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EL PASO ELECTRIC REQUESTS EXTENSIONS OF TIME TO FILE REORGANIZATION PLAN AND TO ASSUME OR REJECT PALO VERDE LEASES

EL PASO ELECTRIC REQUESTS EXTENSIONS OF TIME TO FILE REORGANIZATION PLAN
 AND TO ASSUME OR REJECT PALO VERDE LEASES
 EL PASO, Texas, July 28 /PRNewswire/ -- El Paso Electric (EPE) (NASDAQ: ELPQE) announced today that on July 23, 1992, it filed a motion with the Bankruptcy Court to extend the period during which the company has the exclusive right to propose a plan of reorganization until Dec. 9, 1992, and to solicit acceptances thereof to March 8, 1993, as well as a motion to extend the period during which it may assume or reject leases related to its leased interest in the Palo Verde Nuclear Generating Station and to cap administrative rent on such leases.
 Currently, the company has the exclusive right to propose a plan of reorganization in the bankruptcy proceedings until Sept. 8, 1992, and to solicit acceptances thereof until Nov. 9, 1992.
 The company continues the process of formulating a reorganization plan with the hope that a consensual agreement can be reached with the company's creditors, shareholders, regulators and other interested parties. However, the process is still at a negotiation stage due to the complexity of the issues involved in the reorganization. While the company's goal is to propose a plan of reorganization by the Sept. 8 deadline, achieving support from the various parties to the negotiations may not be possible by that date. Therefore, the company has requested an extension in the event additional time is necessary for these sensitive and complex discussions.
 Important to the formulation of a reorganization plan is a thorough analysis of the company's leased interest in the Palo Verde Nuclear Generating Station and a determination of the appropriate treatment thereof, including whether to assume or reject the leases. The current deadline for the company to assume or reject the Palo Verde leases is also Sept. 8, 1992. Therefore, the company has requested an extension of time to make this critical decision until March 8, 1993, in keeping with its position that acceptance or rejection of the Palo Verde leases and treatment of non-administrative claims arising from the leases is best addressed in conjunction with the confirmation of the company's plan of reorganization.
 The company also has requested that pending any ultimate decision to reject the Palo Verde leases, rent on its leased facilities at Palo Verde be capped by the Bankruptcy Court at $49 million per year and be paid in monthly installments beginning Oct. 1, 1992. The company has made this request to eliminate the present uncertainty as to the amount of administrative rent that may be payable for the use of the leased portions of Palo Verde prior to the time that a decision to assume or reject the Palo Verde leases is made. The company's request, in part, reflects its recognition that its current rates include certain amounts attributable to the Palo Verde leases, although the amounts are several millions of dollars less each month than the contract rent amounts and other costs set forth in the leases to be paid by the company. Under the terms of the Palo Verde leases, lease payments aggregate approximately $90 million a year, net of the company's obligation under the leases to pay operations and maintenance costs, taxes and other related costs on the leased portions of Palo Verde.
 As previously stated by David H. Wiggs Jr., EPE's chief executive officer, president and chairman of the board, a primary objective of the company in formulating its reorganization plan is to allow the company to emerge from bankruptcy with a capital structure and costs that are in balance with its future revenues and that will result in value for investors and creditors, consistent with the interest of its customers.
 The company will continue pursuit of its financial reorganization as expeditiously as possible; however, the company cannot predict when any restructuring or other arrangements satisfactory to the company, its creditors and shareholders will be reached. Any such arrangement will be subject to the approval of the Bankruptcy Court and possibly the regulatory bodies with jurisdiction over the company.
 El Paso Electric Company, which filed for protection 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. The company currently owns or leases 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- 7/28/92
 /CONTACT: William J. Johnson of El Paso Electric Company, 915-543-5843/
 (ELPQE) CO: El Paso Electric Company ST: Texas IN: UTI SU:


PS -- NY090 -- 4238 07/28/92 16:24 EDT
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Date:Jul 28, 1992
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