================================================================= ENTERGY NEW ORLEANS BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2005 (ISSN XXXX-XXXX) September 28, 2005 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001 ----------------------------------------------------------------- ENTERGY NEW ORLEANS BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 572 Fernwood Lane, Fairless Hills, Pennsylvania 19030, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtor's cases. New issues are prepared by Marie Therese V. Profetana, Christopher G. Patalinghug, Frauline S. Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of ENTERGY NEW ORLEANS BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO ENTERGY NEW ORLEANS BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF ENTERGY NEW ORLEANS [00002] ENTERGY NEW ORLEANS' BALANCE SHEET AT JUNE 30, 2005 [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] ENTERGY NEW ORLEANS' CHAPTER 11 DATABASE [00005] LIST OF ENTERGY NEW ORLEANS' 20 LARGEST CREDITORS [00006] DEBTOR'S MOTION FOR AUTHORITY TO USE CASH COLLATERAL [00007] DEBTOR'S MOTION TO OBTAIN $200,000,000 OF DIP FINANCING [00008] ENTERGY & ENOI SEEK SEC APPROVAL OF INTERIM FINANCING [00009] HURRICANE RITA CAUSED MAJOR DAMAGE TO ENTERGY SYSTEM [00010] STANDARD & POOR'S DOWNGRADES CORPORATE CREDIT RATING TO D [00011] FITCH ASSIGNS D ISSUER DEFAULT RATING TO ENOI KEY DATE CALENDAR ----------------- 09/23/05 Voluntary Petition Date 10/08/05 Deadline for filing Schedules of Assets and Liabilities 10/08/05 Deadline for filing Statement of Financial Affairs 10/08/05 Deadline for filing Lists of Leases and Contracts 10/13/05 Deadline to provide Utilities with adequate assurance 11/22/05 Deadline to make decisions about lease dispositions 12/22/05 Deadline to remove actions pursuant to F.R.B.P. 9027 01/21/06 Expiration of Debtor's Exclusive Plan Proposal Period 03/22/06 Expiration of Debtor's Exclusive Solicitation Period 09/23/07 Deadline for Debtor to Commence Avoidance Actions Organizational Meeting with UST to form Committees First Meeting of Creditors pursuant to 11 USC Sec. 341 Bar Date for filing Proofs of Claim ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO ENTERGY NEW ORLEANS BANKRUPTCY NEWS ----------------------------------------------------------------- ENTERGY NEW ORLEANS BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's chapter 11 proceedings. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of ENTERGY NEW ORLEANS BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. 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Please enter my personal subscription to ENTERGY NEW ORLEANS BANKRUPTCY NEWS at US$45 per issue until I tell you to cancel my subscription. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) ENTERGY NEW ORLEANS BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's chapter 11 proceedings. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of ENTERGY NEW ORLEANS BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF ENTERGY NEW ORLEANS ----------------------------------------------------------------- Entergy New Orleans, Inc. 1600 Perdido Building New Orleans, Louisiana 70112 http://www.entergy-neworleans.com/NOLA/ Entergy New Orleans, Inc., is a wholly owned subsidiary of Entergy Corporation (NYSE: ETR), a public utility holding company. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy Corp. delivers electricity to 2.7 million customers in Arkansas, Louisiana, Mississippi and Texas. Entergy New Orleans accounts for 7% of Entergy Corp.'s customer count. Entergy has served New Orleans for more than 80 years. Entergy New Orleans served, as of December 31, 2004, approximately 190,000 electric and 147,000 gas customers in Orleans Parish. Residential 169,498 Commercial 16,376 Industrial 1,309 Governmental 1,798 Entergy employs approximately 2,500 people in New Orleans. Nearly 2,200 Entergy retirees live in Louisiana. ENOI is subject to the regulatory jurisdiction of the New Orleans City Council. Hurricane Katrina Caused ENOI's Bankruptcy Filing According to Daniel F. Packer, ENOI President and Chief Executive Officer, ENOI's bankruptcy case was precipitated by the unanticipated and devastating impact of Hurricane Katrina on the City of New Orleans and on the Debtor. "Although paling by comparison to its tragic personal impact on the residents of the City, the hurricane also dealt a body blow to the Debtor. Substantial portions of the Debtor's