in different foreign tax jurisdictions. LIQUIDITY AND CAPITAL RESOURCES For the three months ended March 31, 1999, net cash provided by operating activities decreased to $59.1 million from $103.4 million for the same period in 1998. The 1999 decrease primarily reflects higher income taxes, lower distributions from energy projects and higher working capital requirements. Net cash provided by financing activities totaled $1,708.8 million during the first quarter of 1999, compared to net cash used in financing activities of $2.7 million in 1998 for the same prior year period. The 1999 increase is primarily due to the Edison Mission Energy Holding Co., parent company of EME Homer City, borrowing of $800 million, 14 EME financing of $700 million, and borrowing on the corporate revolver of $220 million, the proceeds of which were used to purchase Homer City. Net cash used in investing activities increased to $1,834.1 million for the three months ended March 31, 1999 from $16.5 million for the three months ended March 31, 1998. The increase is primarily due to the purchase of Homer City. At March 31, 1999, EME had cash and cash equivalents of $387.1 million and had available $224 million of borrowing capacity under a $500 million revolving credit facility that expires in 2001. This borrowing capacity under the revolving credit facility may be reduced by borrowings for firm commitments to contribute project equity and to fund capital expenditures and construction costs of its project facilities. FIRM COMMITMENTS FOR ASSET PURCHASES
PROJECTS U.S. ($ IN MILLIONS) - -------- -------------------- Commonwealth Edison Co. (i) $ 5,000 Contact Energy Ltd. (Contact) (ii) 625
(i) A wholly owned subsidiary of EME executed an Asset Sale Agreement to purchase the fossil-fuel generating assets of Commonwealth Edison Co., totaling 9,772 MW located in the midwestern United States. The closing of the transaction is subject to receipt of various state and federal regulatory approvals and is expected to be completed by year end 1999. (ii) A wholly owned subsidiary of EME executed a Sale and Purchase Agreement to purchase 40% of Contact. Contact owns and operates hydroelectric, geothermal and natural gas-fired power generating plants in New Zealand with a total generating capacity of 2,371 MW. Contact also supplies gas and electricity to customers in New Zealand and has minority interests in two power projects in Australia. The acquisition is conditional on the New Zealand government completing an initial public offering of the remaining 60% of Contact, planned for May 1999. FIRM COMMITMENTS TO CONTRIBUTE PROJECT EQUITY
PROJECTS LOCAL CURRENCY U.S. ($ IN MILLIONS) - -------- -------------- -------------------- ISAB (i) 244 billion Italian Lira $136 Paiton (ii) 35 EcoElectrica (iii) 34 Tri Energy (iv) 25 Doga (v) 4
(i) ISAB is a 512-MW integrated gasification combined cycle power plant under construction near Siracusa in Sicily, Italy. A wholly owned subsidiary of EME owns a 49% interest. Equity will be contributed at commercial operation, which is currently scheduled for late 1999. 15 (ii) Paiton is a 1,230-MW coal-fired power plant under construction in East Java, Indonesia. A wholly owned subsidiary of EME owns a 40% interest. Equity contributions are currently being made and will continue until commercial operation, which is currently scheduled for 1999. (iii) EcoElectrica is a 540-MW liquefied natural gas combined-cycle cogeneration facility under construction in Penuelas, Puerto Rico. A wholly owned subsidiary of EME owns a 50% interest. Equity will be contributed at commercial operation, which is currently scheduled for late 1999. (iv) Tri Energy is a 700-MW gas-fired power plant under construction in the Ratchaburi Province, Thailand. A wholly owned subsidiary of EME owns a 25% interest. Equity will be contributed at commercial operation, which is currently scheduled for mid-2000. (v) Doga is a 180-MW gas-fired power plant under construction near Istanbul, Turkey. A wholly owned subsidiary of EME owns an 80% interest. Equity contributions are currently being made and will continue until commercial operation, which is currently scheduled for the second quarter of 1999. Firm commitments to contribute project equity could be accelerated due to certain events of default as defined in the non-recourse project financing facilities. Management has no reason to believe that these events of default will occur to require acceleration of the firm commitments. CONTINGENT OBLIGATIONS TO CONTRIBUTE PROJECT EQUITY
PROJECTS U.S. ($ IN MILLIONS) - -------- -------------------- Paiton (i) $141 Tri Energy (ii) 20 Doga (ii) 14 Contact (ii) 13 All Other 18
(i) Contingent obligations to contribute additional project equity (Contingent Equity) would be based on events principally related to capital cost overruns during the plant construction, certain partner obligations or events of default. These contingent obligations are to be cancelled (if unused) as of the date of term financing by the Export-Import Bank of the United States. Term financing by the Export-Import Bank of the United States is the subject of a comprehensive set of conditions and is scheduled to be achieved by October 1999. A dispute involving a slope adjacent to the Paiton site will require Contingent Equity to be contributed for amounts not otherwise covered by insurance. EME's share of the total costs related to the slope failure are currently estimated to be between $16 and $44 million. 16 (ii) Contingent obligations to contribute additional equity to the project would be based on events principally related to capital cost overruns during plant construction, certain EME or partner obligations or events of default. Other than as noted above, management is not aware, at this time, of any other contingent obligations or obligations to contribute project equity. OTHER COMMITMENTS AND CONTINGENCIES Certain of EME's subsidiaries entered into indemnification agreements whereby the subsidiaries agreed to repay capacity payments to the projects' power purchasers, in the event the projects unilaterally terminate their performance or reduce their electric power producing capability during the term of the power contract. Obligations under these indemnification agreements as of March 31, 1999, if payment were required, would be $252 million. Management has no reason to believe that the projects will either terminate their performance or reduce their electric power producing capability during the term of the power contracts. Paiton is a 1,230-MW coal-fired power plant under construction in East Java, Indonesia. A wholly owned subsidiary of EME owns a 40% interest and has a $349 million investment at March 31, 1999. Construction on the two-unit Paiton project is nearing completion. The tariff is higher in the early years and steps down over time. The tariff for the Paiton project includes infrastructure to be used in common by other units at the Paiton complex. The plant's output is fully contracted with the state-owned electricity company, PT Perusahaan Listrik Negara (PLN). Payments are in Indonesian Rupiah, with the portion of such payments intended to cover non-Rupiah project costs (including returns to investors) indexed to the Indonesian Rupiah/U.S. dollar exchange rate established at the time of the Power Purchase Agreement in February 1994. PLN's payment obligations are supported by the Government of Indonesia. The projected rate of growth of the Indonesian economy and the exchange rate of Indonesian Rupiah into U.S. dollars have deteriorated significantly since the Paiton project was contracted, approved and financed. The project received substantial finance and insurance support from the Export-Import Bank of the United States, The Export-Import Bank of Japan, the U.S. Overseas Private Investment Corporation and the Ministry of International Trade and Industry of Japan. The Paiton project's senior debt ratings have been reduced from investment grade to speculative grade based on the rating agencies' perceived increased risk that PLN might not be able to honor the electricity sales contract with Paiton. The Government of Indonesia has arranged to reschedule sovereign debt owed to foreign governments and has entered into discussions about rescheduling sovereign debt owed to private lenders. PLN has announced its intentions to commence discussions with independent power producers to renegotiate the power supply contracts, however it is not yet known what form the renegotiation may take. The initial meeting on these renegotiations is scheduled in May 1999. Any material modifications of the contract could also require a renegotiation of the Paiton project's debt agreement. The impact of any such renegotiations with PLN, the Government of Indonesia or the project's creditors 17 on EME's expected return on its investment in Paiton is uncertain at this time, however, management believes that it will ultimately recover its investment in the project. Brooklyn Navy Yard is a 286-MW gas-fired cogeneration power plant in Brooklyn, New York. A wholly owned subsidiary of EME owns 50% of the project. In February 1997, the construction contractor asserted general monetary claims under the turnkey agreement against Brooklyn Navy Yard Cogeneration Partners, L.P. (BNY) for damages in the amount of $136.8 million. BNY has asserted general monetary claims against the contractor. In connection with a $407 million non- recourse project refinancing in 1997, EME agreed to indemnify BNY and its partner from all claims and costs arising from or in connection with the contractor litigation, which indemnity has been assigned to the lenders. EME believes that the outcome of this litigation will not have a material adverse effect on its financial position or results of operations. EME's projected construction expenditures that will be funded utilizing non-recourse project financing are $14 million at March 31, 1999. EME and its subsidiaries may incur additional obligations to make equity and other contributions to projects in the future. EME believes that it will have sufficient liquidity on both a short- and long-term basis to fund pre- financing project development costs, make equity contributions to partnerships, pay corporate debt obligations and pay other administrative and general expenses as they are incurred from (1) distributions from energy projects and dividends from investments in oil and gas, (2) proceeds from the repayment of loans to energy projects and (3) funds available from EME's revolving credit facility. CHANGES IN INTEREST RATES, CHANGES IN ELECTRICITY POOL PRICING, FOREIGN CURRENCY FLUCTUATIONS AND OTHER CONTRACTUAL OBLIGATIONS Changes in interest rates, changes in electricity pool pricing and fluctuations in foreign currency exchange rates can have a significant impact on EME's results of operations. Interest rate changes affect the cost of capital needed to construct and finance projects. EME has mitigated the risk of interest rate fluctuations by arranging for fixed rate financing or variable rate financing with interest rate swaps or other hedging mechanisms for the majority of its project financing. Interest expense included $6.2 million and $6.1 million for the three months ended March 31, 1999, and 1998, respectively, as a result of interest rate swap and collar agreements. EME has entered into several interest rate swap and collar agreements whereby the maturity date of the swaps and collars occurs prior to the final maturity of the underlying debt. EME does not believe that interest rate fluctuations will have a material adverse effect on its financial position or results of operations. Projects in the U.K. sell their electrical energy and capacity through a centralized electricity pool, which establishes a half-hourly clearing price (also referred to as the "pool price") for electrical energy. The pool price is extremely volatile and can vary by as much as a factor of ten or more over the course of a few hours, due to the large differentials in demand according to the time of day. First Hydro mitigates a portion of the market risk of the pool by entering into contracts for differences (electricity rate swap 18 agreements), related to either the selling or purchasing price of power, whereby a contract specifies a price at which the electricity will be traded, and the parties to the agreement make payments, calculated based on the difference between the price in the contract and the pool price for the element of power under contract. These contracts are sold in various structures. These contracts act as a means of stabilizing production revenues or purchasing costs by removing an element of First Hydro's net exposure to pool price volatility. On July 29, 1998, the Director General of Electricity Supply proposed to the Minister for Science, Energy and Industry that the current structure of contracts-for-differences and compulsory trading via the pool at half-hourly clearing prices bid a day ahead be abolished. He proposed in its place, among other things, the establishment of voluntary forwards and futures markets, organized by independent market operators and evolving in response to demand; a short-term bilateral market operating from 24 to 4-hours before a trading period; a balancing market to enable the system operator to balance generation and demand and resolve any transmission constraints; a settlement process for recovering imbalances between contracted and metered volumes with stronger incentives for being in balance; and a Balancing and Settlement Code Panel to oversee governance of the short-term bilateral and balancing markets. The Minister for Science, Energy and Industry has recommended that the proposal be implemented by April 2000. Further definition of the proposal will be required before the effects of the changes can be evaluated. Implementation of the proposal may also require legislation. Loy Yang B sells its electrical energy through a centralized electricity pool (the National Electricity Market) which provides for a system of generator bidding, central dispatch and a settlements system based on a clearing market for each half-hour of every day. The Victorian Power Exchange, operator and administrator of the pool, determines a system marginal price each half-hour. To mitigate exposure to price volatility of the electricity traded into the pool, Loy Yang B has entered into a number of financial hedges. From May 8, 1997 to December 31, 2000, approximately 53% to 64% of the plant output sold is hedged under "Vesting Contracts" with the remainder of the plant capacity hedged under the "State Hedge" described below. Vesting Contracts were put into place by the State Government of Victoria, Australia (State), between each generator and each distributor, prior to the privatization of electric power distributors in order to provide more predictable pricing for those electricity customers that were unable to choose their electricity retailer. Vesting Contracts set base strike prices at which the electricity will be traded, and the parties to the agreement make payments, calculated based on the difference between the price in the contract and the half-hourly pool clearing price for the element of power under contract. These contracts are sold in various structures. These contracts are accounted for as electricity rate swap agreements. The State Hedge is a long- term contractual arrangement based upon a fixed price commencing May 8, 1997, and terminating October 31, 2016. The State guarantees SECV's obligations under the State Hedge. EME's electric revenues were increased by $23.3 million and $50.7 million for the three-month period ended March 31, 1999, and 1998, respectively, as a result of electricity rate swap agreements. 