UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10K/A
(Amendment
No. 1)
T ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
fiscal year ended December
31, 2008
or
o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period
from _________________________ to
_________________________
Commission
file number 33-42125
Chugach
Electric Association, Inc.
(Exact
name of registrant as specified in its charter)
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Alaska
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92-0014224
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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5601 Electron Dr., Anchorage,
Alaska
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99518
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(907)
563-7494
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Name
of each exchange on which registered
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Securities
registered pursuant to Section 12(g) of the Act:
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(Title
of class)
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(Title
of class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
oYes TNo
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
TYes oNo
Indicate
by check mark whether registrant (1) has filed reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
TYes oNo
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Registration S-K (§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. T
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer T
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Smaller
reporting company o
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).oYes TNo
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. N/A
EXPLANATORY
STATEMENT
This Amendment No. 1 on Form 10-K/A is
being filed to correct an error to the variable rate average interest rate in
the table regarding cash flows for principle payments on total debt by maturity
date as of December 31, 2008, included in “Item 7A – Quantitative and
Qualitative Disclosures About Market Risk” contained in Chugach Electric
Association, Inc.’s Form 10-K for the fiscal year ended December 31, 2008,
originally filed with the Securities and Exchange Commission on March 13,
2009.
Item
7A - Quantitative and Qualitative Disclosures About Market Risk
Chugach
is exposed to a variety of risks, including changes in interest rates and
changes in commodity prices due to repricing mechanisms inherent in gas supply
contracts. In the normal course of our business, we manage our
exposure to these risks as described below. We do not engage in
trading market risk-sensitive instruments for speculative purposes.
Interest
Rate Risk
The
following table provides information regarding cash flows for principal payments
on total debt by maturity date (dollars in thousands) as of December 31,
2008:
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Total Debt1
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2009
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2010
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2011
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2012
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2013
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Thereafter
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Total
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Fair
Value
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Fixed
rate
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$ | 2,000 | $ | 1,500 | $ | 150,000 | $ | 120,000 | $ | 0 | $ | 0 | $ | 273,500 | $ | 285,926 | ||||||||||||||||
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Average
interest
rate
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5.50 | % | 5.50 | % | 6.55 | % | 6.20 | % | 0.00 | % | 0.00 | % | 6.38 | % | ||||||||||||||||||
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Annual
interest expense
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$ | 17,405 | $ | 17,297 | $ | 9,487 | $ | 620 | $ | 0 | $ | 0 | ||||||||||||||||||||
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Variable
rate
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$ | 2,404 | $ | 45,582 | $ | 2,851 | $ | 2,694 | $ | 2,076 | $ | 29,680 | $ | 85,287 | $ | 85,287 | ||||||||||||||||
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Average
interest
rate
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2.37 | % | 5.08 | % | 2.37 | % | 2.37 | % | 2.37 | % | 2.37 | % | 3.82 | % | ||||||||||||||||||
1Includes
current portion
Chugach
is exposed to market risk from changes in interest rates on its variable rate
long term debt (NRUCFC line of credit and CoBank notes). A 100
basis-point change (up or down) would increase or decrease our interest expense
by approximately $852,872, based on $85,287,159 of variable debt outstanding at
December 31, 2008. Management does not believe the downgrade Chugach
recently received from Moody’s Investors Service on our bonds will materially
affect interest rates associated with future financing.
2002 Series B
Bonds
The 2002
Series B Bonds (the “Auction Rate Bonds”) had a maturity date of February 1,
2012. The applicable interest rate for any 28-day auction period was
the term rate established by the auction agent based on the terms of the
auction. The Auction Rate Bonds could have been converted, in
Chugach’s discretion, to a daily, seven-day, 35-day, three-month or a
semi-annual period or a flexible auction period. The Auction Rate
Bonds were not subject to redemption at the option of the bondholders under any
circumstances. Chugach could elect to redeem the bonds and was
required to redeem the bonds in pre-established incremental amounts over time
through a sinking fund. The Auction Rate Bonds were subject to a
remarketing agreement on a best efforts basis, however in the event of
unsuccessful remarketing, the bonds would be returned to the bondholders and
would continue as auction rate bonds subject to a maximum auction rate (15%).
Under no circumstances would Chugach have been obligated to pay off the Bonds in
the event of an unsuccessful remarketing effort. Chugach had not
provided any protection to the bondholders in the event of an unsuccessful
remarketing, therefore, Chugach had classified the Bonds as long-term, with the
exception of the mandatory sinking fund payment. The average
interest rate for the 2002 Series B Bonds in 2008, 2007, and 2006 was 4.87%,
5.34%, and 5.07%, respectively.
Certain
events affecting bond insurers, including Chugach’s bond insurer, MBIA, had
injected some level of uncertainty regarding the success of the auction
process. By the terms of the auction securities agreement, should an
attempt to reset the interest rate on Chugach’s auction rate bonds fail because
there was insufficient bids to establish a market-based price, the interest rate
on Chugach’s 2002 Series B Bonds would have been set utilizing an “Auction Mode
Multiple” as defined in Exhibit A to Appendix 2 to Eleventh Supplemental
Indenture (Auction Procedures Description).
The
“Auction Mode Multiple” as of any Auction Date was a percentage of the Index in
effect on such auction date (in Chugach’s case, a percentage of the one month
London Interbank Offered Rate (LIBOR). That percentage was based on
the Prevailing Rating of the 2002 Series B Bonds in effect at the close of
business on the Business Day immediately preceding the Auction
Date.
In
Chugach’s case, the Auction Mode Multiple was based on MBIA’s AAA rating and
would have been 150% of one-month LIBOR. That rate would have stayed
in effect for 28 days, followed by another auction. On February 20,
2008, the auction was held and failed to obtain sufficient clearing
bids. Therefore, the current bondholders continued to hold the bonds
and the rate on the 2002 Series B Bonds was set at 4.677% and stayed in
effect until March 20, 2008. The failure of the auction did not
constitute an event of default under any financing arrangement.
On March
5, 2008, bondholders were notified of the intent of Chugach to redeem the entire
outstanding principal amount of the 2002 Series B Bonds. The Board of
Directors authorized the redemption using funds obtained from one or more new
borrowings under Chugach’s existing lines of credit with CoBank or
NRUCFC.
On March
20, 2008, Chugach redeemed the $29.6 million outstanding principal amount of the
2002 Series B Bonds using our NRUCFC line of credit at an initial rate of
3.46%. Repayment of the NRUCFC line of credit is due on January 1,
2010. Accordingly, outstanding borrowings continue to be classified
as long-term.
Commercial
Paper
On
January 30, 2009, Chugach issued $36.0 million of commercial paper to repay its
NRUCFC line of credit. On February 5, 2009, Chugach issued an
additional $10.0 million of commercial paper to repay the balance of its NRUCFC
line of credit. For information regarding current commercial paper
transactions, see “Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations – Liquidity and Capital Resources –
Commercial Paper.”
Commodity
Price Risk
Chugach’s
gas contracts provide for adjustments to gas prices based on fluctuations of
certain commodity prices and indices. Because fuel and purchased
power costs are passed directly to our wholesale and retail customers through a
fuel surcharge process, fluctuations in the price paid for gas pursuant to
long-term gas supply contracts does not normally impact
margins.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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 on January 29,
2010.
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CHUGACH
ELECTRIC ASSOCIATION, INC.
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By:
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/s/ Edward Jenkin for
BWE
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Bradley
W. Evans, Chief Executive Officer
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Date:
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January 29,
2010
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