facilities were destroyed, its revenues were disrupted and, with the evacuation of the City eliminated, at least in the short term," Mr. Packer relates. In addition, Mr. Packer continues, the ability of the Debtor's customer base to pay utility bills -- which is directly linked to the fortunes of the City -- has been significantly impaired. "Although the Debtor is optimistic that its fortunes will rise with the City's redevelopment and economic resurrection, it also must recognize that the path to recovery will be a difficult one and fraught with substantial uncertainty." Total restoration costs for the repair and replacement of ENOI's electric and gas facilities damages by Hurricane Katrina and business continuity costs are estimated to range from $325 million to $475 million. "This cost estimate does not include other potential incremental losses that cannot be estimated at this time," Mr. Packer says "The purpose of this bankruptcy filing -- consistent with the fundamental goals of the bankruptcy laws -- is to provide the Debtor with the respite it needs to deal with the challenges caused by the hurricane, and to enable it to address the interests of its creditors, employees, and the customers which it is dedicated to serve," Mr. Packer adds. ----------------------------------------------------------------- [00002] ENTERGY NEW ORLEANS' BALANCE SHEET AT JUNE 30, 2005 ----------------------------------------------------------------- ENTERGY NEW ORLEANS, INC. BALANCE SHEET As of June 30, 2005 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents: Cash $1,640,000 Temporary cash investments - at cost, which approximates market 6,418,000 ------------ Total cash and cash equivalents 8,058,000 ------------ Accounts receivable: Customer 40,156,000 Allowance for doubtful accounts (3,444,000) Associated companies 9,355,000 Other 5,691,000 Accrued unbilled revenues 38,721,000 ------------ Total accounts receivable 90,479,000 ------------ Deferred fuel costs 23,396,000 Fuel inventory - at average cost - Materials and supplies - at average cost 9,468,000 Prepayments and other 8,685,000 ------------ TOTAL 140,086,000 ------------ OTHER PROPERTY AND INVESTMENTS Investment in affiliates - at equity 3,259,000 ------------ UTILITY PLANT Electric 717,279,000 Natural gas 192,759,000 Construction work in progress 25,315,000 ------------ TOTAL UTILITY PLANT 935,353,000 Less - accumulated depreciation & amortization 448,562,000 ------------ UTILITY PLANT - NET 486,791,000 ------------ DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Other regulatory assets 37,101,000 Long term receivables 1,812,000 Other 21,629,000 ------------ TOTAL 60,542,000 ------------ TOTAL ASSETS $690,678,000 ============ CURRENT LIABILITIES Currently maturing long-term debt $30,000,000 Accounts payable: Associated companies 30,807,000 Other 30,682,000 Customer deposits 18,005,000 Taxes accrued 2,219,000 Accumulated deferred income taxes 7,546,000 Interest accrued 4,354,000 Energy Efficiency Program provision 6,776,000 Other 2,696,000 ------------ TOTAL 133,085,000 ------------ NON-CURRENT LIABILITIES Accumulated deferred income taxes and taxes accrued 52,582,000 Accumulated deferred investment tax credits 3,782,000 SFAS 109 regulatory liability - net 45,300,000 Accumulated provisions 9,006,000 Pension liability 26,890,000 Long-term debt 229,910,000 Other 3,853,000 ------------ TOTAL LIABILITIES 371,323,000 ------------ Commitments and Contingencies SHAREHOLDERS' EQUITY Preferred stock without sinking fund 19,780,000 Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 2005 and 2004 33,744,000 Paid-in capital 36,294,000 Retained earnings 96,452,000 ------------ TOTAL SHAREHOLDERS' EQUITY 186,270,000 ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $690,678,000 ============ ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- Entergy Board Approves DIP Financial Package to Facilitate Business Continuity NEW ORLEANS, Louisiana -- September 23, 2005 -- To protect its customers and ensure continued progress in restoring power and gas service to New Orleans after Hurricane Katrina, Entergy Corporation (NYSE: ETR) announced today that its New Orleans subsidiary - Entergy New Orleans, Inc. (Entergy New Orleans) - has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Simultaneous with this filing, Entergy New Orleans filed a motion with the Court for "debtor-in-possession" financing that contemplates Entergy Corporation making loans up to $200 million to Entergy New Orleans to address Entergy New Orleans' current liquidity crisis. The petition also requests that up to $150 million of these loans be approved on an interim basis. These funds will enable Entergy New Orleans to meet its near-term obligations, including employee wages and benefits, payments under power purchase and gas supply agreements, and its current efforts to repair and restore the facilities needed to serve its electric and gas customers. Entergy Corporation trusts that the bankruptcy court will act swiftly to approve its debtor-in-possession financing for Entergy New Orleans. Entergy New Orleans, which provides electric and natural gas service to customers within the city of New Orleans, is the smallest of Entergy's five utility companies and represented about 7 percent of the consolidated revenues and 3 percent of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in the bankruptcy filing. "We took this action after careful review of the various options available to preserve Entergy New Orleans' business over the near- and long-term" said Dan Packer, Entergy New Orleans' chairman and chief executive officer. "Due to our parent company's financial support, we can focus on the city's reconstruction and rebirth, as those restoration efforts continue today." This filing also is intended to address the very legitimate concern expressed recently in a letter by U.S. Senators Mary Landrieu and David Vitter from Louisiana to President Bush that the potential bankruptcy of Entergy New Orleans would stall or cease restoration efforts in the City as a result of creditor disputes that could arise in such a filing. In making the filing for debtor-in-possession financing, it is Entergy's hope and desire that Entergy New Orleans will be able to continue its restoration efforts for the immediate future. The Court has set this petition and motion for hearing on Monday, September 26. As the City Council of New Orleans stated in a letter of support to Entergy Chief Executive Officer J. Wayne Leonard this week, any long-term solution, that provides for a financially viable utility at Entergy New Orleans and protects customers from the massive restoration costs they can ill afford to pay, must involve a substantial federal financial commitment. In a related action, a bill was introduced by Senators Landrieu and Vitter in the U.S. Senate on September 22 that could provide $250 billion of financial aid to Louisiana, of which $2.5 billion was earmarked to cover restoration costs of in-state utilities, including Entergy's Louisiana subsidiaries. Federal resources, in addition to reimbursement of certain costs covered by insurance, are critical to restoring the system and restoring Entergy New Orleans' financial health. Entergy is working with public officials at the federal, state and local levels to try to secure vital government assistance. Entergy also announced it had taken steps in advance of this bankruptcy filing by Entergy New Orleans to mitigate any effects of the filing on the parent and its financially stronger subsidiaries. Prior to the Entergy New Orleans' bankruptcy filing, Entergy obtained amendments to the $2 billion bank revolving credit facility and other bank facilities to eliminate the bankruptcy of Entergy New Orleans as an Event of Default under the terms of those bank agreements. Therefore, this bankruptcy filing by Entergy New Orleans will not trigger a default under these bank facilities or other financing obligations of Entergy and subsidiaries that are not party to this bankruptcy filing. Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy has annual revenues of over $10 billion and approximately 14,000 employees. ----------------------------------------------------------------- [00004] ENTERGY NEW ORLEANS' CHAPTER 11 DATABASE ----------------------------------------------------------------- Debtor: Entergy New Orleans Inc. c/o R. Patrick Vance, Esq. Jones Walker 8555 United Plaza Boulevard, 4th Floor Baton Rouge, Louisiana 70809-7000 Bankruptcy Case No.: 05-17697 Type of Business: The Debtor sells electric power and natural gas to retail customers in the City of New Orleans, except for Algiers. Entergy New Orleans is a wholly owned subsidiary of Entergy Corporation. Chapter 11 Petition Date: September 23, 2005 Court: Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Debtor's Counsel: Elizabeth J. Futrell, Esq. R. Partick Vance, Esq. Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P. 201 Street, Charles Avenue, 49th Floor New Orleans, Louisiana 70170-5100 Tel: (504) 582-8000 Fax: (504) 589-8194 ----------------------------------------------------------------- [00005] LIST OF ENTERGY NEW ORLEANS' 20 LARGEST CREDITORS ----------------------------------------------------------------- Entity Nature of Claim Claim Amount ------ --------------- ------------ Atmos Energy Marketing LLC Gas purchases $13,219,466 11251 Northwest Freeway,#400 Houston, TX 77092 Bridgeline Gas Distribution Gas purchase $9,768,204 Co. 333 Clay Street, #1200 Houston, TX 77002 Western Gas Resources Inc. Gas purchases $4,146,326 1099 18th Street, #1200 Denver, CO 80202 Magnus Energy Marketing Ltd. Gas purchases $2,226,291 2805 North Dallas Tollway #640 Plano, TX 75093 Coral Energy Resources LP Gas purchases $1,856,825 909 Fannin Street, #700 Houston, TX 77010 Enbridge Marketing US Inc. Gas purchases $871,735 1100 Louisiana, #3300 Houston, TX 77002 Apache Corp. Gas purchases $437,394 2000 Post Oak Boulevard,#100 Houston, TX 77056-4400 Air 2 LLC Utility services $234,638 contractor Bridgeline Gas Marketing LLC Gas purchases $214,153 Chaparral Energy, LLC Gas purchases $128,823 ER Solutions, Inc. $69,588 CJ Calamania Construction Utility services $43,287 Co., Inc. provider Pike Electrical Contractor, Utility contract $29,823 Inc. services William C. Broadhurst Consultant $24,500 Mail Box Inc. $22,315 AT&T Communication $18,203 services Strategic Business $16,775 Initiatives Inc. David J. Domangue Equip. Electrical supplies $15,278 Priority Wire & Cable Electrical supplies $14,638 Policy & Planning Partners Consultant $8,700 LLC ----------------------------------------------------------------- [00006] DEBTOR'S MOTION FOR AUTHORITY TO USE CASH COLLATERAL ----------------------------------------------------------------- Prior to the Petition Date, Entergy New Orleans, Inc., issued six series of first priority mortgage bonds in the aggregate principal amount of $230 million, ranging in maturity dates from August 2008 to September 2029. The Mortgage Bonds are secured by first priority liens on certain property of the Debtor pursuant to a Mortgage and Deed of Trust dated as of May 1, 1987 by and among the Debtor, The Bank of New York (successor to Harris Trust Company of New York and Bank of Montreal Trust Company) as Trustee and Stephen J. Giurlando (successor to Mark F. McLaughlin and Z. George Klodnicki) as Co- Trustee. The Mortgage Collateral largely consists of utility plant and equipment, but it does not include the Debtor's cash, accounts receivable, personal property, mineral rights, general intangibles, and all products or materials generated by the Debtor in the ordinary course of business, including electric power and gas. In addition to the Mortgage Bonds, the Debtor has traditionally had two other sources of financing to meet its short-term liquidity needs: (i) a fully-drawn $15 million, 364-day secured credit facility with Hibernia National Bank dated June 6, 2005, and (ii) borrowings from Entergy's intercompany money pool, pursuant to which the Debtor had authority to borrow certain amounts from Entergy and certain affiliates. According to Daniel F. Packer, ENOI President and Chief Executive Officer, unless authorized to use their prepetition lenders' cash collateral, the Debtor will not have enough cash to: -- repair and rebuild its business and operations in the wake of Hurricane Katrina, -- continue operating its business, -- maintain business relationships with vendors, suppliers and customers, -- make payroll, and -- satisfy other working capital and operational needs. Mr. Packer informs the Court that the Debtor and Entergy Corporation have reached an agreement for fresh financing to further address ENOI's liquidity problems. At present, the Debtor does not anticipate requiring the use of any cash collateral subject to the Mortgage Lien, but it does expect to utilize cash collateral subject to the Hibernia Lien, in the form of collections on prepetition receivables which were pledged to Hibernia. The Debtor proposes that Hibernia be granted a replacement lien on the Debtor's postpetition receivables to the extent of the cash collateral so used, which replacement lien will have the same validity and priority as the Hibernia Lien as of the Petition Date. With respect to cash collateral that may be covered by the Mortgage Lien, the Debtor believes that that cash collateral would represent