FirstEnergy, Ohio, pollution control revenue bond remarketings fail

By Sheri Kasprzak

New York, Oct. 9 - FirstEnergy Corp. of Ohio has experienced unsuccessful remarketings of its pollution control revenue bonds for the first time since the bondholders began tendering their bonds, according to a filing Thursday with the Securities and Exchange Commission.

FirstEnergy had not experienced any unsuccessful remarketings of the pollution control bonds, but with recent disruptions in the variable-rate demand bond and capital markets, $195 million of the bonds backed by Wachovia Bank's letters of credit were tendered. Most of these were tendered before the announcements of the sale of Wachovia. Of those bonds, $191 million were not successfully remarketed and resulted in draws on the letters of credit, all of which Wachovia honored, the filing said.

If the bonds are not successfully remarketed, the bondholders will be paid by drawings under irrevocable direct-pay letters of credit.

The company has $2.1 billion of the variable-rate bonds currently outstanding, with $1.9 billion as obligations of FirstEnergy Solutions Corp., $156 million as obligations of Ohio Edison Co., $29 million as obligations of Metropolitan Edison Co. and $45 million as obligations of Pennsylvania Electric Co.

The rates reset daily or weekly.

The bondholders can tender their bonds for mandatory purchase before maturity with the purchase price available from remarketing proceeds.

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