Seabrook partners try to find money to finish plant's Unit 1
New Britain, Conn.
The Public Service Company of New Hampshire (PSNH) is managing, barely, to stay out of bankruptcy. Meanwhile, its 15 partners are scrambling to wrap a lifeline around the incomplete Seabrook nuclear plant. They want to keep it afloat if PSNH sinks.
This past weekend, the utility partners took control of Seabrook Unit 1 after PSNH, in a cash-conserving step, stopped making its construction payments.
''PSNH has essentially (temporarily) walked away from the project,'' William Ellis at a Connecticut Department of Public Utility Control hearing said Monday. Mr. Ellis is the chief executive officer of Northeast Utilities, which has a 4 percent share in Seabrook.
To keep Unit I alive, the partners have agreed to pick up PSNH's slack and pay $5 million a week ''one week at a time'' for maintenance and security, said John Fasset, chief executive officer of United Illuminating, which has a 17 percent share of the project.
In return, PSNH has tentatively agreed to:
* Relinguish its veto power over Unit 1.
* A Seabrook oversight committee of joint owners and ''others with high credentials in nuclear construction'' - the recently hired project manager, William Derrickson, is expected to continue.
* Give a new separate entity responsibility for operating the Unit 1 - if it's completed.
The partners are pursuing a plan to set up a corporate entity to finance and complete Unit 1. ''Newbrook,'' as the partners have dubbed it, would raise some percentage of stock in this entity has each now hold in the project.
While admitting to legal and financing obstacles, Mr. Fasset of United Illuminating said the plan is ''doable.''
''It is starting to look like the light at the end of the tunnel is something other than a fast train coming toward us,'' said Fasset at the hearing.
But Wall Street is less optimistic. ''If all they're doing is changing management, that doesn't help much,'' says Mark D. Luftig, a utility analyst at Salomon Brothers Inc.
''The new corporation has no credit. The only asset is a incomplete nuclear plant - which isn't worth much,'' he says, adding that the project has little chance for success unless Seabrook's more fiscally sound partners hold a larger share of the new entity or each partner is responsible for any partner that falls to make payments on the new debt issued.
On Friday, Moody's Investors Service lowered PSNH's bond rating for a third time after the company decided last Thursday to omit its stock dividend. The firm's stocks have fallen to $4 a share from $20 last fall.
Moody's said PSNH's ''financial difficulties make prospects for financial recovery unlikely.'' But Luftig says he thinks that ''PSNH can hold on for a while'' as long as the joint owners do not push the company to make construction payments.
During the last week, PSNH has managed to stay afloat through a number of moves:
* Last Wednesday it laid off 5,200 of 6,200 workers.
* On Thursday it omitted dividend payments on its common and preferred stock. Also, it laid off 200 more utility employees and cut managers salaries and directors fees.
* On Friday it laid off 450 workers that were converting a Portsmouth oil-fired plant to burn coal.
On March 1, the PSNH estimated the twin-reactor Seabrook project would cost $ 9 billion to complete. By March 30, its partners forced it to agree to cancel Unit 2. At the same time, PSNH's banks denied it a $160 million line of credit and told the company to seek additional credit elsewhere. Company auditors gave the firm three weeks before it would need to seek bankruptcy protection.