insurance proceeds related to assets that were destroyed or damaged by the hurricane, and would appropriately be used to either finance rebuilding efforts or to reimburse Entergy, in connection with the grant of priming lien, for advances Entergy made for purposes of rebuilding. * * * At the hearing yesterday in Baton Rouge, the Court authorized the Debtor to use all Cash Collateral, if any, of Hibernia; provided that Hibernia is granted adequate protection. Specifically, Hibernia is granted a replacement lien in postpetition receivables to secure an amount equal to the amount of Cash Collateral used. The Court directs Hibernia to make a series of book entries that will result in the transfer of funds so that the Hibernia Payment Processing Account will have an immediate balance of $15,057,050. The Hibernia Payment Processing Account will remain frozen and subject to all parties' rights pending the submission and determination of a motion establishing cash management procedures. The Court will convene a Final Hearing on December 7, 2005, at 2:00 p.m. Objections must be filed and served by November 29, 2005, at 5:00 p.m. prevailing Eastern time. ----------------------------------------------------------------- [00007] DEBTOR'S MOTION TO OBTAIN $200,000,000 OF DIP FINANCING ----------------------------------------------------------------- See prior related entry at [00006] (Debtor's Motion For Authority To Use Cash Collateral). Without access to fresh financing, Entergy New Orleans, Inc., won't have enough cash to meet its obligations to fuel and gas suppliers. The Company needs new financing to continue operating its business as a going concern and to rebuild the electric and gas infrastructure of the City of New Orleans. Entergy Corporation, the Debtor's parent, has agreed on an interim basis to advance up to $150 million in financing, on a discretionary basis, to meet the Debtor's immediate liquidity needs. R. Patrick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., in Baton Rouge, Louisiana, tells the Court that the Debtor and Entergy are still discussing the extent to which Entergy would be willing to provide additional financing. "It is contemplated, however, that any such additional financing would only be made on a first priority lien basis pursuant to a priming facility approved under [Section 364(d) of the Bankruptcy Code], and the interim financing will be immediately repayable if a final order approving the proposed credit facility, in form and substance satisfactory to Entergy, is not entered." After good faith negotiations, the Debtor and Entergy have reached an agreement on the principal terms of the DIP Facility. The salient terms of the DIP Financing Agreement are: Borrower: Entergy New Orleans, Inc. Lender: Entergy Corporation Facility Amount: Up to $150 million on an interim basis pending final approval of the DIP Facility. Upon final approval of the DIP Facility, the Facility Amount will increase to $200 million; Purpose: The Debtor will use borrowings under the DIP Facility to fund its working capital and general corporate requirements, including electric and gas system restoration costs. Term: Borrowings will be repaid in full, and the DIP Agreement will terminate, at the earliest of: (i) August 23, 2006, (ii) November 10, 2005, if a Final Order satisfactory to Entergy will not have been entered on or prior to that date, (iii) the acceleration of the loans and the termination of the DIP Agreement in accordance with its terms, (iv) the date of the closing of a sale of all or substantially all of the Debtor's assets pursuant to section 363 of the Bankruptcy Code or a confirmed plan of reorganization, and (v) the effective date of a plan of reorganization in the Debtor's chapter 11 case. Security: All borrowings by the Debtor under the DIP Facility will at all times, subject to the Carve-Out: (i) pursuant to section 364(c)(1) of the Bankruptcy Code, be entitled to superpriority administrative claim status; (ii) pursuant to section 364(c)(2) of the Bankruptcy Code, be secured by a perfected first priority lien on all Unencumbered Collateral; (iii) pursuant to section 364(c)(3) of the Bankruptcy Code, be secured by a perfected junior lien on all property of the Debtor subject to perfected and non- avoidable liens as of the Petition Date; and (iv) pursuant to section 364(d)(1) of the Bankruptcy Code, be secured by a perfected first priority, senior priming lien on all property of the