19 Electric power generated at Homer City is sold under bilateral arrangements with domestic utilities and power marketers under short-term contracts (two years or less) or to the Pennsylvania-New Jersey-Maryland Power Pool (PJM) or the New York Power Pool (NYPP). These pools have short-term markets, which establish an hourly clearing price. Homer City is situated in the PJM Control Area and is physically connected to high-voltage transmission lines serving both the PJM and NYPP markets. Power can also be transmitted to the midwestern United States. EME has developed risk management policies and procedures which, among other matters, address credit risk. It is EME's policy to sell to investment grade counterparties. EME intends on hedging a portion of the electric output of the plant in order to lock in desirable outcomes. It plans to manage the "spark spread" or margin, that is the spread between electric prices and fuel prices when deemed appropriate. It plans to use forward contracts, swaps, futures, or options contracts to achieve those objectives. The electric power generated by EME's domestic operating projects, excluding Homer City, is generally sold to electric utilities pursuant to long- term (typically, 15 to 30-year) power sales contracts and is expected to result in consistent cash flow under a wide range of economic and operating circumstances. To accomplish this, EME structured its power sales contracts so that fluctuations in fuel costs would produce similar fluctuations in electric and/or steam revenues and entered into long-term fuel supply and transportation agreements. Fluctuations in foreign currency exchange rates can affect, on a U.S. dollar equivalent basis, the amount of EME's equity contributions to, and distributions from, its foreign projects. As EME continues to expand into foreign markets, fluctuations in foreign currency exchange rates can be expected to have a greater impact on EME's results of operations in the future. At times, EME has hedged a portion of its current exposure to fluctuations in foreign exchange rates where it deems appropriate through financial derivatives, offsetting obligations denominated in foreign currencies and indexing underlying project agreements to U.S. dollars or other indices reasonably expected to correlate with foreign exchange movements. In addition, EME has used statistical forecasting techniques to help assess foreign exchange risk and the probabilities of various outcomes. There can be no assurance, however, that fluctuations in exchange rates will be fully offset by hedges or that currency movements and the relationship between certain macro economic variables will behave in a manner consistent with historical or forecasted relationships. ENVIRONMENTAL MATTERS EME is subject to environmental regulation by federal, state and local authorities in the U.S. and foreign regulatory authorities with jurisdiction over projects located outside the U.S. EME believes that it is in substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect its financial position or results of operations. EME completed a partial review of its sites in 1995 and does not believe that a material liability exists as of March 31, 1999. The implementation of Clean Air Act 20 Amendments is expected to result in increased operating expenses; however, these increased operating expenses are not expected to have a material impact on EME's financial position or results of operations. YEAR 2000 ISSUE EME has a comprehensive program in place to remediate potential Year 2000 impacts from critical systems. EME divides its Year 2000 Issue activities into five phases: inventory, impact assessment, remediation, documentation and certification. EME's plan is for critical systems to be complete by July 1999. A critical system is defined as those applications and systems, including embedded processor technology, which if not appropriately remediated may have a significant impact on customers, the revenue stream, regulatory compliance, or the health and safety of personnel. EME has essentially completed all phases of the project and is going through the final review and approval process, well ahead of the July date. Assurances from third party operated plants have been received indicating aggressive Year 2000 remediation programs. Monitoring of these efforts is ongoing. Plants under construction have obtained assurances from new construction and development contractors, who have been requested to ensure this is part of their goals. General warranty of plants would likely include any equipment issues that may arise regarding Year 2000 in the current year. The other essential component of the EME Year 2000 readiness program is to identify and assess vendor products and business partners for Year 2000 readiness. EME has a process in place to identify and contact vendors and business partners to determine their Year 2000 status, and is evaluating the responses. EME's general policy requires that all newly purchased products be Year 2000 ready or otherwise designed to allow EME to determine whether such products present Year 2000 issues. Plant contingency plans have been developed and reviewed for any significant issues and to schedule appropriate testing and/or training. Such contingency plans include developing strategies for dealing with Year 2000- related processing failures or malfunctions due to EME's internal systems or from external parties. EME's contingency plans evaluate reasonably likely worst case scenarios or conditions. EME does not expect the Year 2000 issue to have a material adverse effect on its results of operations or financial position. However, if not effectively remediated, negative effects from Year 2000 issues, including those related to external systems, vendors, business partners, the independent system operator, the power exchange or customers, could cause results to differ. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133 In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities", which will be effective in January 2000. The Statement establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in 21 earnings unless specific hedge accounting criteria are met. A derivative's gains and losses for qualifying hedges offset related results on the hedged item in the income statement and a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. The impact of adopting Statement 133 on EME's financial statements has not been quantified at this time. ACQUISITIONS PENDING In March 1999, EME entered into agreements to acquire the fossil-fuel generating assets of Commonwealth Edison Co. (ComEd), totaling 9,772 MW. EME will operate the plants, which are located in the midwestern United States. The closing of the transaction is subject to various state and federal regulatory approvals and is expected to be completed by year end 1999. EME plans to finance the approximately $5 billion acquisition with a combination of debt secured by the project, corporate debt, cash and funding from Edison International. The acquisition is expected to have an immaterial effect on earnings in 1999, 2000 and 2001 as a result of transition contracts whereby ComEd will retain power purchase agreements with EME, enabling ComEd access to certain amounts of plant output for the next five years to serve its customers. In March 1999, EME entered into agreements to acquire 40% of Contact, currently owned by the government of New Zealand. Contact owns and operates hydroelectric, geothermal and natural gas-fired power generating plants in New Zealand with a total generating capacity of 2,371 MW. Contact also supplies gas and electricity to customers in New Zealand and has minority interests in two power projects in Australia. The acquisition is conditional on the New Zealand government completing an initial public offering of the remaining 60% of Contact, planned for May 1999. EME plans to finance the approximately $625 million acquisition with debt secured by the project, corporate debt, cash and funding from Edison International. The acquisition is expected to have an immaterial effect on earnings through 2001. In April 1999, EME entered into agreements to acquire the Ferrybridge and Fiddler's Ferry electric generating plants from the U.K.'s PowerGen for approximately $2 billion. Each plant has a generating capacity of approximately 2,000 MW. The purchase is subject to regulatory approval in accordance with U.K. merger control legislation pursuant to an undertaking given by PowerGen to the U.K. Government last year that allowed PowerGen to buy the East Midlands Electricity Regional Electricity Company. EME plans to finance the acquisition with a combination of debt secured by the project, corporate debt, cash and funding from Edison International. The transaction is expected to close in the second quarter of 1999. The acquisition is expected to contribute to earnings immediately after closing. 22 PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION OTHER EVENTS In April 1999, EME entered into agreements to acquire the Ferrybridge and Fiddler's Ferry electric generating plants from the United Kingdom's PowerGen for approximately $2 billion. Each plant has a generating capacity of approximately 2,000 MW. The purchase is subject to regulatory approval in accordance with U.K. merger control legislation pursuant to an undertaking given by PowerGen to the U.K. Government last year that allowed PowerGen to buy the East Midlands Electricity Regional Electricity Company. EME plans to finance the acquisition with a combination of debt secured by the project, corporate debt, cash and funding from Edison International. The transaction is expected to close in the second quarter of 1999. The acquisition is expected to contribute to earnings immediately after closing. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS EXHIBIT NO. DESCRIPTION ----------- ----------- 2.6 Agreement for the Sale and Purchase of Shares in Contract Energy Limited between Her Majesty the Queen in Right of New Zealand, Edison Mission Energy Taupo Limited and Edison Mission Energy 27 Financial Data Schedule (B) REPORTS ON FORM 8-K The registrant filed the following reports on Form 8-K during the quarter ended March 31, 1999. Date of Report Date Filed Item Reported -------------- ---------- ------------- March 18, 1999 April 2, 1999 2 23 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. EDISON MISSION ENERGY ----------------------------- (Registrant) Date: May 12, 1999 /s/ THOMAS E. LEGRO - ------------------ ----------------------------- THOMAS E. LEGRO, Vice President and Controller 24 EX-2.6 2 AGREEMENT FOR THE SALE & PURCHASE EXHIBIT 2.6 HER MAJESTY THE QUEEN IN RIGHT OF NEW ZEALAND as Vendor - and - EDISON MISSION ENERGY TAUPO LIMITED as Purchaser - and - EDISON MISSION ENERGY as Guarantor - -------------------------------------------------------------------------------- AGREEMENT FOR THE SALE AND PURCHASE OF SHARES IN CONTACT ENERGY LIMITED - -------------------------------------------------------------------------------- [LOGO OF SIMPSON GRIERSON APPEARS HERE] CONTENTS Clause Heading l. Interpretation 2. Sale of the Shares 3. Purchase Price 4 Purchaser's Obligations 5. Settlement and Payment of the Purchase Price 6. Conditions of Settlement 7. Warranties 8. Pending Settlement 9. Restrictions 10. Purchaser's Covenants 11. No Greater Rights 12 Guarantee and Indemnity 13. Expenses 14. Delay in Exercise of Rights 15. Further Assurances and Post Settlement 16. Amendments 17. Assignment 18. Notices 19. Counterparts 20. Governing Law 21. Process Agent SCHEDULE l. Registered Holders 2. Form of Letter of Credit 3. Form of Indemnity 4. Bidding Rules 5. Capital Expenditure Details 6. Purchaser and Guarantor Details THIS AGREEMENT is dated 1999 BETWEEN: (1) HER MAJESTY THE QUEEN IN RIGHT OF NEW ZEALAND acting by and through her MINISTER OF FINANCE and her MINISTER RESPONSIBLE FOR CONTACT ENERGY LIMITED (the "Vendor" or the "Crown"); and (2) THE PURCHASER SPECIFIED IN SCHEDULE 6 (the "Purchaser"); (3) THE GUARANTOR SPECIFIED IN SCHEDULE 6 (the "Guarantor"). RECITALS: A. Contact Energy Limited (the "COMPANY") is a company registered under the Companies Act 1993 and has an issued share capital of 603,950,000 ordinary shares each ranking pari passu in all respects (such shares representing the consolidated number of shares after a two for one consolidation occurring on or about 10 March 1999). B. The Vendor is the beneficial owner of all of the issued shares in the Company, which are registered in the names of certain persons as set out in Schedule l. C. The Vendor is willing to sell 241,580,000 of the shares in the Company, being 40.0% of the issued shares in the Company, and being the shares expressed to be subject to this Agreement in Schedule 1 (the "SHARES"), and the Purchaser is willing to purchase the Shares, in accordance with the provisions of this Agreement. D. The Vendor intends to sell the remaining 362,370,000 shares in the Company by means of an initial public offering of the shares involving a combined global offering to members of the public and institutional and professional investors in New Zealand and to institutional and professional investors in Australia (the "AUSTRALASIAN OFFERING") and to institutional and professional investors in the United States and other countries (the "INTERNATIONAL OFFERING"). E. It is intended that the International Offering will be fully underwritten on a basis which is consistent with usual practice in international financial markets pursuant to a purchase agreement ("PURCHASE AGREEMENT"). The Purchase Agreement is intended to be conditional on settlement of the sale of the Shares pursuant to this Agreement. Settlement of the sale of the Shares pursuant to this Agreement is intended to occur contemporaneously with settlement under the Purchase Agreement. -2- F. The Purchaser and the Guarantor acknowledge that: (a) the Vendor has incurred, and will incur, significant costs in relation to the Contact IPO; (b) those costs have been incurred in reliance on the Shares being sold contemporaneously with the sale of the shares the subject of the Contact IPO; and (c) failure by the Purchaser and Guarantor to satisfy their obligations under this Agreement may result in settlement under the Contact IPO being delayed or cancelled resulting in loss to the Vendor. G. The Guarantor is willing to guarantee the performance by the Purchaser of its obligations under this Agreement. IT IS AGREED: 1. INTERPRETATION 1.1 Definitions: In this Agreement (including in the Recitals), unless the context otherwise requires: "ACCEPTABLE BANK" means an internationally recognised bank with a credit rating for long term debt of AA- or better, as issued by Standard & Poor's (or a comparable credit rating issued by another internationally recognised rating agency); "AGREEMENT" means this Agreement, together with the Schedules; "AUSTRALASIAN OFFERING" is defined in Recital D; "BASE RATE" means for any period: (a) the mid or "FRA" "settlement" rate for bank accepted bills of exchange having a tenor equivalent to the term of the relevant period as quoted on the Reuters page BKBM (or any successor page) at or about 10:45 a.m. on the date on which such rate is to be determined (expressed as a percentage); or (b) if such rate is not available then such rate reasonably determined by a bank, nominated for that purpose by the Governor of the Reserve Bank of New Zealand, to be the nearest practicable equivalent; "BID BOND" means the bid bond in the amount of $25 million issued by an Acceptable Bank in favour of the Vendor in connection with the Purchaser's bid, as required by section 3 of the Bidding Rules; -3- "BIDDING RULES" means the bidding rules dated January 1999 issued by the Vendor relating to the sale of the Shares by international tender as the same may have been amended from time to time, the operative version of which as at the Final Bid Date is attached as Schedule 4; "BUSINESS" means the businesses carried on by the Group as at the Final Bid Date; "BUSINESS DAY" means a day (other than a Saturday or Sunday) on which registered banks (within the meaning of the Reserve Bank of New Zealand Act 1989) are open for the transaction of normal banking business in Wellington; "COMPANY" is defined in Recital A; "CONDITION DATE" means 29 October 1999; "CONFIDENTIAL INFORMATION" is defined in clause 9.3; "CONTACT IPO" means the intended initial public offering of up to 362,370,000 shares in the Company to be effected by means of the Australasian Offering and the International Offering; "DEFAULT INTEREST" is defined in clause 5.5; "DOLLARS" and the sign "$" means New Zealand dollars; "ECNZ" means Electricity Corporation of New Zealand Limited; "ENCUMBRANCE" or "ENCUMBRANCE" includes a debenture, mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, title retention, equity, deferred purchase, option and any other security interest or third party right whether legal or equitable (and references to "ENCUMBER" are to be construed accordingly); "EXECUTION DATE" means the date of execution of this Agreement by the Crown, being a date no later than 21 days after the Final Bid Date; "FINAL BID DATE" means the final date for delivery of final bids under the Bidding Rules, as set out in clause 3.5 of the Bidding Rules and as amended, if at all, by the Vendor in accordance with the Bidding Rules; "GOVERNMENT DOCUMENTS" means any New Zealand Government cabinet papers or ministerial papers; "GROUP" means the Company and the Subsidiaries; "INTERNATIONAL OFFERING" is defined in Recital D; "LETTER OF CREDIT" means the irrevocable standby letter or letters of credit, as required by section 3 of the Bidding Rules, in favour of the Vendor issued by an -4- Acceptable Bank or Acceptable Banks for, in aggregate, the full amount of the Purchase Price and otherwise in the form set out in Schedule 2, or in such other form as agreed by the Vendor in writing; "OFFERING DOCUMENTS" means the documents that are, or are intended to be, made available to potential investors in the Company in relation to the Contact IPO, whether in New Zealand or elsewhere; "ORDERS IN COUNCIL" means the Order or Orders in Council which bring into force sections 3(1) and 3(7) of the State-Owned Enterprises (Contact Energy Limited) Amendment Act 1998; "PURCHASE AGREEMENT" is defined in Recital E; "PURCHASE PRICE" means the sum specified in Schedule 6; "RELATED BODY CORPORATE" bears the same meaning as in the Securities Amendment Act 1988; "SCHEDULE" means a schedule to this Agreement; "SETTLEMENT" means the performance by the parties of their respective obligations under clauses 5.2 and 5.4; "SETTLEMENT DATE" means the date by and upon which the condition in. clause 6.1 is satisfied or waived (which date is intended to be the same as the date of settlement and completion under the Purchase Agreement), or such later date as the Vendor and the Purchaser agree in writing; "SHARES" is defined in Recital C; "SHAREHOLDING MINISTERS" means the Minister of Finance and the Minister Responsible for Contact Energy Limited; "STANDSTILL DEED" means the deed titled "Standstill Deed" entered into by the Purchaser and the Guarantor and in favour of the Vendor, the Company, the New Zealand Stock Exchange and each member of the Syndicate; "SUBSIDIARIES" means Contact United Energy Limited, Javelin Limited, Hawkes Bay Power Limited, Contact Australia Pty Limited and their respective subsidiaries (if any); "SYNDICATE" means ABN AMRO Rothschild (the equity capital markets joint venture of the Rothschild and ABN AMRO groups of companies), NM Rothschild & Sons Limited, Rothschild Australia Securities Limited, ABN AMRO Bank NV, ABN AMRO Corporate Finance Australia Limited, and every Related Body Corporate of any such company, and every other person identified in any of the -5- Offering Documents as a manager and/or co-lead manager of the International Offering and/or the Australasian Offering; "VERIFICATION CERTIFICATE" means the certificate as defined in the Bidding Rules; and "WARRANTY" means a warranty in terms of clause 7. 