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RAPID CITY, S.D., Sept. 22, 2003 -- Black Hills Corp., announced the completion of a transaction terminating a fifteen year contract with Allegheny Energy Supply Co., LLC for capacity and energy at Black Hills' Las Vegas Cogeneration II power plant.
The company received a cash payment of $114 million under the termination agreement, which alleviates the company's credit exposure to Allegheny at this facility. Proceeds will be used to reduce debt and for other corporate purposes.
In recognition of lower expected cash flows from the Las Vegas power plant following the contract termination, the company determined that an impairment of assets would be recognized in the third quarter. Third quarter 2003 financial results will record an after-tax net loss of approximately $2.6 million, or $0.08 per share, due to the accounting treatment of this transaction.
Due to many factors affecting future earnings performance, including the potential impact of changes in the contract status of the Las Vegas plant, the pending sale of hydroelectric power plants in upstate New York, and a reduction in anticipated capital deployment in 2003, and in combination with the expected growth in our other businesses, the company currently expects earnings from continuing operations in 2004 to be comparable to 2003 recurring results.
The company's commitment to a strong balance sheet, sufficient liquidity, and an appropriate debt structure has been demonstrated by the 2003 equity and debt offerings and the pending sale of non-strategic assets. These capital activities establish the strong financial foundation for further pursuit of opportunities for prudent earnings growth and steady dividend growth. Our long-term growth objective is expected to be achieved through investments in new projects and the expansion of existing operations.
About Black Hills Corporation
Black Hills Corporation is a diverse energy and communications company. Black Hills Energy, our wholesale energy unit, generates electricity, produces natural gas, oil and coal and markets energy; Black Hills Power is our electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Black Hills FiberCom, our broadband communications company, offers bundled telephone, high speed Internet and cable entertainment services.
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