Debtor that is subject to valid, perfected and non- avoidable liens in existence on the Petition Date; provided, however, that the superpriority liens granted to Entergy pursuant to section 364(d)(1) of the Bankruptcy Code will not be effective unless and until the Final Order is entered, in which case those priming liens will be deemed to have been effective nunc pro tunc to the Petition Date; Carve-Out for Fees & Expenses of Retained Professionals: The superpriority claims and postpetition liens in favor of Entergy, including the DIP Liens, will be subject to: (i) in the event of the occurrence and during the continuance of an Event of Default, the payment of allowed and unpaid professional fees and disbursements incurred by the Debtor and any statutory committee appointed in the Debtor's chapter 11 case in an aggregate amount not to exceed $500,000, and (ii) the payment of all statutory fees incurred pursuant to Section 1930 of the Judiciary Code. Interest Rate: Cost of Funds Rate, which currently is approximately 4.6% per annum; provided, however, that no interest shall accrue under the DIP Facility prior to receipt of necessary approvals from the Securities and Exchange Commission, at which time each outstanding loan will be deemed to have accrued interest at the rate nunc pro tunc to the date the loan was made. Events of Default: * Failure to make payment of any installment of principal or interest when due and payable; * The occurrence of any Change of Control; * Failure of Entergy to receive, on or prior to November 30, 2005, approval from the Securities and Exchange Commission regarding the charging of interest under the DIP Facility or, in connection with entry of the Final Order, the full amount of the proposed DIP Facility and the priming lien; * Failure by either the Debtor or Entergy to receive other necessary governmental approvals and consents; * The occurrence of an event having a materially adverse effect on the Debtor or its prospects; and * Customary bankruptcy-related defaults, including, without limitation, appointment of a trustee, "responsible person," or examiner with expanded powers, conversion of the Debtor's chapter 11 case to a case under chapter 7 of the Bankruptcy Code, and the Interim Order or the Final Order being stayed or modified or ceasing to be in full force and effect. Expenses: The Debtor agrees to pay all out-of-pocket expenses (including the reasonable fees and expenses of counsel) incurred by Entergy in connection with the preparation of the DIP Agreement and all related documents, and the enforcement of any provision of the DIP Agreement. Moreover, he adds, the Debtor does not believe that any commercial lender would extend credit on an unsecured basis, or even on a basis that is pari passu with the Mortgage Liens or with the Hibernian Lien, to a borrower in the Debtor's situation. Given the impact of Hurricane Katrina on the Debtor's existing plant and property, the Debtor believes that the interests of its current first mortgage bondholders and other prepetition secured creditors are adequately protected, because the proposed expenditures will preserve and enhance the value of the Debtor's assets, which otherwise could have little value, Mr. Vance says. "That being said, however, the Debtor is not seeking at this time to impose a priming lien with respect to the $150 million loan." A full-text copy of the Debtor's DIP Agreement is available for free at http://bankrupt.com/misc/enoiDIPagreement.pdf The Lender is represented by: * J. Ronald Trost, Esq., at Cronin & Vris, LLP, in New York * Shalom L. Kohn, Esq., at Sidley Austin Brown & Wood LLP, in Chicago, Illinois; and * David S. Rubin, Esq., at Kantrow Spaht Weaver and Blitzer (APLC), Baton Rouge, Louisiana * * * Judge Brown, at yesterday's hearing in Baton Rouge, authorized the Debtor on an interim basis to borrow up to $100,000,000. Judge Brown emphasized that his interim approval does not constitute a priming or pari passu lien on any property otherwise subject to a valid, enforceable prepetition security interest or a determination of what constitutes Unencumbered Property or property of the estate. A full-text copy of the Interim DIP Financing Order is available for free at http://bankrupt.com/misc/enoiINTERIMDIPorder.pdf Judge Brown will convene a Final DIP Financing Hearing on December 7, 2005, at 2:00 p.m. Objections, if any, must be filed and served on: (a) Attorneys for the Debtor Jones Walker Four