1.2 PARTIES: In this Agreement, a reference to any party is to a party to this Agreement and includes, as far as is consistent with the provisions of this Agreement, that party's successors in title and permitted assigns. 1.3 STATUTES: In this Agreement, any reference to a statute or statutory provision, or order or regulation made under it, includes: (a) that statute, provision, order or regulation, as amended, modified, re-enacted or replaced from time to time (whether before or after the Execution Date); and (b) any previous statute, statutory provision, order or regulation amended, modified, re-enacted or replaced by that statute, provision, order or regulation. 1.4 GENERAL REFERENCES: In this Agreement, any reference to: (a) a "PERSON" includes an individual, body corporate, an association of persons (whether corporate or not), a trust, estate and agency of a state (in each case, whether or not having separate legal personality and whether incorporated or existing in New Zealand or elsewhere); (b) a "SUBSIDIARY" is to a subsidiary as defined in the Companies Act 1993 or the Corporations Law (Australia); (c) one gender includes each other gender; (d) the singular includes the plural and vice versa; (e) an agreement includes that agreement as modified, supplemented, novated or substituted from time to time; and (f) time is to New Zealand standard time. 1.5 HEADINGS: Headings and the table of contents are to be ignored in construing this Agreement. 1.6 JOINT AND SEVERAL - PURCHASER: Where two or more persons are named as "the Purchaser" the expression "the Purchaser" shall be a reference to each of the said persons severally as well as any two or greater number of them jointly, and the -6- obligations and agreements of the Purchaser in this Agreement shall bind each of them and every two or greater number of them jointly and each of them severally provided however that the delivery by or on behalf of the Vendor of any notice, document or information to any one or more of them shall be deemed to be delivery to all of them. 1.7 JOINT AND SEVERAL - GUARANTOR: Where two or more persons are named as "the Guarantor" the expression "the Guarantor" shall be a reference to each of the said persons severally as well as any two or greater number of them jointly, and the obligations and agreements of the Guarantor in this Agreement shall bind each of them and every two or greater number of them jointly and each of them severally provided however that the delivery by or on behalf of the Vendor of any notice, document or information to any one or more of them shall be deemed to be delivery to all of them. 2. SALE OF THE SHARES 2.1 AGREEMENT TO SELL: The Vendor will sell, as beneficial owner, and the Purchaser will purchase, the Shares on and with effect from the Settlement Date. 2.2 CONDITION OF THE SHARES: The Shares will, on transfer to the Purchaser, be free from Encumbrances and have the benefit of all rights attaching to them including the right to receive all dividends declared or paid, or distributions (as that term is defined in the Companies Act 1993) made, on the Shares after the Settlement Date. 3. PURCHASE PRICE 3.1 PURCHASE PRICE: The Purchaser shall pay the Purchase Price to the Vendor before 2:00 p.m. on the Settlement Date. Until the whole of the Purchase Price is finally received by the Vendor no right, title or interest in the Shares shall pass to the Purchaser. 3.2 PAYMENTS: All payments to be made by a party under this Agreement will be made free of any deduction, withholding, set-off, counterclaim, restriction or condition. 3.3 CORE ACQUISITION PRICE: The Purchase Price does not include any capitalised interest. In addition, the parties agree that the "lowest price" for the purposes of the definition of "core acquisition price" in section OB 1 of the Income Tax Act 1994 is equal to the Purchase Price. 4. PURCHASER'S OBLIGATIONS 4.1 LETTER OF CREDIT: Within seven days following the Execution Date the Purchaser will establish, or will procure the establishment of, the Letter of Credit and deliver the same to the Vendor. Upon receipt of the Letter of Credit, the Vendor will return -7- the Bid Bond to the Purchaser, (subject to compliance by the Purchaser with all obligations secured thereby), undrawn and uncalled, and shall advise the provider of the Bid Bond in writing that the Bid Bond is no longer required by it. The Letter of Credit may be drawn upon by the Vendor in or towards satisfaction of payment of the Purchase Price if the Vendor fails to pay the Purchase Price or any portion of it in accordance with clause 3. 4.2 REMEDIES OF THE VENDOR ON DEFAULT: If the Purchaser fails to comply with clause 4.1 in any respect then, without prejudice to any other rights or remedies available to the Vendor at law or in equity, including making demand under the Bid Bond, the Vendor may cancel this Agreement by notice to the Purchaser and sue the Purchaser for damages. Where the Vendor is entitled to cancel this Agreement, the entry by the Vendor into a conditional or unconditional contract for the sale of the Shares by the Vendor will take effect as a cancellation of this Agreement by the Vendor if this Agreement has not previously been cancelled and such resale will be deemed to have occurred after cancellation. The damages claimable by the Vendor under this clause 4.2 will include the damages specified in clause 5.7. 5. SETTLEMENT AND PAYMENT OF THE PURCHASE PRICE 5.1 TIME AND PLACE: Settlement will take place before 2:00 p.m. on the Settlement Date at the offices of Simpson Grierson at Unisys House, 44-52 The Terrace, Wellington, New Zealand or at such other time or place as the Vendor and the Purchaser may agree. 5.2 DOCUMENTS FOR DELIVERY BY VENDOR ON SETTLEMENT: On Settlement, and against compliance with clause 5.4, the Vendor will deliver to the Purchaser: (a) registrable transfers of the Shares, executed by the Shareholding Ministers, in favour of the Purchaser, together with the relevant share certificates (if any) or a certificate from an authorised officer of the Company certifying that no share certificates have been issued; (b) evidence that the Purchaser's name has been entered on the Company's share register as the holder of the Shares; and (c) a certified copy of each of the resolutions referred to in clause 5.3. 5.3 RESOLUTIONS: Prior to Settlement, the Vendor will procure the passing of the necessary resolutions of the shareholders or directors of the Company sanctioning the registration of the transfers of the Shares and appointing three Purchaser's nominees as directors to the board of the Company (notified to the Vendor just prior to Settlement) with effect from Settlement. -8- 5.4 REQUIREMENTS OF PURCHASER ON SETTLEMENT: On Settlement, the Purchaser will make or procure payment of the Purchase Price in accordance with clause 3. 5.5 DEFAULT INTEREST: (a) If the Purchaser does not pay, or the Vendor does not receive, under the Letter of Credit or otherwise, any sum payable under or in terms of this Agreement as and when due the Purchaser will, on demand by the Vendor, pay interest on that unpaid sum ("DEFAULT INTEREST"). (b) Default Interest will accrue without the necessity for demand or notice on any unpaid sum from day to day from the due date up to the date of actual payment, before and after judgment, in accordance with this clause. Default Interest shall be calculated and payable by reference to successive periods. Each such period shall be of one month or such shorter period as the Vendor may from time to time select and the rate of interest applicable to the unpaid amount for a particular period shall be the rate which is two per cent above the Base Rate determined on the first day of the relevant period or if such date is not a Business Day on the next following Business Day. Default Interest payable under this clause shall be due and payable at the end of each period by reference to which it is calculated, or at the time of payment of the relevant unpaid amount if prior to the end of such a period (at the applicable rate but calculated daily for such part- period), and if not paid shall be capitalised and itself bear interest accordingly. 5.6 REMEDIES OF THE VENDOR ON DEFAULT: If the Vendor has complied, or is in a position to comply, with its obligations under clause 5.2 and clause 5.3 and the Purchaser does not pay, or the Vendor does not receive, under the Letter of Credit or otherwise, the Purchase Price or the Purchaser does not meet all of the Purchaser's other obligations to be performed on the Settlement Date then: (a) without prejudice to any other rights or remedies available to the Vendor at law or in equity, the Vendor may: (i) sue the Purchaser for specific performance; or (ii) cancel this Agreement by notice to the Purchaser and sue the Purchaser and/or Guarantor for damages (provided that any such cancellation shall not affect clause 12 or clause 15.3, each of which shall remain in effect subject to and in accordance with its terms); and (b) where the Vendor is entitled to cancel this Agreement, the entry by the Vendor into a conditional or unconditional contract for the sale of the Shares by the Vendor will take effect as a cancellation of this Agreement by the Vendor if this Agreement has not previously been cancelled and such resale will be deemed to have occurred after cancellation. -9- 5.7 DAMAGES CLAIMABLE BY THE VENDOR: The damages claimable by the Vendor under clause 5.6 (a)(ii) and clause 4.2 will include all damages claimable at common law or in equity and will also include (but will not be limited to): (a) in the event that the Contact IPO is cancelled as a consequence of cancellation of this Agreement, all costs incurred by the Vendor in respect of or in relation to the Contact IPO and/or its cancellation including, without limitation, all fees and disbursements paid or payable by the Vendor to the Syndicate or any other advisers; (b) in the event that the Contact IPO is delayed as a consequence of cancellation of this Agreement, all costs incurred by the Vendor in respect or in relation to the delay of the Contact IPO including, without limitation, the costs involved in preparing new or amended Offer Documents, and all fees and disbursements paid or payable by the Vendor to the Syndicate or any other advisers in respect of the same; and (c) any loss incurred by the Vendor on any bona fide resale or attempted resale of the Shares or the shares the subject of the Contact IPO. The amount of that loss may include: (i) in the case of cancellation under clause 5.6(a)(ii), interest on the Purchase Price at the Default Interest rate described in clause 5.5(b) from the Settlement Date to the settlement of such resale; and (ii) all costs and expenses reasonably incurred in any resale or attempted resale, together, in the case of cancellation under clause 5.6(a)(ii), with interest at the Default Interest rate described in clause 5.5(b) on any such loss from the date of settlement of the resale until payment of the loss (and the interest thereon). 5.8 THIRD PARTY CONSENTS: The Vendor will, in its capacity as the beneficial owner of the Company, use all reasonable endeavours to procure that the Company co-operates with the Purchaser to seek, prior to the Settlement Date, the consents of all parties who are parties to leases and other contracts with the Company under which consent is necessary as a consequence of a change in shareholding of the Company and which the Purchaser desires to obtain. 6. CONDITIONS OF SETTLEMENT 6.1 CONDITION PRECEDENT: Settlement is conditional on the Purchase Agreement being executed and the obligations of the parties to the Purchase Agreement being unconditional, save in respect of any condition relating to settlement or completion under this Agreement. -10- 6.2 WAIVER OF CONDITION: The condition in clause 6.1 has been inserted for the benefit of both the Vendor and the Purchaser and may be waived only by written agreement between them. 6.3 CONSEQUENCES OF NON-FULFILMENT: Should the condition in clause 6.1 not be satisfied or waived by 1.00 p.m. on the Condition Date, then this Agreement may be cancelled by written notice given by the Vendor to the Purchaser or the Purchaser to the Vendor. 6.4 NOTIFICATION BY VENDOR: The Vendor undertakes to notify the Purchaser of the date on which it is expected the condition in clause 6.1 will be satisfied (being the intended date of settlement and completion under the Purchase Agreement), and of any changes in that date, as soon as it is aware of the same. In any event, the Vendor will give no less than three Business Days' notice to the Purchaser of the date on which the condition in clause 6.1 is expected to be satisfied. 6.5 CONDITION SUBSEQUENT: If, after Settlement has been completed, settlement and completion under the Purchase Agreement does not occur on the Settlement Date for any reason, then Settlement shall be reversed, the transfers delivered by the Vendor under clause 5.2(a) shall be of no further force and effect, the Purchaser shall return to the Vendor all such transfers and any other documents delivered by the Vendor under clause 5.2 and, against such return, the Vendor shall refund the Purchase Price paid by the Purchaser in accordance with clause 3, to the extent so paid. Upon a refund of the Purchase Price to the Purchaser under this clause 6.5 this Agreement shall be deemed cancelled. 6.6 EFFECT OF CANCELLATION: Upon cancellation of this Agreement under clause 6.3 or clause 6.5 all parties will be released from all of their obligations under this Agreement provided that any such cancellation and release: (a) shall not discharge or otherwise affect any liability which any party may have to any other party in respect of any breach of or failure to comply with this Agreement prior to the time of cancellation; (b) shall be without prejudice to any claim which any party has against any other party in relation to any such liability; and (c) shall not affect clause 12, or clause 15.3, each of which shall remain in effect subject to and in accordance with its terms. 7. WARRANTIES 7.1 VENDOR'S WARRANTIES: The Vendor hereby represents and warrants in favour of the Purchaser (which Warranties will be deemed to be repeated on each day up to and including the Settlement Date) that: (a) the Shares, together with the shares being offered by the Vendor pursuant to the Contact IPO and any shares included in any over- allotment option that -11- may be granted to the Syndicate under the Purchase Agreement, comprise all of the issued shares in the Company; (b) the Shares are fully paid; (c) the Shares are beneficially owned by the Vendor and the Vendor has full power, right and authority to sell and procure the transfer of the Shares; (d) there are no agreements or restrictions, whether arising out of legislation, regulations, agreement or otherwise, preventing or restricting or inhibiting the Vendor from carrying out or procuring such sale and transfer in the manner provided by this Agreement; (e) on the transfer of the Shares to the Purchaser, property in the Shares will pass to the Purchaser free from any Encumbrances; (f) the Vendor has full power and authority to enter into this Agreement and to carry out the transactions provided for in this Agreement, and this Agreement has been duly executed and delivered by the Vendor and is a valid and binding document of the Vendor; (g) the Company has not declared or paid any dividend, or made any distribution (as that term is defined in the Companies Act 1993), and will not declare or pay any dividend or make any such distribution (as the case may be), during the period beginning on 30 September 1998 and ending on (and including) the Settlement Date, other than as disclosed in writing to the Purchaser before the Final Bid Date; and (h) neither the Vendor nor the Company is a party to, nor will it prior to Settlement enter into, any agreement or arrangement providing for a right, entitlement or option for any person to take shares or convertible securities in the Company, other than for the purposes of the Contact IPO or as disclosed in writing to the Purchaser before the Final Bid Date. 7.2 WARRANTIES OF THE PURCHASER AND GUARANTOR: Each of the Purchaser and the Guarantor hereby represents and warrants in favour of the Vendor (which Warranties will be deemed to be repeated on each day up to and including the Settlement Date) that: (a) it has full power and authority to enter into this Agreement and the Standstill Deed and to carry out the transactions provided for in this Agreement and the Standstill Deed; (b) the execution, delivery and performance of this Agreement and the Standstill Deed and the consummation of the transactions provided for in this Agreement and the Standstill Deed by it has been duly authorised by all requisite corporate action and no director of the Purchaser or the Guarantor is -12- interested in any transaction evidenced by this Agreement other than as a director of the Purchaser or the Guarantor (as the case may be); (c) this Agreement and the Standstill Deed have been duly executed and delivered by it and are valid and binding upon it; (d) it has obtained all requisite or necessary clearances, authorisations or consents from such regulatory authorities as may be necessary, whether in New Zealand or overseas, for the implementation of this Agreement and the Standstill Deed including, but not limited to, clearances or authorisations under the Commerce Act 1986 and consents under the Oversees Investment Regulations 1995, which clearances, authorisations or consents are valid on the Execution Date and will remain valid up to the Settlement Date; (e) it has obtained all requisite or necessary approvals under or waivers from the requirements of the Listing Rules of the New Zealand Stock Exchange or any similar rules of a recognised stock exchange for the implementation of this Agreement and the Standstill Deed; and (f) there was, and is, no error, misstatement or omission in respect of the written information and confirmations provided by or on behalf of the Purchaser to the Vendor and the Company in the Verification Certificate in connection with the Contact IPO, as contemplated by section 4 of the Bidding Rules. 