8-KOther Events

AMERICAN ELECTRIC POWER CO INC 8-K Report (Jun 21, 2002)

Filed June 21, 2002For Securities:AEP

Summary

American Electric Power Company, Inc. (AEP) announced on June 18, 2002, an agreement to sell its United Kingdom subsidiary, SEEBOARD, which handles retail electricity and gas supply and electricity distribution in southeast England, to London Electricity Group plc (LE Group). This divestiture is a significant strategic move, aiming to streamline AEP's operations and focus on its core U.S. markets. The transaction is expected to yield substantial cash proceeds for AEP while also transferring considerable debt and certain obligations to LE Group.

Key Highlights

  • 1AEP to sell its UK subsidiary, SEEBOARD, to London Electricity Group plc (LE Group).
  • 2Sale price includes 670 million pounds (approx. US$975 million) in cash.
  • 3LE Group will assume approximately 722 million pounds (approx. US$1.05 billion) of SEEBOARD debt.
  • 4LE Group will also assume obligations of 100 million pounds (approx. US$146 million) related to a power purchase agreement with Medway Power Ltd.
  • 5AEP anticipates recognizing a pre-tax loss on the sale of approximately US$440 million in the second quarter of 2002, including an estimated US$80 million foreign exchange loss.
  • 6The transaction is conditional on European Commission approval and is expected to close in four to six weeks.
  • 7SEEBOARD includes electricity distribution and supply, a contracting business, and a 37.5% stake in Medway Power Ltd.

Frequently Asked Questions

AEP expects to recognize a pre-tax loss of approximately US$440 million on the sale in the second quarter of 2002. This loss includes a foreign exchange loss of approximately US$80 million that was previously recorded in shareholders' equity. A portion of the loss may be classified as an impairment of goodwill due to changes in accounting rules.

AEP will receive 670 million pounds (approximately US$975 million) in cash. London Electricity Group will assume SEEBOARD's debt of approximately 722 million pounds (approximately US$1.05 billion) and assume obligations valued at 100 million pounds (approximately US$146 million) related to a power purchase agreement.

The sale includes SEEBOARD's electricity distribution and supply business, its contracting business, and AEP's 37.5 percent interest in Medway Power Ltd.

The sale is conditional on approval from the European Commission under its merger regulations. The completion of the transaction is expected to occur within four to six weeks from the filing date.