United Plaza 8555 United Plaza Boulevard Baton Rouge, Louisiana 70809 Attn: R. Patrick Vance, Esq. (b) Attorneys for Entergy Corporation Cronin & Vris LLP 380 Madison Avenue New York, New York 10017 Attn: J. Ronald Trost, Esq. Sidley Austin Brown & Wood 10 South Dearborn Chicago, Illinois 60603 Attn: Shalom L. Kohn, Esq., and Kantrow Spaht Weaver and Blitzer (APLC) P.O. Box 2997 Baton Rouge, Louisiana 70821-2997 Attn: David S. Rubin, Esq. (c) The Office of the United States Trustee for the Eastern District of Louisiana so they are RECEIVED no later than November 29, 2005. ----------------------------------------------------------------- [00008] ENTERGY & ENOI SEEK SEC APPROVAL OF INTERIM FINANCING ----------------------------------------------------------------- Entergy Corporation and Entergy New Orleans, Inc., inform the Securities and Exchange Commission that they have entered into a credit facility under which Entergy will lend up to $150 million to ENOI. ENOI asks the Commission for authorization to borrow money from time to time through February 8, 2006, under the Credit Facility in order to meet its immediate cash needs. Steven C. McNeal, Entergy's vice president and treasurer, assures the Commission that all borrowings by ENOI under the Credit Facility will be secured, will be repaid by ENOI within one year, and will bear interest at a rate equal to Entergy's effective cost of short-term borrowings. Entergy and ENOI also ask the Commission to modify a couple of orders: (1) Under the terms of the Commission's Money Pool Order dated November 11, 2004, ENOI has committed that it will maintain common equity as a percentage of consolidated capitalization, including short-term debt and current maturities of long-term debt, at 30% or higher. In addition, ENOI is restricted under the Money Pool Order from making any borrowings (other than borrowings under the Money Pool) unless, at the time of those borrowings, all of its outstanding securities that are rated are rated investment grade by at least one of the nationally recognized ratings organizations. (2) Under the terms of the Commission's Omnibus Financing Order dated June 30, 2004, Entergy may not issue any securities (other than common stock) unless, at the time of the issuance, common equity as a percentage of total capitalization of Entergy and of each of its public utility subsidiaries is 30% or higher. Entergy and ENOI want the Commission to modify the Money Pool Order to eliminate the 30% common equity test and the investment grade ratings test as applied to ENOI, and the Omnibus Financing Order to eliminate the 30% common equity test solely as it relates to ENOI. Mr. McNeal relates that as a result of as a result of ENOI's deteriorating financial condition, both Standard & Poor's Rating Services and Moody's Investors Service, Inc., have downgraded ENOI's senior secured debt to below investment grade. In addition, on a pro forma basis, taking into account the Interim Loan, common equity as a percentage of ENOI's total capitalization will be reduced to below 30%. Mr. McNeal further assures the Commission that Entergy and ENOI are in compliance with the applicable statutory provisions. To the extent they're not, Mr. McNeal says, the proposed transactions should still be approved because they (i) will not have a substantial adverse impact on Entergy's financial integrity and (ii) will not have an adverse impact on Entergy's utility subsidiaries (including ENOI), their customers or on the ability of Entergy's state and local regulators to protect those subsidiaries or customers. ----------------------------------------------------------------- [00009] HURRICANE RITA CAUSED MAJOR DAMAGE TO ENTERGY SYSTEM ----------------------------------------------------------------- More Than 832,000 Customers Without Service Due to Rita, Katrina JACKSON, Mississippi -- September 24, 2005 -- Entergy officials say that outages related to Hurricane Rita continue to rise and that Rita - which came just a few weeks after the worst storm in company history - is now the second-worst storm in company history. As of 2 p.m. Saturday, Hurricane Rita had interrupted service to almost 611,000 Entergy customers in Louisiana, Texas, Arkansas and Mississippi. This is second only to Hurricane Katrina, which interrupted service to 1.1 million customers in Louisiana and Mississippi. At the time Rita struck, Entergy still had 211,553 customers out of service in the greater New Orleans