7.3 ACKNOWLEDGEMENT: Each of the Purchaser and the Guarantor acknowledges and agrees that, except for the Warranties of the Vendor specified in clause 7.1: (a) it has entered into this Agreement in reliance solely on its own judgment and not in reliance on any representations of the Vendor, the Company, the Subsidiaries, the Company's associated companies or their respective advisers, directors, employees, officers or agents; (b) it has made its own independent enquiry and investigations into the affairs of the Company, the Subsidiaries and all of the Company's associated companies (including, without limitation, the business, operations, financial condition, prospects, creditworthiness and status of them) and though various information or statements of fact or opinion may have been supplied or made to the Purchaser by the Vendor, the Company, the Subsidiaries, the Company's associated companies or their respective advisers, directors, employees, officers or agents, the Purchaser unconditionally waives, and agrees not to facilitate, assist or encourage the taking or making of, any claim against the Vendor, the Company, the Subsidiaries, the Company's associated companies or their respective advisers, directors, employees, officers or agents (whether arising in tort, in contract, by operation of law or otherwise) in respect of any such matters; (c) all express or implied or other representations or warranties of the Vendor, the Company, the Subsidiaries or their respective advisers, directors, -13- employees, officers or agents in relation to the sale of the Shares are hereby expressly excluded; (d) neither the Vendor, the Company, the Subsidiaries, the Company's associated companies nor their respective advisers, directors, employees, officers or agents have made or make any representation or have given or give any warranty (express or implied) as to the accuracy, content, completeness, value or otherwise of, nor have or accept any liability (whether arising in tort, in contract, by operation of law or otherwise) in respect of, any information or statements of fact or opinion (written, oral or otherwise) directly or indirectly provided or available to or used by the Purchaser in connection with the transactions evidenced by this Agreement and the Purchaser unconditionally waives, and agrees not to facilitate, assist or encourage the taking or making of, any claim against any of them in respect of any such matters; (e) neither the Vendor, the Company, the Subsidiaries, the Company's associated companies nor their respective advisers, directors, employees, officers or agents has given, or will give, any representation or warranty as to the future prospects of the Group including, for the avoidance of doubt, the Business; and (f) the references in this paragraph and in the previous paragraphs of this clause to "advisers" include references to ABN AMRO Rothschild (the equity capital markets joint venture of the Rothschild and ABN AMRO groups of companies), NM Rothschild & Sons Limited, Rothschild Australia Securities Limited, NM Rothschild & Sons (Singapore) Limited, ABN AMRO Bank NV, ABN AMRO Corporate Finance Australia Limited, ABN AMRO Equities NZ Limited, ABN AMRO New Zealand Limited and every Related Body Corporate of any such company and their respective directors, officers, employees and agents and that the acknowledgements and agreements given in the foregoing paragraphs of this clause 7.3 are promises which confer, and are intended to confer, a benefit upon the Vendor, the Company, the Subsidiaries, the Company's associated companies and their respective advisers, directors, employees, officers and agents and are intended to be enforceable against the Purchaser and the Guarantor at the suit of each such person pursuant to the Contracts (Privity) Act 1982. 7.4 ENTIRE AGREEMENT: This Agreement together with the Bid Bond, the Letter of Credit, the deed of indemnity (in the form set out in Schedule 3), the Standstill Deed and the confidentiality deed entered into by the party named in Schedule 6 and dated as specified in Schedule 6 in favour of the Vendor and other named beneficiaries: (a) constitutes the entire understanding and agreement of the parties relating to the sale and purchase of the Shares; and -14- (b) supersedes and extinguishes all other agreements and understandings between the parties relating to that sale and purchase prior to the date of this Agreement. 8. PENDING SETTLEMENT 8.1 CONDUCT OF BUSINESS: Pending Settlement, and notwithstanding that the Vendor executes this Agreement on the Execution Date, the Vendor will use, or undertakes that it has used, in its capacity as beneficial owner of the Shares, all reasonable endeavours to procure that, from the Final Bid Date: (a) each member of the Group will: (i) subject to paragraph (b) of this clause 8.1, operate and conduct the Business in the normal course of business in accordance with the business practices employed by the Group as at the Final Bid Date; (ii) properly keep and maintain all necessary books of account (reflecting in a true and fair manner, in accordance with the accounting policies of the Group as at the Final Bid Date, all transactions effected by the Group or to which it has been a party, in so far as they relate to the Business), minute books, records, the share register and other statutory registers and books; (iii) maintain its assets in as good a state of operating condition and repair as they are on the Final Bid Date, except for ordinary depreciation and fair wear and tear; (iv) maintain in full force and effect all existing insurances in respect of the Business and the assets of the Business; (v) promptly notify the Purchaser (other than in respect of normal debt collection) of any law suits, claims, proceedings, investigations or adverse events which may occur, be threatened, brought, asserted or commenced against it, its officers or directors, involving in any way the Business or the assets of the Business; and (vi) use its best efforts to preserve intact its good name and reputation, and its existing relationships with suppliers of goods and services, employees, governmental authorities and customers; and (b) each member of the Group will not, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld): (i) make any alterations to its existing constitution or name, or take any steps towards altering its capital structure, other than as disclosed in writing to the Purchaser before the Final Bid Date; - 15 - (ii) declare or pay, or approve the declaration or payment of, any dividend or otherwise make any distribution (as that term is defined in the Companies Act 1993), other than as disclosed in writing to the Purchaser before the Final Bid Date; (iii) alter, or agree to alter, the remuneration or any of the conditions of employment of its directors, officers or employees in force as at the Final Bid Date provided however that changes of remuneration or conditions may be made consistent with the business practices employed by it as at the Final Bid Date; (iv) make, or enter into a legal commitment in respect of, or draw down or use any borrowing or other facilities for, any item of capital expenditure not consistent with the capital expenditure projections attached as Schedule 5; (v) give any guarantee of or indemnity in respect of the liabilities of any other person other than to any party to the Purchase Agreement or in the ordinary course of business; (vi) create or allow any Encumbrance to arise over the Business or assets of the Business (other than any title retention arising in the ordinary course of business or any Encumbrance arising by operation of law); or (vii) dispose of any of the assets or undertakings of the Business, other than disposals in the ordinary course of business, for a cash consideration payable in full at the time of disposal equal to or greater than book value, or disposals of redundant or other non-material assets; and in any case of action taken or omitted to be taken in accordance with either clauses 8.1(a) or 8.1(b), that action is taken or not taken (as the case may be) having regard to, and in such a manner so as not to be inconsistent with the contents of the Offering Documents in the forms of the drafts of such documents as at the Final Bid Date, subject to any amendments required to be made in order to ensure the Offering Documents meet the requirements of all relevant laws. 8.2 EVENTS PENDING SETTLEMENT: If any event, matter or thing (other than a breach of the Vendor's Warranties, or other agreement of the Vendor to be performed by it under this Agreement, in either case as a result solely of the Vendor's actions) occurs pending Settlement that affects the value of the Shares, or if anything comes to the Purchaser's attention that may influence the decision of it or a purchaser to complete the purchase of the Shares and whether material or not, and whether or not amounting to force majeure, the Purchaser will not be able to re-negotiate the Purchase Price nor claim any deduction, set-off or counterclaim in respect thereof nor refuse to settle. -16- 8.3 ORDERS IN COUNCIL: The Vendor will use all reasonable endeavours to promulgate the Orders in Council as soon as is reasonably practicable after the Settlement Date. 9. RESTRICTIONS This clause 9 shall have no force or effect prior to Settlement, but shall come into full force and effect as from Settlement. 9.1 DISCLOSURE OF INFORMATION: As further consideration for the Purchaser agreeing to purchase the Shares, the Vendor hereby undertakes with the Purchaser that it will not, except with the written consent of the Purchaser, or as required by law, at any time after Settlement itself make use of or disclose to any person any information of a secret or confidential nature supplied to it by the Company and relating to the Business. 9.2 GOVERNMENT DOCUMENTS: (a) The Purchaser hereby undertakes with the Vendor that if any Government Documents are in or come into the possession of any member of the Group, any company associated to the Company or the Purchaser, the Purchaser will (or will procure that the relevant member of the Group, or, to the extent that it is able, any company associated to the Company, will) promptly deliver them to the State Services Commission or any other person nominated for this purpose by the Vendor. (b) The Vendor will, at the request of the Purchaser, formulate and agree procedures with the Purchaser and/or any one or more members of the Group for its reasonable access to any Government Documents the Purchaser or the relevant member or members of the Group need or needs for the purposes of any legal action or proceedings or the carrying on of the Business or its other activities. 9.3 CONFIDENTIAL INFORMATION; (a) All confidential information (including Government Documents) in the possession of a member of the Group or any company associated to the Company relating to the business or activities carried on or out prior to the Settlement Date by any government department or ministry ("CONFIDENTIAL INFORMATION") but excluding such confidential information (other than Government Documents) which is the property of a member of the Group, will be kept confidential by the Purchaser, the Group and its employees, and, to the extent the Purchaser can procure the same (using best endeavours), any company associated to the Company, unless: (i) the Purchaser, any member of the Group, any company associated to the Company or any employee is required by law or the listing -17- requirements of a recognised stock exchange to disclose that Confidential Information; or (ii) the Vendor agrees in writing that that Confidential Information may be disclosed. (b) Furthermore, upon any termination of this Agreement, or upon demand by the Vendor or its advisers, the Purchaser will: (i) either return to such person as they may direct or destroy, at the option of the Vendor or its advisers (as the case may be), all of the Confidential Information (including copies thereof) in the possession or control of the Purchaser or its directors, officers, employees, related companies or its legal, accounting, taxation or financial advisers; and (ii) destroy all copies of any analyses, compilations, studies or other documents prepared by the Purchaser or for the Purchaser's use containing or reflecting any Confidential Information excluding, in the case of advisers to the Purchaser: (A) particular documents and materials held on solicitors' files and which continue to be held on such files; and (B) those documents and materials that may reasonably be required for internal audit purposes or as a justification for any advice that may have been provided by any such adviser to the Purchaser regarding the acquisition of the Shares under this Agreement. (c) Upon the return or destruction (as the case may be), as specified in paragraph (b), of all such Confidential Information, the Purchaser will provide to the Vendor a certificate from an authorised officer of the Purchaser stating that the Purchaser has complied with its obligations under this clause. 9.4 DISCLOSURE: If the Purchaser, any member of the Group, any company associated to the Company, that associated company or any employee is required by law to disclose any Confidential Information the Purchaser will, subject to its legal obligations: (a) consult with the Vendor prior to the Purchaser, that member of the Group, that associated company or that employee making such disclosure; and (b) procure (or, in the case of such an associated company, use best endeavours to procure) that all reasonable requirements of the Vendor in relation to the disclosure of that Confidential Information are followed strictly. 9.5 CLAUSE 9 TO SURVIVE TERMINATION: The obligations of the Purchaser under this clause 9 will survive termination of this Agreement. -18- 10. PURCHASER'S COVENANTS 10.1 INDEMNITY: The Purchaser will indemnify and keep indemnified the Vendor in respect of, and to the extent of, any costs, losses, damages, claims, liabilities and expenses incurred or suffered by the Vendor, or which may be made against it, as a result of or attributable to: (a) any matter or thing at any time being found to be other than as warranted or agreed by the Purchaser under any provision of this Agreement; or (b) any failure by the Purchaser to perform its obligations under this Agreement. 10.2 NO ACTION AGAINST OFFICERS: The Purchaser and the Guarantor, at all times after Settlement, agree not to take, institute or make, or facilitate, assist or encourage the taking, instituting or making of, and will, to the extent they can do so, procure, and will otherwise use all reasonable endeavours to procure that, no member of the Group or the Company's associated companies takes, institutes or makes any action, proceeding, claim or demand against: (a) any present or former director or officer of the Company or the Subsidiaries or the Company's associated companies (in such person's capacity as a director or officer of the Company or the Subsidiaries, or the Company's associated companies, or purporting to act as such, or in any other capacity acting or purporting to act on behalf of the Company or the Subsidiaries, or the Company's associated companies, or arising out of such person's association with, or wish to assist, the Company or the Subsidiaries or the Company's associated companies) in respect of any act, omission, matter or thing arising or occurring on or prior to the Settlement Date except in so far as such act, omission, matter or thing is the result of a lack of good faith by such director or officer; or (b) any present or former shareholder of (or beneficial owner of shares in the capital of) the Company or the Subsidiaries or the Company's associated companies (in such person's capacity as shareholder) in respect of any act, omission, matter or thing arising or occurring prior to the Settlement Date except in so far as such act, omission, matter or thing may give rise to a claim against the Vendor under an express provision of this Agreement. The undertaking contained in this clause is given for the benefit of each present or former director, officer or shareholder of (or beneficial owner of shares in the capital of) the Company and the Subsidiaries and the Company's associated companies and is intended to be enforceable against the Purchaser at the suit of each such person pursuant to the Contracts (Privity) Act 1982. -19- 10.3 INDEMNITY FOR ERRORS ETC. IN INFORMATION FOR CONTACT IPO: On the Execution Date the Purchaser and the Guarantor will enter into the indemnity in the form set out in Schedule 3. The undertaking contained in this clause is given for the benefit of each of the Vendor, the Company, its directors and former directors and each member of the Syndicate and is intended to be enforceable against the Purchaser at the suit of each such person pursuant to the Contracts (Privity) Act 1982. 