SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 15, 2002
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
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333-21011 FIRSTENERGY CORP. 34-1843785
(An Ohio Corporation)
76 South Main Street
Akron, Ohio 44308
Telephone (800)736-3402
Item 5. Other Events
On March 15, 2002, FirstEnergy Corp. finalized the terms of a previously
announced agreement through which Aquila, Inc. (formerly UtiliCorp United) will
acquire a 79.9 percent economic interest in FirstEnergy's wholly owned Avon
Energy Partners Holdings subsidiary, the holding company for Midlands
Electricity plc, for a purchase price of $264 million. As a result of this
transaction, Avon's debt of approximately $1.7 billion, which is non-recourse to
FirstEnergy, would no longer be included on FirstEnergy's consolidated balance
sheet. The transaction is subject to the receipt of all applicable regulatory
approvals.
Aquila and FirstEnergy together will own all of the outstanding shares of
Avon Energy Partners Holdings through a jointly owned subsidiary, with each
company having a 50-percent voting interest. Midlands Electricity's assets
include its 38,000-mile electric distribution network, an investment in the
1,875-megawatt Teesside Power generating plant in the United Kingdom, and
investments in other energy businesses.
Under the revised terms of the Purchase and Sale Agreement, Aquila will
acquire a 79.9% economic interest in Avon in exchange for a $150 million payment
at closing and six annual payments of $19 million, guaranteed by Aquila at the
holding company level, commencing on the first anniversary of the closing.
FirstEnergy will retain ownership of the remaining 20.1% interest in Avon.
FirstEnergy and Aquila will form a new joint venture entity with Class "A",
Class "B" and Class "C" shares. The A Shares, owned by Aquila, will represent a
79.9% economic interest and have a 50% voting interest in the entity. The B and
C Shares, both owned by FirstEnergy, will represent a 20.1% economic interest
and the B shares will have a 50% voting interest in the entity.
Terms of the agreement provide that Aquila has certain rights of first
refusal with respect to FirstEnergy's transfer of its ownership interest.
The restructured Purchase and Sale Agreement provides an acceptable
financial outcome for FirstEnergy. FirstEnergy estimates that the dilutive
earnings impact of the revised sale terms is approximately $0.11 per share, the
same as it was in the previously announced agreement. FirstEnergy's estimated
income associated with its 20.1% ownership is expected to offset the reduction
in securities retirements due to the reduced up-front cash sale proceeds. More
importantly, the restructured sale allows FirstEnergy to largely accomplish its
strategic objectives of divesting non-core assets and strengthening its balance
sheet through debt retirements.
Item 7. Exhibits
Exhibit No. Description
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99 Press Release of FirstEnergy Corp. announcing the agreement
to sell 79.9% of Avon Energy Partners Holdings in the United
Kingdom to Aquila, Inc. (formerly UtiliCorp United Inc.).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
March 18, 2002
FIRSTENERGY CORP.
Registrant
/s/ Harvey L. Wagner
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Harvey L. Wagner
Vice President and Controller
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