Area, bringing the total number of customers affected by both storms to 832,506. Rita came on shore east of Sabine Pass, Texas at about 2:30 a.m. Saturday as a Category 3 Hurricane with wind speeds of 120 mph. It had a direct impact to Entergy's service territory in Texas and Louisiana. Entergy is responding to damage from Hurricane Rita. Initial assessments are underway. Entergy has 7,000 linemen and support workers committed to restoring service and the company continues working to bring in more. Prior to Hurricane Rita's strike, Entergy had restored service to almost 880,000 customers affected by Hurricane Katrina. Up to 170,000 of those are unable to accept electric and gas service, with restoration for many requiring major repairs or reconstruction. In New Orleans, Entergy crews continue to work in areas of the city that were not affected by flooding. Those customers who can take power in the French Quarter and areas of Uptown without flooding will have power sometime next week. Before the back-to-back hurricanes, Entergy's highest outage count was 270,000, from Tropical Storm Cindy. Before the 2005 hurricane season, the highest number of customers impacted by a storm was 260,000 during Hurricane Georges in 1998. Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy has annual revenues of over $10 billion and approximately 14,000 employees. ----------------------------------------------------------------- [00010] STANDARD & POOR'S DOWNGRADES CORPORATE CREDIT RATING TO D ----------------------------------------------------------------- NEW YORK, New York -- September 23, 2005 -- Standard & Poor's Ratings Services said today that it lowered its corporate credit rating on electric utility Entergy New Orleans Inc. to 'D' from 'CCC+' reflecting the company's voluntary petition for bankruptcy protection filed on Sept. 23, 2005. Standard & Poor's also lowered its rating on Entergy New Orleans' first mortgage bonds to 'CC' from 'CCC+'. The rating remains on CreditWatch with negative implications pending further clarity regarding the likelihood of nonpayment on these obligations. In addition, the recovery prospects for first mortgage bondholders are still under review pending the valuation of the remaining utility plant collateral and insurance proceeds. The ratings on the company's parent, New Orleans, La.-based Entergy Corp. (BBB/Watch Neg/--), and all other affiliates remain on CreditWatch with negative implications. As of June 30, 2005, Entergy New Orleans had $259 million of debt outstanding. "Entergy New Orleans' bankruptcy filing is in response to the unit's near-term liquidity needs and restoration costs from Hurricane Katrina, currently estimated at between $325 million to $475 million," said Standard & Poor's credit analyst John Kennedy. Entergy, the parent company, eliminated all cross defaults associated with its bank credit facility before Entergy New Orleans filed for bankruptcy. Entergy may provide $200 million to Entergy New Orleans as debtor-in-possession financing, on bankruptcy court approval, for the unit's short-term needs. "We continue to believe that parent Entergy and all other units will be excluded from Entergy New Orleans' bankruptcy filing based on the assessment that the parent has the means and motivation to effectively contain the obligations of Entergy New Orleans at the subsidiary level," said Mr. Kennedy. ----------------------------------------------------------------- [00011] FITCH ASSIGNS D ISSUER DEFAULT RATING TO ENOI ----------------------------------------------------------------- CHICAGO, Illinois -- September 23, 2005 -- Fitch Ratings maintains the 'CCC' first mortgage bond rating of Entergy New Orleans, Inc. (ENOI) and assigns a 'D' issuer default rating (IDR) in accordance with the recovery rating methodology published July 26, 2005, following today's Chapter 11 bankruptcy filing by ENOI. Based on Fitch's initial recovery analysis, the 'CCC' rating reflects good recovery prospects for first mortgage bondholders. Fitch will update the ratings for ENOI as more information regarding creditor recovery prospects becomes available during the course of the bankruptcy. Fitch notes that ENOI's parent, Entergy Corp., has obtained waivers for the cross default provision in its primary $2 billion credit facility. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site at http://www.fitchratings.com/ Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. *** End of Issue No. 1 ***