11. NO GREATER RIGHTS Notwithstanding any other provision of this Agreement, the Purchaser: (a) acknowledges that the Company and the Subsidiaries and the Company's associated companies have no better title to any asset transferred, or purportedly transferred, by ECNZ to the Company pursuant to the sale and purchase agreement dated 13 November 1995 between ECNZ and the Company than that title which ECNZ had in respect of that asset as at the date of settlement of such agreement; and (b) agrees to waive, release and discharge forever, and to use reasonable endeavours to procure that, as soon as is practicable after Settlement, the Company and each Subsidiary and each company associated to the Company will waive, release and discharge forever, all past, present and future actions, claims, rights, suits, demands and proceedings of every kind whatever available to it against ECNZ in respect of any such asset that has not been validly transferred to the Company under that sale and purchase agreement as a result of ECNZ not having had good title to that asset as at the date of settlement of such agreement, each of those waivers to be in a form satisfactory to the Vendor. 12. GUARANTEE AND INDEMNITY 12.1 GUARANTEE: The Guarantor unconditionally and irrevocably guarantees to the Vendor: (a) the due and punctual payment by the Purchaser of all moneys which: (i) from time to time become due from the Purchaser to the Vendor under this Agreement; or (ii) arise out of or are payable in relation to any breach by the Purchaser of or failure by the Purchaser to comply with any of its obligations under this Agreement; and (b) the due, punctual and proper performance and observance by the Purchaser of all of its other obligations under this Agreement. - 20 - 12.2 NO DISCHARGE: The liability of the Guarantor under this guarantee will constitute a principal obligation of the Guarantor and will not be discharged, released or otherwise affected: (a) by any delay, grant of time, release or compromise granted by the Vendor to the Purchaser or any other person; (b) by cancellation or termination of this Agreement; (c) by the Vendor exercising or refraining from exercising any rights against the Purchaser or any other person; or (d) by any other act, omission, matter, circumstance or law whereby the Guarantor would, but for the provisions of this clause, have been released from liability under this Agreement. 12.3 CONTINUING GUARANTEE: This guarantee will remain in full force and effect until all liabilities and obligations of the Purchaser under this Agreement (including, without limitation, any liability of a type referred to in clause 6.6) have been fully discharged and all moneys payable to the Vendor under this Agreement have been fully paid, including moneys the payment or satisfaction of which is subsequently avoided or affected in any way, whether under any statutory provision or otherwise, so as to deprive the Vendor of the full benefit of such payment or satisfaction. 12.4 INDEMNITY: As a separate and independent obligation, the Guarantor will be liable, and agrees to indemnify the Vendor, for all costs, losses, damages, claims, liabilities and expenses incurred or suffered by the Vendor, or that may be made against it, as a result of: (a) the failure on the part of the Purchaser to pay all moneys that from time to time become due from the Purchaser to the Vendor under this Agreement; or (b) any breach of any other obligation of the Purchaser under this Agreement. 12.5 PAYMENT: The Guarantor will pay to the Vendor on demand all amounts payable pursuant to the guarantee and the indemnity contained in this clause 12. 12.6 ABILITY TO ENFORCE: The Vendor may enforce the guarantee and the indemnity contained in this clause 12 against the Guarantor without first taking any steps or proceedings against the Purchaser. -21- 13. EXPENSES Whether or not any of the transactions contemplated by this Agreement are consummated, each of the parties will (unless otherwise specified in this Agreement) bear its own legal and accountancy costs and other expenses of and incidental to the preparation, negotiation, execution of this Agreement and Settlement. 14. DELAY IN EXERCISE OF RIGHTS 14.1 NO DELAY: No delay, grant of time, release, compromise, forbearance (whether partial or otherwise) or other indulgence by one party in respect of any breach of any other party's obligations under this Agreement is to: (a) operate as a waiver of or prevent the subsequent enforcement of that obligation; or (b) be deemed a delay, grant of time, release, compromise, forbearance (whether partial or otherwise) or other indulgence in respect of, or a waiver of, any subsequent or other breach. 14.2 EXERCISE OF RIGHTS AND WAIVERS: (a) Time is of the essence in this Agreement but no failure to exercise, and no delay in exercising, a right by a party will operate as a waiver of that right, nor will a single or partial exercise of a right preclude another or further exercise of that right or the exercise of another right. (b) No waiver by a party of its rights under this Agreement will be effective unless it is in writing signed by that party. 14.3 PARTIAL INVALIDITY: The illegality, invalidity or unenforceability of a provision of this Agreement under any law will not affect the legality, validity or enforceability of that provision under another law or the legality, validity or enforceability of another provision. 15. FURTHER ASSURANCES AND POST SETTLEMENT 15.1 FURTHER ASSURANCES: The parties will sign, execute and do all deeds, schedules, acts, documents and things as may reasonably be required by any other party, effectively to carry out and give effect to the terms and intentions of this Agreement, whether before or after Settlement. Without limiting the generality of the foregoing the Purchaser and the Guarantor will not take any steps that might adversely affect the success of the Contact IPO. - 22 - 15.2 POST SETTLEMENT: Notwithstanding Settlement, and to the extent that any provision of this Agreement is not performed or fulfilled at Settlement, that provision will not merge on Settlement and will continue in full force and effect. 15.3 PUBLIC ANNOUNCEMENTS: The Purchaser agrees that it will not make any public statement or announcement with respect to this Agreement or any matter which is provided for in this Agreement or the Contact IPO, including without limitation the signing of this Agreement and Settlement nor will it enter into any discussion or correspondence, or otherwise have any communications of any nature, with any financial institution, analyst, broker or any other person in respect of the Contact IP0 (other than its financial adviser engaged prior to the date of this Agreement to assist it solely in respect of its acquisition of the shares), except in the case of a public announcement or statement where and to the extent that any such public statement or announcement is required by law, the listing requirements of a recognised stock exchange or the constitution (or its equivalent) of the Purchaser or the (Guarantor and then only in strict accordance with the Securities Act 1978, the Securities Regulations 1983 and the securities laws of any other relevant jurisdiction, having regard to the Contact IPO, and not without the Purchaser: (a) having provided the Vendor with a reasonable opportunity to comment on the proposed public statement or announcement prior to the making of the same; and (b) having considered, and having not declined (other than on reasonable grounds) to take account of, any comments which the Vendor may make. 16. AMENDMENTS No amendment to this Agreement will be effective unless it is in writing and signed by all the parties. 17. ASSIGNMENT 17.1 SUCCESSORS: This Agreement will be binding on and enure for the benefit of the parties and their respective successors and, in the case of the Purchaser, its permitted assignees or transferees. 17.2 ASSIGNMENT: (a) The Purchaser may not assign or transfer all or any part of its rights or obligations under this Agreement without the prior written consent of the Vendor, which may be given or withheld by the Vendor at its absolute discretion and, if given, given on such terms as it thinks fit. -23- (b) Each permitted assignee or transferee of the Purchaser will have the same rights against the Vendor under this Agreement as if named in this Agreement as Purchaser. 18. NOTICES 18.1 FORM OF NOTICE: Any notice or other communication to be made or delivered to any party under this Agreement is to be: (a) in writing; (b) signed by a person authorised by the sender; and (c) sent by facsimile, personal delivery or post to the facsimile number or address, and marked for the attention of the person or office holder (if any), from time to time designated by that party to the other parties for the purposes of this Agreement. The initial facsimile number, address and relevant person or office holder of the Vendor is set out under its name at the end of this Agreement, and for the Purchaser and the Guarantor is set out in Schedule 6. 18.2 NOTICE EFFECTIVE: No communication is to be effective until received. A communication will, however, be deemed to be received by the addressee: (a) in the case of a facsimile, on the Business Day on which it is despatched or, if despatched after 5:00 p.m. (in the place of receipt) on a Business Day or, if despatched on a non-Business Day, on the next Business Day after the date of dispatch, in each case evidenced by the receipt of a transmission report from the machine on which the facsimile was transmitted; (b) in the case of personal delivery, when delivered; (c) in the case of a letter, if posted to an overseas address, on the third Business Day after posting by airmail, and if posted to a postal address in New Zealand, on the first Business Day after posting by fastpost; and (d) in the case of a communication to the Purchaser or Guarantor where the Purchaser or Guarantor comprises two or more persons, by receipt or deemed receipt by any one or more of such persons. 19. COUNTERPARTS (a) This Agreement may be executed in two or more counterparts (including facsimile copies) each of which will be deemed an original, but all of which together will constitute one and the same instrument. - 24 - (b) A party may enter into this Agreement by executing any counterpart. 20. GOVERNING LAW 20.1 NEW ZEALAND LAW: This Agreement is to be governed by and construed in accordance with the laws of New Zealand. 20.2 SUBMISSION TO JURISDICTION: Each of the parties irrevocably and unconditionally agrees that the Courts of New Zealand have non- exclusive jurisdiction to hear and determine every matter that may arise out of or in connection with this Agreement. 20.3 WAIVER OF IMMUNITY: The Vendor acknowledges that its obligations under this Agreement are private and commercial acts and, to the maximum extent permissible by law, irrevocably waives any rights to claim sovereign or other immunity from suit or action or process in respect of its obligations under this Agreement. 21. PROCESS AGENT (a) The Purchaser and the Guarantor severally appoint the person specified in Schedule 6 (registered office of which at the Execution Date is set out in Schedule 6) in New Zealand to receive, for it and on its behalf, service of process of any legal action or proceedings in New Zealand arising out of or in connection with this Agreement and warrants that such person has agreed to so act (and that appointment will only be revocable if, contemporaneously with that revocation, the Purchaser or the Guarantor (as the case may be) appoints a substitute process agent in New Zealand acceptable to the Vendor and warrants that such person has agreed to so act). (b) Such service will be deemed completed on delivery to that process agent (whether or not it is forwarded to and received by the Purchaser or the Guarantor (as the case may be)). EXECUTED as an agreement. -25- SIGNED on behalf of ) HER MAJESTY THE QUEEN ) /s/ BILL ENGLISH IN RIGHT OF NEW ZEALAND ) ---------------- acting through her Minister of ) Finance BILL ENGLISH ) in the presence of: ) /s/ ILLEGIBLE SIGNATURE Signature of Witness ----------------------------- Solicitor Occupation ----------------------------- Wellington Address ----------------------------- Address: Commercial and Financial Branch, The Treasury, 1 the Terrace, Wellington Facsimile No.:499 0437 Attention: Branch Manager SIGNED on behalf of ) HER MAJESTY THE QUEEN ) /s/ A. L. SMITH IN RIGHT OF NEW ZEALAND ) --------------- acting through her Minister ) Responsible for Contact Energy ) Limited A. LOCKWOOD SMITH ) in the presence of: ) /s/ ILLEGIBLE SIGNATURE Signature of Witness ----------------------------- /s/ Solicitor Occupation ----------------------------- /s/ Wellington Address ----------------------------- Address: Commercial and Financial Branch, The Treasury, 1 the Terrace, Wellington Facsimile No.:499 0437 Attention: Branch Manager - 26 - SIGNED as a deed by ) /s/ GERRY LOUGHMAN EDISON MISSION ENERGY ) -------------------------------- TAUPO LIMITED in the ) Authorised Signatory presence of: ) ) /s/ MICHAEL KELLAND ) --------------------------------- ) Authorised Signatory Witness: /s/ THOMAS ROBERT FAIL - --------------------------- Signature of witness of /s/ Thomas Robert Fail - --------------------------- Full name of witness Solicitor - --------------------------- Occupation of witness Wellington - --------------------------- Address of witness SIGNED as a deed by ) /s/ GERRY LOUGHMAN EDISON MISSION ENERGY ) --------------------------------- in the presence of: ) Authorised Signatory ) ) /s/ MICHAEL KELLAND ) --------------------------------- ) Authorised Signatory Witness: /s/ THOMAS ROBERT FAIL - --------------------------- Signature of witness Thomas Robert Fail - --------------------------- Full name of witness Solicitor - --------------------------- Occupation of witness Wellington - --------------------------- Address of witness
SCHEDULE 1 REGISTERED HOLDERS - ----------------------------------------------------------------------------------------- Name and Address Holding of Shares Shares Subject to This Agreement - ----------------------------------------------------------------------------------------- Minister of Finance 301,975,000 ordinary shares 120,790,000 ordinary shares Parliament Buildings Wellington - ----------------------------------------------------------------------------------------- Minister Responsible for 301,975,000 ordinary shares 120,790,000 ordinary shares Contact Energy Limited Parliament Buildings Wellington - -----------------------------------------------------------------------------------------
SCHEDULE 2 FORM OF LETTER OF CREDIT [Issuer Letterhead] IRREVOCABLE STANDBY LETTER OF CREDIT NO. [ ] DATED: [ ] To: [Crown] [address] [Acceptable Bank] (the "Issuer") hereby issues this irrevocable standby Letter of Credit No. [ ] in favour of [Crown] (the "Beneficiary") at the request of [Purchaser/Other party] (the "Account Party") [on behalf of [Purchaser] (the "Purchaser"). This Letter of Credit is issued in connection with the [Account Party's/Purchaser's] obligations to pay certain amounts pursuant to an Agreement for the Sale and Purchase of Shares in Contact Energy Limited dated [ ] 1999 between the Beneficiary and the [Account Party/Purchaser] [and other/s] (the "Agreement") for the sum of [Purchase Price (or part thereof, if more than one letter of credit)] New Zealand Dollars (NZ$[Purchase Price (or part thereof, if more than one letter of credit)]) (the "Maximum Amount") and shall expire on the date of receipt by the Beneficiary of the Maximum Amount in accordance with this Letter of Credit or 7 November 1999 whichever is the earlier (the "Expiry Date"). This Letter of Credit is available for payment up to, in aggregate, the Maximum Amount immediately on presentation at [New Zealand Address] no later than 3pm on a business day on or before the Expiry Date of a communication purporting to be from the Beneficiary to the Issuer quoting "Drawing under [Issuer] Standby Letter of Credit No. [ ] dated [ ]" and containing the following statement: "We certify on behalf of the -2- Beneficiary that the [Account Party/Purchaser] has failed to pay NZ$[ ] being [the whole/part] of the Purchase Price under the Agreement. We therefore make demand on you under the above referenced letter of credit in the amount of NZ$[ ]. Please pay this amount to [nominated account details]. Terms used in this communication have the same meaning as in the above referenced Letter of Credit." Partial drawings are permitted. The Issuer undertakes to the Beneficiary that demands made in compliance with the terms of this Letter of Credit will be duly honoured on presentation without reference to the Account Party and agrees to pay the funds demanded telegraphically, with same day value to the Beneficiary's nominated account referred to in the demand without any discount, deduction, set-off or counterclaim whatsoever. Except as otherwise stated herein this Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits 1993 Revision International Chamber of Commerce Publication No. 500 and, subject to that, is governed by, and is to be construed in accordance with the provisions of, the laws of New Zealand. The Issuer irrevocably submits to the nonexclusive jurisdiction of the courts of New Zealand in respect of