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EXTENSION OF PERIOD FOR EL PASO ELECTRIC TO SOLICIT ACCEPTANCES OF PLAN OF REORGANIZATION EXTENDED FROM 11/9/92 TO 12/23/92

 EXTENSION OF PERIOD FOR EL PASO ELECTRIC TO SOLICIT ACCEPTANCES
 OF PLAN OF REORGANIZATION EXTENDED FROM 11/9/92 TO 12/23/92
 EL PASO, Texas, Aug. 26 /PRNewswire/ -- El Paso Electric (NASDAQ: ELPAQ) announced today that following a hearing held on Aug. 25, 1992, the U.S. Bankruptcy Court extended the period in which to solicit acceptances of its plan of reorganization from Nov. 9, 1992, to Dec. 23, 1992. The company's request to extend the period in which it has the exclusive right to file a plan of reorganization was denied. As a result of the ruling, the company intends to file its plan of reorganization by Sept. 8, 1992, which is within the current exclusivity period, and to proceed to obtain the acceptances and approvals required from applicable parties by Dec. 23, 1992. During this time, no other party can file a competing plan of reorganization with the Bankruptcy Court.
 The company also announced that it withdrew a motion it had filed with the Bankruptcy Court requesting an extension of the deadline for the assumption or rejection of the leases related to the company's sale and leaseback transactions involving Unit 2 and a portion of Unit 3 of the Palo Verde Nuclear Generating Station. As a result, to the extent such leases are leases of real property rather than leases of personal property under applicable law, the deadline remains at Sept. 8, 1992.
 The company believes the legal effect of the withdrawal of its motion on the Palo Verde leases will be the rejection, as a matter of law, of the leases effective Sept. 8, 1992. This result is dependent upon a determination by the Bankruptcy Court that the Palo Verde leases are real property leases. The company intends to institute a legal action with the Bankruptcy Court immediately after filing its plan of reorganization to resolve the issues related to the Palo Verde leases, including their characterization as real property leases rather than personal property leases and the extent of any damages that may result from their rejection. Pursuant to applicable bankruptcy law, damage claims arising from rejection of real property leases are limited. The company believes, based on statements made by the Bankruptcy Judge, that a ruling will be made by the Bankruptcy Court by Dec. 23, 1992.
 During such litigation, and during the period to solicit acceptances of its plan of reorganization, the company intends to continue to pay the amounts due to Arizona Public Service Company, operating agent of Palo Verde, for valid post-petition obligations coming due under the separate agreement that governs the relationship between the utilities with interests in Palo Verde. The company also anticipates that it will continue to pay operation and maintenance costs associated with portions of Palo Verde subject to the leases, and that the company will continue to receive power generation entitlements related to such portions, which amount to approximately 280 megawatts of the total 600 megawatts the company has received historically from Palo Verde.
 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 and an area of the Rio Grande Valley in West Texas and Southern New Mexico.
 -0- 8/26/92
 /CONTACT: Alan Lee Bunnell of El Paso Electric Company, 915-543-5823/
 (ELPAQ) CO: El Paso Electric ST: Texas IN: UTI SU: BCY


TS -- NY012 -- 3345 08/26/92 09:30 EDT
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Publication:PR Newswire
Date:Aug 26, 1992
Words:581
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