Banks Calls in Seabrook Power Plant Bond Issue
CONCORD, N.H. (AP) _ A bank Wednesday called in a $425 million bond issue by Public Service Company of New Hampshire, lead owner of the stalled Seabrook nuclear project, pushing the utility one step closer to bankruptcy court.
The New York Stock Exchange suspended trading in Public Service stock and bonds for several hours after Midlantic National Bank of Edison, N.J., the sole trustee for the 17 1/2 percent debentures due 2004, demanded payment of the principal and interest.
Public Service skipped a $37 million interest payment on the notes Oct. 15, becoming the first major investor-owned utility to default since the Depression. The company has since missed four payments totaling $12 million on other debts.
Under terms of the loan agreement with Midlantic, the bank may demand payment of principal and interest 30 days after any payment is skipped.
Public Service spokesman Nicholas Ashooh said the utility would not pay the $425 million principal. ″We’re not in a position to pay that,″ he said. ″That’s why we didn’t pay the interest.″
But Ashooh said Midlantic’s move would not prompt the utility to seek bankruptcy protection. The utility is trying to reorganize its finances out of court.
Midlantic spokesman Charles Ward would not comment on the bank’s action.
One Wall Street analyst, Daniel Scotto of L.F. Rothschild, said, the action itself would not lead to a bankruptcy filing, ″but it is one step closer to that happening.″
″The company owes $425 million today that yesterday they did not owe,″ said Amil Schiaffino of McCarthy, Crisanti and Maffei Inc. ″It makes it that much more difficult.″
But Schiaffino noted that no creditor had launched bankruptcy proceedings. Three creditors who together hold at least $5,000 in bonds can together start the proceedings after a grace period, usually 30 days, expires.
″The large institutional investors who are savvy and own a bit of this apparently have decided it’s in nobody’s interest to do this yet,″ probably because they believe a judge first would give out-of-court restructuring efforts a chance, Schiaffino said.
Public Service’s woes stem from its $2.1 billion investment in the $5.1 billion Seabrook reactor, which is completed but sits idle, unable to overcome evacuation-planning obstacles to an operating license.
New Hampshire law bars utilities from charging ratepayers for power plants before they operate commercially.
Public Service, which is seeking an emergency $71 million rate increase as part of its survival effort, has asked state Supreme Court to overturn that law.
Public Service common stock closed Wednesday at 3 1/4 , down 1/2 but still a full point ahead of its low for the year. The 17 1/2 percent debentures closed down 1 3/4 at 29 1/4 .