any matter arising in relation to this Letter of Credit. SIGNED by [Issuer] by: in the presence of: ------------------------ ------------------------ ------------------------ SCHEDULE 3 FORM OF INDEMNITY - -------------------------------------------------------------------------------- DEED OF INDEMNITY THIS DEED dated the day of 1999 BETWEEN HER MAJESTY THE QUEEN IN RIGHT OF NEW ZEALAND acting by and through her MINISTER OF FINANCE and her MINISTER RESPONSIBLE FOR CONTACT ENERGY LIMITED (the "CROWN") AND EDISON MISSION ENERGY TAUPO LIMITED (the "PURCHASER") AND EDISON MISSION ENERGY (the "GUARANTOR") RECITALS: A. The Purchaser has, contemporaneously with this deed, entered into an agreement for sale and purchase (the "AGREEMENT FOR SALE AND PURCHASE") with the Crown pursuant to which it will acquire from the Crown 241,580,000 of the shares in Contact Energy Limited (the "COMPANY"), being 40.0% of the issued shares in the Company. B. The Crown intends to sell the remaining 362,370,000 shares in the Company by means of an initial public offering of the shares involving a combined global offering to members of the public and institutional and professional investors in New Zealand and to institutional and professional investors in Australia (the "AUSTRALASIAN OFFERING"), and to institutional and professional investors in the United States and other countries (the "INTERNATIONAL OFFERING"). C. The Purchaser has provided certain written information to the Crown and the Company for inclusion in offering documents relating to the Contact IPO. D. Such information includes information relating to the Purchaser's operations and differences in strategic vision in relation to the Company from that outlined in the offering documents. -2- E. In terms of the Agreement for Sale and Purchase, the Purchaser has agreed to indemnify the Crown, the Company, its directors and former directors and each member of the Syndicate against, amongst other things, any loss or liability arising as a result of, or attributable to, any error, or misstatement or omission in respect of such information. F. The parties wish to record the terms of the indemnity as set out below. WITNESSES AS FOLLOWS: 1. INTERPRETATION 1.1 DEFINITIONS: In this deed (including in the Recitals), unless the context otherwise requires: "AGREEMENT FOR SALE AND PURCHASE" is defined in Recital A; "AUSTRALASIAN OFFERING" is defined in Recital D of the Agreement for Sale and Purchase; "BIDDING RULES" means the bidding rules dated January 1999 issued by the Crown relating to the sale of shares in the Company by international tender, as the same may have been amended from time to time, the operative version of which as at the Final Bid Date is attached as the schedule to this deed; "BUSINESS DAY" means a day (other than a Saturday or Sunday) on which registered banks (within the meaning of the Reserve Bank of New Zealand Act 1989) are open for the transaction of normal banking business in Wellington; "COMPANY" is defined in Recital A; "CONTACT IPO" means the intended initial public offering of up to 362,370,000 shares in the Company to be effected by means of the Australasian Offering and the International Offering; "FINAL BID DATE" means the final date for delivery of final bids under the Bidding Rules, as set out in clause 3.5 of the Bidding Rules and as amended, if at all, by the Crown in accordance with the Bidding Rules; "INDEMNIFIED PARTIES" means the Crown, the Company, the directors and former directors of the Company and every member of the Syndicate; -3- "INFORMATION" means any and all written information and confirmations in the Verification Certificate; "INTERNATIONAL OFFERING" is defined in Recital D of the Agreement for Sale and Purchase; "LIABILITIES" includes, but is not limited to, all claims, losses, costs (including legal costs), damages, charges and expenses which the Indemnified Parties, or any of them, may suffer or incur in respect of any action or claim, including all proceedings, suits, enquiries or investigations, which may be brought or threatened to be brought against the Indemnified Parties, or any of them, and whether or not such proceedings are successful, compromised or settled and however the liabilities are suffered or properly and reasonably incurred in disputing any such proceedings; "OFFERING DOCUMENTS" means the documents that are, or are intended to be, made available to potential investors in the Company in relation to the Contact IPO, whether in New Zealand or elsewhere; "RELATED BODY CORPORATE" bears the same meaning as in the Securities Amendment Act 1988; "SYNDICATE" means ABN AMRO Rothschild (the equity capital markets joint venture of the Rothschild and ABN AMRO groups of companies), NM Rothschild & Sons Limited, Rothschild Australia Securities Limited, ABN AMRO Bank NV, ABN AMRO Corporate Finance Australia Limited, and every Related Body Corporate of any such company, and every other person identified in any of the Offering Documents as a manager and/or co-lead manager of the International Offering and/or the Australasian Offering; "VERIFICATION CERTIFICATE" means the certificate referred to in section 4 of the Bidding Rules; 1.2 PARTIES: In this deed, a reference to any party is to a party to this deed and includes, as far as is consistent with the provisions of this deed, that party's successors in title and permitted assigns. 1.3 STATUTES: In this deed, any reference to a statute or statutory provision, or order or regulation made under it, includes: (a) that statute, provision, order or regulation, as amended, modified, re-enacted or replaced from time to time; and -4- (b) any previous statute, statutory provision, order or regulation amended, modified, re-enacted or replaced by that statute, provision, order or regulation. 1.4 GENERAL REFERENCES: In this deed, any reference to: (a) a "PERSON" includes an individual, body corporate, an association of persons (whether corporate or not), a trust, estate and agency of a state (in each case, whether or not having separate legal personality and whether incorporated or existing in New Zealand or elsewhere); (b) a "SUBSIDIARY" is to a subsidiary as defined in the Companies Act 1993 or the Corporations Law (Australia); (c) one gender includes each other gender; (d) the singular includes the plural and vice versa; (e) an agreement includes that agreement as modified, supplemented, novated or substituted from time to time; and (f) time is to New Zealand standard time. 1.5 HEADINGS: Headings are to be ignored in construing this deed. 1.6 JOINT AND SEVERAL - PURCHASER: Where two or more persons are named as "the Purchaser" the expression "the Purchaser" shall be a reference to each of the said persons severally as well as any two or greater number of them jointly, and the obligations and agreements of the Purchaser in this deed shall bind each of them and every two or greater number of them jointly and each of them severally provided however that the delivery by or on behalf of the Crown of any notice, document or information to any one or more of them shall be deemed to be delivery to all of them. 1.7 JOINT AND SEVERAL - GUARANTOR: Where two or more persons are named as "the Guarantor" the expression "the Guarantor" shall be a reference to each of the said persons severally as well as any two or greater number of them jointly, and the obligations and agreements of the Guarantor in this deed shall bind each of them and every two or greater number of them jointly and each of them severally provided however that the delivery by or on behalf of the Crown of any notice, document or information to any one or more of them shall be deemed to be delivery to all of them. -5- 1.8 JOINT AND SEVERAL - GENERAL: The obligations and agreements of the Purchaser and the Guarantor in this deed shall bind each of them and every two or greater number of them jointly and each of them severally. 2. WARRANTY AS TO INFORMATION The Purchaser and the Guarantor represent and warrant to the Indemnified Parties that: 2.1 STATEMENTS OF FACT: all statements of fact contained in the Information are true and accurate in all material respects and not misleading in any material respect; 2.2 STATEMENTS OF OPINION: all statements of opinion and all statements of intention and expectation in the Information are honestly held by it after careful consideration and such expressions of opinion and statements of intention and expectation are fair and reasonable; and 2.3 NO OMISSIONS: the Information does not omit any particular which is material in the context of the Contact IP0. 3. INDEMNITY 3.1 INDEMNIFICATION BY PURCHASER AND GUARANTOR: The Purchaser and the Guarantor hereby indemnifies and saves harmless each of the Indemnified Parties from and against any and all Liabilities, and any other claims, losses, costs (including legal costs), damages, charges and expenses which the Indemnified Parties, or any of them, may suffer or incur, in each case arising out of or attributable to any breach of the representations and warranties set out in clause 2 where the Information in respect of which the breach arises is included in or referred to, in any way, (provided such is not materially different to the form in which it was provided) in all or any of the Offering Documents or relied upon by any of the Indemnified Parties in the compilation of all or any of the Offering Documents. 3.2 LIABILITIES: Without limiting the generality of clause 3.1, the indemnity contained in that clause shall extend to, and for the purposes of this deed be read to include any liabilities arising: (a) by virtue of the terms of, or by the reference to, any document by which the Contact IP0 is made; (b) by virtue of the communication, disclosure or use of any of the Information (materially in the form in which it was -6- provided) which has been disclosed by or on behalf of the Purchaser for the purposes of the formulation, preparation and implementation of the Contact IPO or all or any of the Offering Documents; (c) whether or not the liabilities arise in tort, contract, by statute, by operation of law or otherwise howsoever; and (d) wherever and whenever the liabilities are suffered, incurred or brought. 3.3 DEFENCE OF CLAIMS: If any legal proceeding shall be instituted, or any claim or demand made, against any Indemnified Party in respect of which the Purchaser and/or Guarantor may be liable hereunder, such Indemnified Party shall give prompt written notice thereof to the Purchaser and Guarantor, and if they accept liability hereunder, the Purchaser and/or Guarantor shall have the right to defend any such litigation, action, suit, demand or claim for which such Indemnified Party may seek indemnification, provided that: (a) the Purchaser and/or Guarantor obtains an opinion from counsel nominated by the Crown that they have a better than even prospect of success; (b) the reputation of the Indemnified Parties is not unduly harmed; and (c) the insurers of the Indemnified Party do not object to the defence of the litigation, action, suit, demand or claim by the Purchaser and/or Guarantor; unless the legal proceeding instituted, or the claim or demand made, relates solely and exclusively to the Information, in which case the Purchaser and the Guarantor shall have an unconditional right to defend any such litigation, action, suit, demand or claim but only insofar as the relevant legal proceedings, claim or demand continues at all times thereafter to be related solely and exclusively to the Information. The Crown shall extend reasonable co-operation in connection with and such defence, which shall be at the expense of the Purchaser and Guarantor. 3.4 DEFENCE BY CROWN: If the Purchaser or Guarantor shall not have the right to assume the defence of any litigation, action, suit, demand or claim in accordance with clause 3.3, the Indemnified Parties shall have the absolute right to control the defence of and to settle, in their sole discretion and without the consent of the Purchaser or Guarantor, such litigation, action, suit, demand or claim. -7- 4. CONTRACTS (PRIVITY) ACT The warranties, covenants and agreements given by the Purchaser and the Guarantor in this deed are given for the benefit of each of the Indemnified Parties and are intended to be enforceable at the suit of each of them pursuant to the Contracts (Privity) Act 1982. 5. ASSIGNMENT Neither the Purchaser nor the Guarantor may assign or transfer all or any part of its rights or obligations under this deed without the prior written consent of the Crown, which such consent may be given or withheld by the Crown at in absolute discretion and, if given, given on such terms and conditions as it thinks fit. 6. DELAY AND EXERCISE OF RIGHTS 6.1 NO DELAY: No delay, grant of time, release, compromise, forbearance (whether partial or otherwise) or other indulgence by one party in respect of any breach of any other party's obligations under this deed is to: (a) operate as a waiver of or prevent the subsequent enforcement of that obligation; or (b) be deemed a delay, grant of time, release, compromise, forbearance (whether partial or otherwise) or other indulgence in respect of, or a waiver of, any subsequent or other breach. 6.2 EXERCISE OF RIGHTS AND WAIVERS: Time is of the essence in this deed but no failure to exercise, and no delay in exercising, a right by a party will operate as a waiver of that right, nor will a single or partial exercise of a right preclude another or further exercise of that right or the exercise of another right. No waiver by a party of its rights under this deed will be effective unless it is in writing signed by that party. 7. FURTHER ASSURANCES The parties will sign, execute and do all deeds, schedules, acts, documents and things as may reasonably be required by any other party, effectively to carry out and give effect to the terms and intentions of this deed. -8- 8. NOTICES 8.1 FORM OF NOTICE: Any notice or other communication to be made or delivered to any party under this deed is to be: (a) in writing; (b) signed by a person authorised by the sender; and (c) sent by facsimile, personal delivery or post to the facsimile number or address, and marked for the attention of the person or office holder (if any), from time to time designated by that party to the other parties for the purposes of this deed. The initial facsimile number, address and relevant person or office holder of each party is set out under its name at the end of the Agreement for Sale and Purchase. 8.2 NOTICE EFFECTIVE: No communication is to be effective until received. A communication will, however, be deemed to be received by the addressee: (a) in the case of a facsimile, on the Business Day on which it is despatched or, if despatched after 5:00 p.m. (in the place of receipt) on a Business Day or, if despatched on a non-Business Day, on the next Business Day after the date of dispatch, in each case evidenced by the receipt of a transmission report from the machine on which the facsimile was transmitted; (b) in the case of personal delivery, when delivered; (c) in the case of a letter, if posted to an overseas address, on the third Business Day after posting by airmail, and if posted to a postal address in New Zealand, on the first Business Day after posting by fastpost; and (d) in the case of a communication to the Purchaser or Guarantor where the Purchaser or Guarantor comprises two or more persons, by receipt or deemed receipt by any one or more of such persons. 9. COUNTERPARTS This deed may be executed in two or more counterparts (including facsimile copies) each of which will be deemed an original, but all of which together -9- will constitute one and the same instrument. A party may enter into this deed by executing any counterpart. 10. GOVERNING LAW 10.1 NEW ZEALAND LAW: This deed is to be governed by and construed in accordance with the laws of New Zealand. 10.2 SUBMISSION TO JURISDICTION: Each of the parties irrevocably and unconditionally agrees that the Courts of New Zealand have non- exclusive jurisdiction to hear and determine every matter that may arise out of or in connection with this deed. 10.3 WAIVER OF IMMUNITY: The Crown, to the maximum extent permissible by law, irrevocably waives any rights to claim sovereign or other immunity from suit or action or process in respect of this Deed and/or its subject matter. - 10 - In witness of which this deed has been executed. SIGNED on behalf of ) HER MAJESTY THE QUEEN ) IN RIGHT OF NEW ZEALAND ) acting through her Minister of ) Finance BILL ENGLISH ) in the presence of: ) _______________________________ Signature of Witness _______________________________ Occupation _______________________________ Address Address: Commercial and Financial Branch, The Treasury, 1 the Terrace, Wellington Facsimile No.: 499 0437 Attention: Branch Manager SIGNED on behalf of ) HER MAJESTY THE QUEEN ) IN RIGHT OF NEW ZEALAND ) acting through her Minister for ) Responsible For Contact Energy ) Limited A. LOCKWOOD SMITH ) in the presence of: ) _______________________________ Signature of Witness _______________________________ Occupation _______________________________ Address Address: Commercial and Financial Branch, The Treasury, 1 the Terrace, Wellington Facsimile No.: 499 0437 Attention: Branch Manager -11- SIGNED as a deed by ) EDISON MISSION ENERGY ) ______________________________ TAUPO LIMITED in the ) Authorised Signatory presence of: ) ) ) ______________________________ ) Authorised Signatory Witness: ____________________________________ Signature of witness ____________________________________ Full name of witness ____________________________________ Occupation of witness ____________________________________ Address of witness SIGNED as a deed by ) EDISON MISSION ENERGY ) ______________________________ in the presence of: ) Authorised Signatory ) ) ) ______________________________ ) Authorised Signatory Witness: ____________________________________ Signature of witness ____________________________________ Full name of witness ____________________________________ Occupation of witness ____________________________________ Address of witness SCHEDULE BIDDING RULES [To be attached.] SCHEDULE 4 BIDDING RULES - -------------------------------------------------------------------------------- BIDDING RULES FOR THE SALE OF 40 PER CENT OF THE SHARES IN CONTACT ENERGY LIMITED ISSUED BY HER MAJESTY THE QUEEN IN RIGHT OF NEW ZEALAND ADVISED BY ABN AMRO ROTHSCHILD January 1999 - -------------------------------------------------------------------------------- TABLE OF CONTENTS 1. Offer for Sale and summary of Bidding Rules.......................... 