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BANKRUPTCY COURT RULES FOR CONTINUATION OF EPE'S EXCLUSIVITY PERIOD

 EL PASO, Texas, Dec. 29 /PRNewswire/ -- El Paso Electric Company (NASDAQ-NMS: ELPAQ) announced that following a hearing held on Wednesday, Dec. 23, 1992, the United States Bankruptcy Court in Austin, Texas, ruled that the continuation of the company's exclusivity period, based on Bankruptcy Rule 3016, allows the company to continue negotiating with interested parties concerning the settlement of certain issues contained in its proposed reorganization plan. During this period, no other party may file a competing plan of reorganization until confirmation of the company's pending plan is denied or unless Court authorization is first obtained.
 In addition, as a result of (i) the Court's extension of exclusivity; (ii) the Court's recent partial summary judgment denying EPE's request to apply $288.4 million of proceeds on letters of credit (that were drawn upon in December 1991 and January 1992) as an offset against any damages resulting from its rejection of leases associated with the Palo Verde Nuclear Generating Station; and (iii) discussions with certain of its constituencies, the company will cease solicitation of acceptance of its current proposed plan of reorganization. The company will continue to negotiate and pursue a consensual agreement of its reorganization plan with the company's creditors, shareholders, regulators and other interested parties. No new date for solicitation of acceptances has been set by the Court.
 The Court reaffirmed limitations on third parties which may be interested in acquiring the company from conducting discussions with the company's regulators until the Court evaluates whether or not such a restriction should continue in place at a hearing scheduled for Jan. 13, 1993. At that time, the Court also may consider appointing an independent expert, mediator or examiner with specified powers to assist various parties in the resolution of the pending adversary proceeding, as well as assist in resolution of various regulatory issues.
 The Court has not yet ruled on other pending issues, including whether the Palo Verde leases are leases rather than financing arrangements and, if leases, whether they are leases of real or personal property and the extent of any damages that would result from their rejection. The company has maintained that the leases are real property leases, that as such the leases were rejected as a matter of law on Sept. 8, 1992, and that pursuant to applicable bankruptcy law, any damages resulting from the rejection of the leases are limited.
 El Paso Electric Company, which filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code on Jan. 8, 1992, is an electric utility serving approximately 250,000 customers in El Paso, Texas, and an area of the Rio Grande Valley in West Texas and Southern New Mexico.
 -0- 12/29/92
 /CONTACT: Alan Lee Bunnell of El Paso Electric Company, 915-543-5823/
 (ELPAQ)


CO: El Paso Electric Company ST: Texas IN: UTI SU:

SH -- NY006 -- 0257 12/29/92 08:52 EST
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Date:Dec 29, 1992
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