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EL PASO ELECTRIC ANNOUNCES DELAY ON CLOSING OF ITS FINANCIAL RESTRUCTURING

 EL PASO ELECTRIC ANNOUNCES DELAY ON CLOSING
 OF ITS FINANCIAL RESTRUCTURING
 EL PASO, Texas, Dec. 2 /PRNewswire/ -- El Paso Electric Company (NASDAQ: ELPA) announced today a delay on the closing of its financial restructuring plan, which the company has been pursuing with its existing creditor group and had expected to complete by the end of November 1991. Negotiations among the parties continue, and the company has now targeted the middle of this month for the completion of the restructuring. Completion of the restructuring is subject to finalization of negotiations among the parties and satisfaction of other conditions, including consents from and waives by various parties. The company has obtained the regulatory approvals required for the restructuring.
 The company's revolving credit facility of $150 million has been amended to extend its termination date from Nov. 30, 1991 to Dec. 16, 1991.
 The credit facility to the company's independent fuel oil trust is due and owing today. To avoid default on the facility, the company must either obtain an interim extension of the facility (which would enable the company to continue negotiations with the lender for an extension of the facility through 1993 as part of the company's proposed restructuring) or retire the $5.7 million principal balance, plus accrued interest, owing on the facility today.
 The company is seeking an interim extension of the facility, but cannot determine at this time whether the lender will grant the extension. Based on negotiations to date, the company believes retirement of the debt to the facility could adversely affect the company's ability to complete the restructuring.
 Because of the delay on the restructuring, the company failed to provide by Dec. 1, 1991, as required, a renewal letter of credit to an owner participant in one of the company's sale/leaseback transactions on Unit 2 at the Palo Verde Nuclear Generating Station. The renewal letter of credit that was required to be provided by Dec. 1, 1991, as well as other renewal letters of credit (which the company is obligated to provide by the latter part of this month to the owner participants of the company's other sale/leasebacks on Palo Verde Units 2 and 3) are part of the transactions to be completed in the proposed restructuring. The company's failure to provide the one renewal letter of credit by Dec. 1, 1991, will be an event of default under the facility lease for that sale/leaseback transaction, unless the owner participant waives the company's failure to provide by Dec. 1, 1991, the renewal letter of credit. The terms of the facility lease expressly provide that the owner participant may grant such a waiver and thereby avoid the event of default.
 The company is continuing to seek the necessary waiver; however, the owner participant is not required to grant the waiver and there can be no assurance the owner participant will grant the waiver.
 Because the company failed to provide the renewal letter of credit by Dec. 1, 1991, the owner participant may draw upon the existing letter of credit (approximately $31 million) at any time through its Dec. 31, 1991, expiration date. The company has received no indication from the owner participant it intends to draw on the letter of credit at the present time.
 If the above defaults were to occur, they could lead to events of default under substantially all of the company's financing and lease agreements, inluding the company's mortgage indentures and letter of credit agreements. Such defaults would permit accelerations of maturity of the obligations related to the agreements and could lead to draws by the owner participant beneficiaries of the existing letters of credit issued on the account of the company in support of the Palo Verde sale/leaseback transactions (an aggregate amount of approximately $300 million).
 In the event of draws on the letters of credit, the company has an immediate reimbursement obligation to the issuing banks, which it does not expect it would be able to meet. The occurance of any events of default would jeopardize the company's proposed restructuring and could lead to the company not completing the restructuring. Without a satisfactory restructuring, the company would not be able to meet its obligations and could be forced to file for protection under the federal bankruptcy laws.
 The company believes that, absent the occurance of the possible draws on the letters of credit and events of default described above, the company will be able to meet its cash needs through the now-targeted date of the restructuring (mid-December) without requiring any additional financing.
 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- 12/2/91
 /CONTACT: William J. Johnson of El Paso Electric, 915-543-5843/
 (ELPA) CO: El Paso Electric Company ST: Texas IN: SU: RCN


TS -- NY016 -- 8228 12/02/91 09:30 EST
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Date:Dec 2, 1991
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