1 2. Indicative Bids...................................................... 3 3. Final Bid Process.................................................... 5 4. Initial Public Offering.............................................. 8 5. General.............................................................. 9 ENCLOSURES I. Indicative Timetable II. Letter of Application III. Form of Bid Bond These Bidding Rules have been distributed and should be read in conjunction with an Information Memorandum in relation to Contact Energy Limited compiled by ABN AMRO Rothschild and dated January 1999 and the covering letter sent by ABN AMRO Rothschild dated 15 January 1999. Particular attention with respect to the sale process is drawn to paragraphs 1.5 and 15 in the Information Memorandum as these Bidding Rules are not intended to be definitive as to every aspect of the sale process. - -------------------------------------------------------------------------------- DEFINITIONS "ABN AMRO ROTHSCHILD" means the Equity Capital Markets joint venture of the Rothschild and ABN AMRO Groups, which has been appointed to advise the Crown on the sale of its shareholding in Contact. "AWARDEE" means the successful Bidder. "BID" means the unilateral and irrevocable offer of the Bidder to acquire the Shareholding made pursuant to and in accordance with these Bidding Rules. "BID BOND" means the bond required to be submitted by each Bidder in accordance with and as further described in section 3.6. "BIDDER" means the persons referred to in section 1.3 and any parties named as purchaser or guarantor under the Sale and Purchase Agreement in that document as submitted on the Final Bid Date in accordance with section 3.6(a). "BIDDING GROUP" means a group of investors that jointly participates in the Final Bid Process as a single Bidder. "BIDDING RULES" means these rules as approved by the Crown, as these may be amended, supplemented or clarified in accordance with section 5.1. "CONTACT" means Contact Energy Limited, a state enterprise within the meaning ascribed to that term by the State-Owned Enterprises Act 1986. "CD-ROMS" means the CD-Roms containing information relevant to Contact that will be provided to Bidders who are invited to participate in the Final Bid Process. "CROWN" means Her Majesty the Queen in right of New Zealand acting through and by her Minister of Finance and her Minister for State-Owned Enterprises. "DATA ROOM" means the data room or rooms each containing documents and other information relevant to Contact which will be open to Bidders who are invited to participate in the Final Bid Process. "FINAL BID PROCESS" means the process involving the submission of final Bids by the small number of Bidders and as outlined in Section 3. "GOVERNING LAWS" means the laws of New Zealand. "INFORMATION MEMORANDUM" means the information memorandum issued by the Crown in relation to the sale of the Shareholding dated January 1999. "IPO" means initial public offering within the meaning generally ascribed to that term by the financial services industry. - -------------------------------------------------------------------------------- - ii - - -------------------------------------------------------------------------------- "OFFERING DOCUMENTS" means the prospectus, investment statement and Rule 144A documentation pursuant to which shares in Contact are to be offered for sale by the Crown in an IPO. "SALE AND PURCHASE AGREEMENT" means the agreement to be executed by the Crown and the Awardee setting forth the terms upon which the Awardee shall acquire the Shareholding. "SECTION" refers to a section of these Bidding Rules. "SHAREHOLDING" in relation to Contact, means the 40 per cent of the ordinary shares of Contact being offered for sale by the Crown pursuant to the process outlined in these Bidding Rules. "STANDSTILL AGREEMENT" means the agreement between the Awardee and the Crown whereby for a specified period the Awardee will agree: (i) not to sell or dispose of the Shareholding; and (ii) not to acquire an interest in any other securities of Contact. "VERIFICATION CERTIFICATE" means the certificate in the form attached as Attachment IV. References to "party" or "interested party" are references to persons who may become Bidders whether alone or as a member of a Bidding Group. - -------------------------------------------------------------------------------- BIDDING RULES l. OFFER FOR SALE AND SUMMARY OF BIDDING RULES 1.1 The Crown is offering to sell the Shareholding by international tender. This sale will be made in conjunction with an IPO of Contact by which the Crown proposes to dispose of the balance of its shareholding in Contact. Following the IPO, it is intended that the ordinary shares of Contact offered for sale in the IPO will be listed on the New Zealand Stock Exchange, and possibly also on the Australian Stock Exchange. 1.2 The sale process for the Shareholding will be governed by these Bidding Rules, as may be amended as outlined in section 5, and by the Governing Laws. Parties should note that amendments and any changes to the process will be notified through the website established by ABN AMRO Rothschild. The website should be regularly checked as interested parties will be deemed to have notice of any amendments or changes placed on the website. 1.3 The sale process for the Shareholding will be a two-stage process: (i) interested parties who have received a copy of the Information Memorandum must submit indicative non-binding bids and meet the other requirements set out in Section 2; (ii) the Crown will then select from those parties who have submitted indicative non-binding bids and met the other requirements set out in section 2, a small number of parties who will be invited to undertake due diligence and participate in the Final Bid Process (each such party, inter alia, constituting a "Bidder"), as outlined in section 3. 1.4 An indicative timetable outlining the key milestone dates (which as noted may be subject to change) is annexed as Attachment l. Interested parties and Bidders must adhere strictly to the timetable. 1.5 By submitting indicative non-binding bids parties will be agreeing to be bound by these Bidding Rules. 1.6 Parties should note that: (i) aside from entering into the Sale and Purchase Agreement, the Awardee will be expected to enter into the Standstill Agreement (signed by all members of a Bidding Group where relevant); (ii) the sale of the Shareholding will be conditional upon the IPO of Contact being successfully concluded; and -2- (iii) Bidders will be expected to provide certain information to the Crown as part of the Contact IPO process and, if successful, will be expected to indemnify the Crown, Contact and its directors in relation to errors, omissions and mis-statements relating to that information. -3- 2. INDICATIVE BIDS 2.1 Interested parties wishing to participate in the Final Bid Process should submit an indicative non-binding bid (in the form annexed as Attachment II), together with the other information outlined in section 2.3. 2.2 The indicative price should be a specified price rather than being expressed as a range of prices. 2.3 The Crown wishes interested parties to provide documentary evidence of the following matters: (i) existing ownership or significant operational experience in the energy sector (parties intending to bid as a Bidding Group should ensure that at least one member can meet this requirement); (ii) how their Bid will contribute to the success of the Contact IPO (parties should include a brief indicative outline of their broad intentions relating to Contact and indicate any significant differences in strategic vision to that outlined by Contact in the Information Memorandum); (iii) their capacity to complete the process in the time required, including financial capacity to fund the likely cost of the Shareholding (details of financial accounts and any credit ratings should be provided where appropriate); (iv) clearance or authorisation granted under the Commerce Act 1986 or an explanation satisfactory to the Crown as to why application for such is not necessary or evidence that they have submitted an application for Commerce Commission clearance that was registered by the Commerce Commission on or before 3 February 1999 (note: where a party or parties may directly or indirectly have any local operations in the New Zealand energy sector, the Crown will expect such party to seek and obtain clearance or authorisation); (v) that application for consent from the Overseas Investment Commission has been made; (vi) that any other regulatory consents required in New Zealand or elsewhere have been obtained; and (vii) evidence that a relevant senior employee representative of the Bidder has the requisite corporate authority to investigate and negotiate a purchase of the Shareholding. -4- 2.4 Indicative non-binding bids, together with the other information required as per section 2.3, should be delivered in a sealed envelope to the offices of ABN AMRO Rothschild at Level 11, Castrol House, 36 Customhouse Quay, Wellington no later than 5:00pm on 3 February 1999, New Zealand time. Any late indicative bids will not be accepted. -5- 3. FINAL BID PROCESS 3.1 A small number of interested parties who have complied with section 2 will be invited to participate in the Final Bid Process, provided that in respect of any interested party who had applied for, and the Commerce Commission had registered, on or before 3 February 1999, an application for Commerce Commission clearance, if the Commerce Commission does not grant them clearance by 12 February 1999, their involvement in the Final Bid Process, including, without limiting the generality of the foregoing, the due diligence review referred to in section 2, shall cease forthwith. 3.2 Bidders will be permitted to undertake a due diligence review of Contact in accordance with the procedures outlined by ABN AMRO Rothschild on behalf of the Crown. 3.3 Bidders will be given the opportunity to comment on drafts of the Sale and Purchase Agreement and Standstill Agreement prior to the deadline for submission of final Bids. Drafts will be provided on 5 February 1999. These documents will be able to be accessed through the website established by ABN AMRO Rothschild. Bidders' comments must be provided to the Crown, through ABN AMRO Rothschild, no later than 22 February 1999. The Crown, in its sole discretion, may accept or reject any comments. Final versions of these documents will be provided to Bidders on 5 March 1999. No further changes to these documents will be accepted. 3.4 Reference to Bidders' involvement in relation to the IPO process is outlined in section 4. 3.4A All Bidders will be required to submit the identity and details of the proposed purchaser entity to ABN AMRO Rothschild no later than 22 February 1999. Purchaser entities which are not the shortlisted Bidder notified by ABN AMRO Rothschild will be required to provide an acceptable Guarantor of their obligations under the Sale and Purchase Agreement. Parties intending to bid as a Bidding Group should note that they will be required to advise ABN AMRO Rothschild of the proposed consortium no later than 22 February 1999, and to submit to ABN AMRO Rothschild on that date the following information: (i) details and the identity of the consortium members and all relevant arrangements among them; (ii) details and the identity of the proposed purchaser entity. The shortlisted Bidder, directly or through a wholly owned subsidiary will be required to own at least an effective 75% equity interest in the relevant -6- Bidding Group and will be required to guarantee the obligations of the Bidding Group. 3.5 Each final Bid for a Shareholding must be expressed to be an irrevocable and unconditional offer (executed as a deed) capable of acceptance within 21 days and must be delivered, in a sealed envelope, together with the documents referred to in section 3.6, to the offices of ABN AMRO Rothschild at Level 11, Castrol House, 36 Customhouse Quay, Wellington by 5:00pm on 20 March 1999, New Zealand time. Any late Bids will not be accepted. 3.6 The following documents or information must accompany final Bids: (i) the Sale and Purchase Agreement (including the purchase price for the Shareholding) and Standstill Agreement duly executed by the Bidder (signed by all members of the Bidding Group, where relevant); (ii) a Bid Bond in the amount of NZ$25 million (in the form annexed as Attachment III) from an internationally recognised bank with a credit rating for long term debt of AA- or better, as issued by Standard & Poors (or a comparable credit rating issued by another internationally recognised rating agency); (iii) the Verification Certificate, duly executed by a senior representative of the Bidder, for and on behalf of the Bidder; (iv) evidence of due execution of all documents and of all corporate, regulatory, governmental and other consents; and (v) where the Bidder is a Bidding Group, executed copies of all agreements, arrangements and understandings between the members. 3.7 The Sale and Purchase Agreement will be expressed to be conditional upon successful completion of the Contact IPO, such condition to be satisfied no later than 29 October 1999. 3.8 The Bid Bond must secure a Bidder's obligations under these Bidding Rules, the Bid of the Bidder and the Sale and Purchase Agreement. The Bid Bond will be returned to the Bidder (undrawn and uncalled): (a) where the Bidder is the Awardee, in accordance with clause 4.1 of the Sale and Purchase Agreement; or (b) where the Bidder is not the Awardee, upon the Crown receiving a letter or letters of credit in accordance with clause 4.1 of the Sale and Purchase Agreement entered into with the Awardee. 3.9 The successful Bidder, on being so notified by the Crown, shall be required to lodge, or procure the lodgement of, within 7 days thereafter, an -7- irrevocable letter or letters of credit, in favour of the Crown, issued by an internationally recognised bank or banks having a credit rating for long term debt of AA- or better, as issued by Standard & Poors (or a comparable credit rating issued by another internationally recognised rating agency), for (in aggregate) the full purchase price of the Shareholding as recorded in the Sale and Purchase Agreement between the Crown and the Bidder. 3.10 The Crown has sole and complete discretion to accept or reject any or all Bids of any or all Bidders, to cancel the sale process and to run the process generally as it deems fit. 3.11 The Crown reserves the right to consider any factor when determining the successful Bid and to deal with any Bidder individually or simultaneously with others, or to revert back to other Bidders. 3.12 The Crown shall have no obligation to accept any Bid whether or not such Bid represents the best and/or highest offer for the Shareholding. 3.13 Without limiting the generality of sections 3.10 to 3.13, once parties have been short-listed to participate in the Final Bid Process, the Crown's decision as to the successful Bid is likely to be determined primarily on price. -8- 4. INITIAL PUBLIC OFFERING 4.1 Submission of a Bid by a Bidder will constitute acknowledgement that the Crown proposes to sell the balance of the issued share capital in Contact (being 60% of the capital of Contact) through an IPO to be conducted in conjunction with the sale of the Shareholding. The IPO will: (a) be managed and organised by ABN AMRO Rothschild; (b) will consist of a public offer in New Zealand and a private institutional offer in the United States of America and elsewhere; (c) will result in the shares in Contact being listed on both the New Zealand Stock Exchange and possibly the Australian Stock Exchange. 4.2 Copies of the Offering Documents will be made available to Bidders on or about 18 February 1999. Bidders will not be expected to make extensive comments on the Offering Documents but will be expected to provide the information outlined in section 4.4 for inclusion, assuming they are successful, and indicate any differences in strategic vision in relation to Contact from that outlined in the Offering Documents. 4.3 The Crown will appoint three nominees of the Awardee to the Board of Contact immediately prior to settlement of the Sale and Purchase Agreement (which is to occur on completion of the IPO just prior to stock exchange listing). The Crown does not wish to know the identity of the nominees until just prior to settlement. 