EDITORS: Please do not use
"Pacific Gas and Electric" or "PG&E" when
referring to PG&E Corporation or its National Energy Group.
The PG&E National Energy Group is not the same company as Pacific
Gas and Electric Company, the utility, and is not regulated by the
California Public Utilities Commission. Customers of Pacific Gas
and Electric Company do not have to buy products or services from
the National Energy Group in order to continue to receive quality
regulated services from Pacific Gas and Electric Company.
LENDERS PROVIDE FUNDING FOR PG&E NATIONAL ENERGY GROUP'S
LA PALOMA CONSTRUCTION PROJECT TO PROCEED
BETHESDA, Md. - PG&E National Energy Group, Inc. today announced
that the company and a syndicate of lenders have reached an agreement
to provide funding for the La Paloma Generating plant, allowing
construction to continue at the Kern County, Calif. facility. PG&E
National Energy Group, as guarantor, was required to make a payment
in November against the remaining $369.5 million equity contributions
under the La Paloma Generating credit facility to fund construction
costs. PG&E National Energy Group is a wholly owned subsidiary
of PG&E Corporation (NYSE: PCG).
La Paloma Generating is a 1,121 megawatt natural gas-fired, combined-cycle
generating project. The project is now 99 percent complete.
The agreement announced today is intended to provide funds necessary
to continue construction and is a transitional step until the lenders
look at a more permanent resolution. The financing arrangements
for the project are secured by a first mortgage on the La Paloma
facility. In October 2002, PG&E National Energy Group funded
approximately $4.5 million of construction costs and notified the
lenders under La Paloma Generating's credit facility that it would
not make further payments of construction costs for the plant.
As reported in an Oct. 21, 2002 filing with the U.S. Securities
and Exchange Commission, PG&E National Energy Group and the
lenders under its 364-day and two-year revolving credit facilities
entered into an amendment to the credit facilities that, among
other amendments, prohibits PG&E National Energy Group from
making any payment for the La Paloma Generating plant and for certain
other projects under construction.
The Administrative Agent for the syndicate lenders is Citibank
The agreement announced today is consistent with PG&E National
Energy Group, Inc.'s previously announced strategy to explore options
to raise cash and reduce its indebtedness, ongoing guarantee and
working capital requirements. These options include, but are not
limited to sales of assets and businesses, debt restructuring,
and reorganization of existing operations.
Headquartered in Bethesda, Md., PG&E National Energy Group
Inc. develops, builds, owns and operates electric generating and
natural gas pipeline facilities and provides energy trading, marketing
and risk-management services.