Summary
Exelon Corporation (EXC) filed an 8-K on February 23, 2004, to disclose a significant settlement agreement regarding its Boston Generating, LLC (BG) and associated Mystic 8 and 9 and Fore River generating projects. The company is transitioning out of ownership of these projects due to an evaluation of their performance and discussions with lenders. A settlement was reached with lenders to transfer ownership of the project companies to a special purpose entity owned by the lenders. This transfer, along with the subsequent transfer of plant operations and power marketing responsibilities, will occur in two stages, subject to Federal Energy Regulatory Commission (FERC) approval, with an anticipated completion in the second and third quarters of 2004, respectively. This settlement also resolves disputes with Raytheon Company, the turnkey contractor, involving a global settlement of construction-related claims. Exelon will pay approximately $31 million to Raytheon and $1.5 million to BG as part of this global resolution. Notably, Exelon had already recorded a substantial impairment charge of $945 million ($573 million net of taxes) in the third quarter of 2003 related to these assets. No further losses are expected from the consummation of this settlement.
Key Highlights
- 1Exelon Corporation is exiting ownership of Boston Generating, LLC (BG) and its Mystic 8/9 and Fore River projects.
- 2A settlement agreement has been reached with lenders to transfer ownership of the project companies to a lender-owned special purpose entity.
- 3The transfer of ownership is expected to be completed in Q2 2004, subject to FERC approval.
- 4Plant operations and power marketing responsibilities will be transferred in a second stage, expected by Q3 2004, also requiring FERC approval.
- 5A global settlement with Raytheon Company resolves all construction-related disputes for Mystic 8/9 and Fore River.
- 6Exelon will pay approximately $32.5 million in total ($31M to Raytheon, $1.5M to BG) as part of the settlement with Raytheon.
- 7A significant $945 million impairment charge ($573 million net of tax) was already recorded in Q3 2003 related to these assets, with no further losses anticipated from this settlement.