4.4 Each Bidder will be asked to provide a profile and information relating to its operations and other relevant information for inclusion in the Offering Documents, (assuming it is the successful Bidder). Such information shall be provided by Bidders to the Crown by 13 February 1999. Further comments in relation to any differences in strategic vision and any other comments are to be provided by Bidders no later than 23 February 1999. Bidders will also need to supply a Verification Certificate confirming their provision of, and agreement to use of, and confirmation of, the information and extracts specified in that certificate, which information and extracts are to be included in the Offering Documents substantially in the form in which it appears in the Verification Certificate. 4.5 Bidders should note that the Sale and Purchase Agreement will contain covenants whereby the Awardee will provide an indemnity in favour of the Crown, Contact and its directors for errors, omissions and misstatements in relation to the information provided and confirmations made pursuant to section 4.4 and referred to in the Verification Certificate. -9- 5. GENERAL 5.1 The Crown reserves the right at any time, in its sole discretion, to revoke, modify, amend or terminate any of these Bidding Rules or the indicative timetable without prior notification or justification. Any such changes will be notified to parties through the website established by ABN AMRO Rothschild. Parties should regularly check the website as placement of information thereon will be deemed to be notice of any change to these Bidding Rules. 5.2 These Bidding Rules shall be governed and construed in accordance with the Governing Laws and all parties submit to the non-exclusive jurisdiction of the New Zealand courts. ATTACHMENT I INDICATIVE TIMETABLE 1999 15 January Information Memorandum and Bidding Rules 3 February Indicative non-binding bids and supporting information due 5 February Short-listed Bidders notified of admission in Final Bid Process Due diligence commences: CD-Roms provided to Bidders (and access to Data Room) Forms of Sale and Purchase Agreement and Standstill Agreement made available to Bidders 13 February Bidder's profile for Offering Documents due 22 February Draft IPO Offering Documents made available to Bidders 22 February Bidder's comments on Sale and Purchase Agreement and Standstill Agreement due and the final date for Bidders to advise details and identity of intending Bidding Groups and any relevant proposed arrangements, and the final date for Bidders to advise details and identity of intending purchaser entities. 24 February New Zealand prospectus made available to Bidders. 26 February Bidder's comments on strategic vision for Contact and any other comments on Offering Documents due 5 March Final versions of Sale and Purchase Agreement and Standstill Agreement provided to Bidders 12 March Last day for any final due diligence queries 20 March Submission of final binding Bids due Week beginning Crown approves selected Bidder 22 March ATTACHMENT II FORM OF INDICATIVE NON-BINDING BID LETTER (on Bidder's letterhead) [date] ABN AMRO Rothschild Level 11, Castrol House 36 Customhouse Quay Wellington NEW ZEALAND For: Peter Bird/Liz Kelly Contact Energy Limited We wish to conduct due diligence investigations and discussions with the management of Contact Energy Limited ("Contact") with a view to submitting a final bid for the purchase of 40 per cent of the issued shares in Contact ("Shareholding") from the Crown. Based on our investigations to date, we believe we would be prepared to acquire the Shareholding for a total price of NZ$[ ]. This is an indicative non-binding bid. We agree/our Bidding Group agrees to be bound by the Bidding Rules for the sale of the Shareholding dated January 1999. This letter is solely an indication of interest and a request to be admitted into the Final Bid Process. It does not constitute an offer or commitment on our part to submit a final bid at a future time, and, except for agreeing to be bound by the Bidding Rules, is not intended to have any legal effect. Attached is the additional information requested per section 2.3 of the Bidding Rules. Yours faithfully ___________________________ (Title) ATTACHMENT III FORM OF BID BOND ______________________________________________________________________ of ______________________________ (the "Bidder") has submitted a final bid to purchase 40 per cent of the shares in Contact Energy Limited ("Contact") (the "Shareholding"). In terms of the bidding rules issued by Her Majesty the Queen in right of New Zealand (the "Crown") for the sale of the Shareholding dated January 1999 (the "Bidding Rules") the Bidder is bound and obliged to furnish a Bid Bond along with the final bid to secure certain obligations of the Bidder as set out therein ("Obligations"); At the request of the Bidder, we _____________________________________ of ____________________ having our registered office at ___________________________ have agreed to give such a Bid Bond. WE HEREBY irrevocably undertake and are bound and obliged to pay to the Crown unconditionally and upon demand any sum or sums up to a maximum amount of NZ$25 million. Every demand under this Bid Bond shall be in writing and signed by the New Zealand Minister of Finance (or by any person acting under a delegated authority from him) and shall be accompanied by a statement to the effect that the Bidder has failed and/or neglected to perform its Obligations. For all purposes connected with and relating to this Bid Bond, every demand shall be conclusive proof that the amount so demanded is lawfully due under this Bid Bond and we shall make payment without reference to the Bidder and notwithstanding any notice given by the Bidder not to pay the same. All payments under this Bid Bond shall be made in New Zealand by bank cheque or bank draft drawn in favour of the Crown and in New Zealand dollars. This Bid Bond shall remain valid and binding on us and shall continue until the date on which the Crown advises us in writing that this Bid Bond is no longer required by it or 31 October 1999 (whichever the earlier) PROVIDED HOWEVER that we may, at any time, without being required to do so, pay to the Crown the said sum of NZ$25 million less any amount or amounts we may have previously paid under this Bid Bond or such lesser sum as may be specified by the Crown and thereupon our liability under this Bid Bond shall terminate. This Bid Bond shall be governed by the laws of New Zealand and we submit to the nonexclusive jurisdiction of the New Zealand courts. Dated this _____ day of _____________ 1999. [executed and witnessed as a deed] ATTACHMENT IV VERIFICATION CERTIFICATE TO: The Members of the Contact Energy Limited Due Diligence Committee Contact Energy Limited Directors of Contact Energy Limited The Crown I confirm that: 1. I have prepared the profile (and any additional information) attached to this certificate (the "extract") and I have read the section on Contact's strategic vision (also attached) from the draft dated [ ] 1999 of the Contact Energy Limited Prospectus (the "strategy section"); 2. The statements contained in the extract are true and not misleading and I also confirm that [the Purchaser has no/neither the Purchaser nor the Guarantor has any] significant differences in strategic vision for Contact Energy Limited to that outlined by Contact Energy Limited in the strategy section. 3. No matters have been omitted from the extract or from our confirmation on the strategy section which would make any of the statements contained in the extract, or the strategy section, untrue or misleading in the context of the international and Australasian public offering of 60% of the Shares in Contact Energy Limited. 4. The extract may be used in any offering documents relating to the international and Australasian public offering of 60% of the Shares in Contact Energy Limited to be published on or around April 1999. 5. Where possible, I have attached references to independent external material which support each of the statements contained in the extract. 6. I acknowledge that the parties listed above will rely on this certificate, which I give for and on behalf of [the Purchaser[and the Guarantor]]. Bidder's Name: ____________________________ Duly Authorised Signatory: ____________________________ Full Name of Signatory: ____________________________ Senior Position Held: ____________________________ Date: ____________________________ SCHEDULE 5 CAPITAL EXPENDITURE PROJECTIONS
1999 2000 2001 2002 2003 2004 2005 Geothermal (1) Steam Winning ($000s) 2.09 3.84 2.65 0.92 Reinjection ($000s) 9.11 Station Misc ($000s) 0.50 0.75 0.75 0.75 0.75 0.75 0.75 RMA Reconsent 0.84 0.84 ---- Costs associated with preparing and progressing RMA consents Total Geothermal 3.43 1.59 4.59 0.75 3.40 0.75 10.78 Thermal Otahuhu B 57.60 1.03 ---- Assumes all retensions are released if dispute is resolved Te Rapa 38.40 ---- Full payment under Te Rapa EPC Total Thermal 96.00 1.03 0.00 0.00 0.00 0.00 0.00 Hydro (2) Stator Repairs 3.13 3.22 Stator Coolers 0.13 0.13 0.27 0.27 ---- Upgrade stator cooling in order to prolong life Transformers 0.37 3.85 0.83 ---- Enhancement/replacement of transformers Elec/Mech 1.24 Sluice 0.23 1.23 ---- Refurbishment of sluice gates Gantry 3.00 ---- Undertake remedial work in order to enhance dam safety Clutha Reconsents 1.20 1.70 ---- Costs associated with preparing and progressing RMA consents Clyde Division Sluice Gates 2.00 2.00 ---- Cost of new division sluice gates Total Hydro 4.43 4.93 2.50 3.98 4.23 0.27 4.46 Total Generation 103.86 7.55 7.09 4.73 7.63 1.02 15.24 Otahuhu B major maintenance 17.42 12.54 Retail Acquisitions Fixed Assets 5.50 ---- Retail acquisitions undertaken between 1 October 1998 and 31 March 1999 Goodwill 172.02 ---- Retail acquisitions undertaken between 1 October 1998 and 31 March 1999 Meters 58.86 ---- Retail acquisitions undertaken between 1 October 1998 and 31 March 1999 Ongoing Meters 1.50 2.00 2.00 2.00 2.00 2.00 2.00 Total Retail 237.88 2.00 2.00 2.00 2.00 2.00 2.00 Other Capex 1.00 0.50 0.50 0.50 0.50 0.50 0.50 Total Capital Expenditure 342.74 10.05 9.59 7.23 10.13 3.52 17.74 Investment Expenditure 7.00 ---- Equity contribution for Oakey 2006 2007 2008 2009 2010 Geothermal (1) Steam Winning ($000s) 2.21 3.02 ---- New drilling activities to secure new steam supplies (does not include deep drilling at Obaaki) Reinjection ($000s) 2.78 ---- Full reinjection of separated liquid may be a new requirement for RMA consents Station Misc ($000s) 0.75 0.75 0.75 ---- Unspecified on-going capital expenditure RMA Reconsent Total Geothermal 3.53 2.96 3.77 0.00 0.00 Thermal Otahuhu B Te Rapa Total Thermal 0.00 0.00 0.00 0.00 0.00 Hydro (2) Stator Repairs 3.27 3.32 3.37 3.42 3.47 ---- Assumes old stators replaced with new Stator Coolers Transformers Elec/Mech 1.2 1.23 1.25 1.35 1.5 ---- Enhancement/replacement of transformers Sluice Gantry Clutha Reconsents Clyde Division Sluice Gates Total Hydro 4.47 4.55 4.62 4.77 4.97 Total Generation 8.00 7.51 8.39 4.77 4.97 Otahuhu B major maintenance 17.39 ---- Cost of major plant maintenance as per O&M agreement with EPC contractor Retail Acquisitions Fixed Assets Goodwill Meters Ongoing Meters 2.00 2.00 2.00 2.00 2.00 ---- Initial estimate for meter replacement Total Retail 2.00 2.00 2.00 2.00 2.00 Other Capex 0.50 0.50 0.50 0.50 0.50 ---- Unspecified ongoing capital expenditure Total Capital Expenditure 10.50 10.01 10.89 7.27 7.47 Investment Expenditure
(1) In the event more onerous consent conditions are imposed with reconsenting Wairakei, management expects there may be future capital expenditure which has not yet been assessed. (2) There may also be future capital expenditure required to monitor the Roxburgh land slide. Again, no estimates are available and preliminary investigations indicate minimal movement of the slide. SCHEDULE 6 1. Purchaser: EDISON MISSION ENERGY TAUPO LIMITED 2. Guarantor: EDISON MISSION ENERGY 3. Purchase Price: NZ$ 1,208,000,000.00 (ONE BILLION, TWO HUNDRED AND EIGHT MILLION NEW ZEALAND DOLLARS) 4. Notice Details: Purchaser Address for Service: Bell Gully Buddle Weir IBM Centre 171 Featherston St. PO Box 1291 Wellington Purchaser Facsimile: 0065 836 0879 Guarantor Address For Service: Bell Gully Buddle Weir IBM Centre 171 Featherston St. PO Box 1291 Wellington Guarantor Facsimile: 0065 836 0879 5. Purchaser's and Guarantor's Agent For Service in New Zealand: Name: Bell Gully Buddle Weir Address: IBM Centre 171 Featherston St. PO Box 1291 Wellington 6. Date and party to Confidentiality Deed: Party: Edison Mission Energy Holdings Pty Ltd Date: 14 January 1999 CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Michael Kelland, of Singapore, Business Development Director, certify that: 1. BY deed dated the 19th day of March 1999, Edison Mission Energy Taupo Limited a company duly incorporated in New Zealand (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. AT the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the liquidation of the grantor, the removal of the grantor from the register or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 24th day of March 1999 /s/ MICHAEL KELLAND ------------------------- Michael Kelland CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Michael Kelland, of Singapore, Business Development Director, certify that: 1. BY deed dated the 17th day of March 1999, Edison Mission Energy a company duly incorporated in the United States of America (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. AT the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the liquidation of the grantor, the removal of the grantor from the register or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 24th day of March 1999 /s/ MICHAEL KELLAND ------------------------- Michael Kelland CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Gerard Loughman, of California, United States of America, Company Director, I certify that: 1. BY deed dated the 19th day of March 1999, Edison Mission Energy Taupo Limited a company duly incorporated in New Zealand (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. AT the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the liquidation of the grantor, the removal of the grantor from the register or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 24th day of March 1999 /s/ GERARD LOUGHMAN ------------------------- Gerard Loughman CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Gerard Loughman, of California, United States of America, Company Director, certify that: 1. BY deed dated the 17th day of March 1999, Edison Mission Energy a company duly incorporated in the United States of America (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. AT the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the liquidation of the grantor, the removal of the grantor from the register or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 24th day of March 1999 /s/ GERARD LOUGHMAN ------------------------- Gerard Loughman CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Michael Kelland, of Singapore, Business Development Director, certify that: 1. by deed dated the 19th day of March 1999, Edison Mission Energy Taupo Limited, a company duly incorporated in New Zealand (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. at the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the liquidation of the grantor, the removal of the grantor from the register or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 20th day of March 1999. /s/ MICHAEL KELLAND ------------------------- Michael Kelland CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Gerard Loughman, of California, United States of America, Company Director, certify that: 1. by deed dated the 19th day of March 1999, Edison Mission Energy Taupo Limited, a company duly incorporated in New Zealand (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. at the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the liquidation of the grantor, the removal of the grantor from the register or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 20th day of March 1999. /s/ GERARD LOUGHMAN ------------------------- Gerard Loughman CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Michael Kelland, of Singapore, Business Development Director, certify that: 1. by deed dated the 17th day of March 1999, Edison Mission Energy, a company duly incorporated in the United States of America (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. at the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the dissolution of the grantor, or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 20th day of March 1999. /s/ MICHAEL KELLAND ------------------------- Michael Kelland CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY I, Gerard Loughman, of California, United States of America, Company Director, certify that: 1. by deed dated the 17th day of March 1999, Edison Mission Energy, a company duly incorporated in the United States of America (the "grantor"), appointed me its attorney on the terms and subject to the conditions set out in the said deed; 2. at the date of this certificate I have not received any notice or information of the revocation of that appointment by the commencement of the dissolution of the grantor, or otherwise; and 3. I have executed the attached document in the name of the grantor in my capacity as its attorney under the powers conferred by the said deed. SIGNED at Wellington this 20th day of March 1999. /s/ GERARD LOUGHMAN ------------------------- Gerard Loughman EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EDISON MISSION ENERGY AND SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 387,119 0 94,042 0 0 579,987 4,921,468 269,600 6,931,231 2,013,879 2,575,715 150,000 0 64,130 924,901 6,931,231 0 205,369 0 94,916 0 0 47,752 74,237 16,301 0 0 0 13,840 44,096 0 0
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