ATLANTA -- The Sebring, Fla., Utilities Commission is likely to reach final agreement soon on its sale of assets to Florida Power Corp., allowing it to pay off $91 million of outstanding bonds and close down operations by mid-1992, the commission's financial adviser said yesterday.
James Lentz, the adviser, said Florida Power last week verbally agreed to pay $11.4 million for the utility's remaining assets, its distribution system. The new offer compares with an original bid of $10.2 million, he said. In addition, he noted, Florida Power agreed to offer a loan to the commission at 8% interest rather than the 9.5% originally offered.
"Florida Power has improved the terms of its offer, and I can't see why agreement cannot be reached sometime fairly soon, allowing us to move forward on the bonds and close out by June," said Mr. Lentz. "Right now it's a matter of crossing t's and dotting i's." Details of benefits to be paid by Florida Power to commissiion employees are also being wrapped up, he said.
To the proceeds from the asset sale and the $43.5 million loan, the commission would add its own cash reserves, Mr. Lentz said, leaving it with about $92 million. This would allow it to call its remaining $91 million of bonds, which are insured by the AMBAC Indemnity Corp., and cover about $1 million in close-out expenses.
He said the cash reserves would include: $12.9 million held in cash by the utility, $2.6 million of other assets, and $21.5 million the City of Sebring last week agreed to pay for the commission's water supply system.
With the bonds called and the commission dissolved, the utility's customers would then be served by Florida Power, which would add a $25.75-a-month "transitional fee" to ratepayers' average bill for a period of 15 years in order to pay off the loan. Before last week's offer, the transition rate had been pegged at $27.00.
But although the commission has received verbal assurances of the new offer, it has not received a final contract offer from Florida Power, Mr. Lentz said. He said the utility has promised to send the contract by this Friday, after which time it will be reviewed by the commission's board. Officials at Florida Power could not be reached for comment yesterday.
Once a contract is signed between Florida Power and the commission, Mr. Lentz said, a petition must be filed with Florida's Public Service Commission requesting approval of the transitional fee. Mr. Lentz said the commission could consider this request as early as March. Bondholders must then be given a 30-day notice before the bonds are redeemed.
At the time of closing, the city also expects to sell about $24.5 million of tax-exempt bonds to pay for purchase of the water system and some improvements to that facility, Mr. Lentz said.
Mr. Lentz has urged the utility to move quickly in order to avoid a steep rise in debt service costs. These would have jumped to $15.4 million a year by 1996 from about $10 million this year, forcing an increase in rates to about 135 per 1,000 kilowatt hours from the current level of about 110 per 100 kilowatt hours.
The Sebring Utilities Commission has been wrestling with a burdensome level of indebtedness ever since 1981, when it sold $92.8 million of bonds to build a 41.7 megawatt diesel/steam power plant. It found that revenues would fall below debt service requirements because power demand in the region was far short of expectations.
After a bridge financing was arranged in 1984 and 1985, the utility restructured its borrowings in 1986, selling $115.2 million of debt in two series, $94.3 million of AM-BAC-insured bonds and $21 million of uninsured bonds then valued at about $ 21 million.
The commission's problems with its debts, however, have continued. Last March, it moved to begin reducing those costs by selling its power plants to Tampa Electric Co. and using the proceeds to redeem the uninsured bonds.