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EPE ANNOUNCES CONTINUATION OF ITS COMPREHENSIVE FINANCIAL RESTRUCTURING NEGOTIATIONS

EPE ANNOUNCES CONTINUATION OF ITS COMPREHENSIVE FINANCIAL RESTRUCTURING
 NEGOTIATIONS
 EL PASO, Texas, Dec. 24 /PRNewswire/ -- El Paso Electric Company (NASDAQ: ELPA) reported today that the company and the coordinating banks for the comprehensive financial restructuring have agreed to continue their joint efforts to complete the comprehensive financial restructuring by mid-January 1992.
 This delay, beyond the previously announced Dec. 23, 1991, deadline, is due to outstanding issues with creditors involved in the comprehensive financial restructuring that are taking more time to resolve than anticipated. Although there can be no assurance that such completion will occur, given the current discussions ongoing between the company and the banks involved in the comprehensive financial restructuring, the company is hopeful that the comprehensive financial restructuring can be completed.
 The comprehensive financial restructuring contemplates restructuring the revolving credit facility of $150 million; letters of credit of approximately $300 million that support lease obligations related to the company's sale and leaseback transactions on Unit 2 at Palo Verde (which are required to be renewed beginning Nov. 30, 1991); and approximately $40 million of other debt that matures between Nov. 30, 1991, and Jan. 2, 1992. The comprehensive financial restructuring involves the extension of maturities of the above existing obligations and a new money bridge financing for $83 million.
 Because of this further delay, the company will not likely obtain further extensions of these maturing obligations and will probably incur payment defaults on certain of these maturing obligations. The $150 million fully-borrowed revolving credit facility will come due and terminate today along with the company's $5.7 million fuel oil trust financing facility, if no further extensions are granted. If the above defaults were to occur, they could lead to events of default under substantially all of the company's mortgage indentures and letters of credit agreements. One of the beneficiaries under the letters of credit has indicated it expects to draw on its letter of credit position on Dec. 26, 1991. Technically, all of the other beneficiaries could draw on their letters of credit at such time, but no other beneficiary has indicated an intention to draw on Dec. 26, 1991. Though there can be no assurance that such will be the case, the company does not presently expect the other beneficiaries to draw on their letters of credit, depending on the progress of the company's efforts to complete the restructuring.
 The company faces other debt maturities at year-end of approximately $40 million. In addition, the company has lease payments on Palo Verde Unit 3 due Jan. 2, 1992. All of these obligations are to be financed under the comprehensive financial restructuring, the completion of which has been extended to mid-January 1992. Absent interim financing, of which there can be no assurance and which is unlikely, the company expects it will be unable to make the lease payments on a timely basis.
 As indicated above, the company is proceeding with efforts to complete the comprehensive financial restructuring as early as possible in January 1992 to avoid any extended period of payment defaults (which would be cured by the completion of the new money bridge financing). The company continues to assess all alternatives and could be forced to file for protection under federal bankruptcy laws.
 El Paso Electric Company is an electric utility serving approximately 248,000 customers in El Paso, Texas, and the Rio Grande Valley in Texas and New Mexico. The company has a 15.8 percent interest in each of the three 1,270-megawatt nuclear units at the Palo Verde Nuclear Generating Station located near Phoenix, Ariz.
 -0- 12/24/91
 /CONTACT: William Johnson of El Paso Electric, 915-543-5843/
 (ELPA) CO: El Paso Electric Company ST: Texas IN: UTI SU: RCN


GK -- NY005 -- 5115 12/24/91 09:40 EST
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Publication:PR Newswire
Date:Dec 24, 1991
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