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EL PASO ELECTRIC ANNOUNCES INTERIM EXTENSION OF CREDIT FACILITIES AND OBLIGATIONS UNTIL JAN. 31, 1992

EL PASO ELECTRIC ANNOUNCES INTERIM EXTENSION OF CREDIT FACILITIES AND
 OBLIGATIONS UNTIL JAN. 31, 1992
 EL PASO, Texas, Jan. 3 /PRNewswire/ -- El Paso Electric Company (NASDAQ: ELPA) announced today that it has obtained extensions until Jan. 31, 1992, of the following financing arrangements: its $150 million revolving credit facility, the $5.7 million credit facility on the company's independent fuel oil trust, a $25 million term loan, approximately $10 million in other debt and its obligations to reimburse issuing banks on letters of credit aggregating approximately $207.9 million. Such facilities and obligations otherwise were due to mature on Dec. 31, 1991, through Jan. 3, 1992. The company also has obtained waivers of nonpayment of interest and fees due through Jan. 3, 1992, on credit arrangements and extensions of the obligations to make such interest and fee payments until Jan. 9, 1992. The company did not make the lease payments of approximately $20 million on the Palo Verde Units 2 and 3 leases that were due Jan. 2, 1992. Under the terms of the leases, the applicable grace period for such payments is five business days.
 As previously announced, the owner participants in the company's sale and leaseback of Unit 2 at the Palo Verde Nuclear Generating Station ("Palo Verde") drew upon letters of credit aggregating approximately $207.9 million on Dec. 26 and 27, 1991. Because of the draws on the letters of credit and the company's resulting obligation to reimburse the issuing banks for the amount of these draws, which the company has recorded as short-term debt, the company is not in compliance with covenants requiring the company to maintain specified debt to equity ratios. Such covenants are included in substantially all of the company's financing arrangements, as well as certain series of its second mortgage bonds. The consequences of the company's noncompliance with the financial ratio covenants depend on the creditors' decisions regarding whether to accelerate the maturities of affected obligations. The company cannot predict at the present time whether any of the creditors will accelerate any such obligations. The company is continuing to negotiate with its lenders and, althought there can be no assurance, is hopeful that the creditors will waive the noncompliance with the maintenance of equity covenants.
 The company is continuing to examine all of its options and is continuing discussions with its lenders to determine whether a satisfactory restructuring of its obligations can be completed. As previously announced, the restructuring that the company has been pursuing for some time could not be completed as originally proposed due to the draws on the letters of credit issued in connection with the company's Palo Verde Unit 2 sale/leaseback transactions. Although negotiations are continuing, there can be no assurance that a restructuring satisfactory to both the company and its creditors can be accomplished. If it is unable to reach a satisfactory resolution, the company could be forced to file for protection under the 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- 1/3/92
 /CONTACT: William Johnson of El Paso Electric, 915-543-5843/
 (ELPA) CO: El Paso Electric Company ST: Texas IN: OIL SU: SH -- NY006 -- 6385 01/03/92 08:49 EST
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Publication:PR Newswire
Date:Jan 3, 1992
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