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GULF STATES UTILITIES AND SOUTHERN CO. END CONTRACT DISPUTE

      GULF STATES UTILITIES AND SOUTHERN CO. END CONTRACT DISPUTE
    BEAUMONT, Texas, Nov. 7 /PRNewswire/ -- Gulf States Utilities Co. (NYSE: GSU) and the Southern Co. (NYSE: CO) today (Nov. 7) signed settlement documents formally ending a longstanding purchased-power contract dispute.
    Under the agreement, GSU paid the Atlanta-based Southern Co. $6.6 million in cash.  The Southern Co. will also receive about $73 million that accumulated in an escrow account established by the federal court while the contract suit was pending before the court. Beaumont-based GSU issued 6 million shares of common stock to the Southern Co., and gave the other utility $160 million in promissory notes.  In the legal proceedings involving the two companies, the Southern Co. had claimed that GSU owed it about $1 billion.
    The two companies agreed to settle the dispute in June 1990, but their tentative agreement had to be approved by the boards of directors of both companies, various regulatory agencies and the court that had jurisdiction over the dispute.  Judge Joe Fisher of the U.S. District Court for the Eastern District of Texas in Beaumont dismissed the lawsuits on Oct. 29 and released the escrow funds for payment to the Southern Co.
    GSU's total cash outlay between now and 1999 could be as little as $167 million.  Gulf States recorded a $135 million after-tax charge in the second quarter of 1990 reflecting the Southern Co. settlement.
    On Jan. 1, 1993, GSU may be required to make a cash payment to the Southern Co. based on the performance of Gulf States common stock.  If GSU's common stock trades at an average high of at least $18.25 per share for five consecutive days between now and Jan. 1, 1993, Gulf States will not have to pay anything.  If the common stock trades lower during that period, GSU will pay Southern Co. the difference between $18.25 and the highest average price the stock attains for five consecutive days.
    The $160 million of promissory notes is payable on Jan. 1, 1993, without interest.  Payments on both the notes and the stock differential, if any is due, will be deferred and will accrue interest after Jan. 1, 1993, if Gulf States has not resumed common stock dividend payments by that time and does not have cash available above an agreed minimum balance.  In any event, full payment will be due Jan. 1, 1999.
    GSU's Lewis Creek power plant and the stock of GSG&T, a GSU subsidiary that owns the 520-megawatt gas-fired generating station near Willis, Texas, will serve as collateral for GSU's future payments.
    Today's action officially terminated both the disputed power sales agreement and all litigation between the two parties.  The companies had been in court concerning the matter since mid-1986.
    -0-         11/7/91
    /CONTACT:  Doug McCormick, 409-839-2858, or Susan Huff Gilley, 409-839-2846, both of Gulf States Utilities/
    (GSU SO) CO:  Gulf States Utilities Co.; Southern Co. ST:  Texas, Georgia IN:  UTI SU:  CON SH -- NY069 -- 2305 11/07/91 14:32 EST
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Publication:PR Newswire
Date:Nov 7, 1991
Words:499
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