CONCORD, N.H., OCT. 13 -- Directors of Public Service Co. of New Hampshire, lead owner of the Seabrook nuclear power plant, voted today to default on a $37 million debt payment due Thursday.
Public Service will be the first major investor-owned utility to default on a bond payment since the Great Depression.
The 13-member Public Service board voted to suspend scheduled interest payments on various bonds, the first of which is due Thursday, said spokesman John Cavanagh.
Public Service has a 30-day grace period during which it can pay. During the period, creditors cannot take any action against the company, such as filing for involuntary bankruptcy reorganization, according to Charles Bayless, the company's financial vice president.
The suspension was effective today, Cavanagh said. He declined to comment further.
"This is a real major event," said Dan Scotto, utility analyst with L.F. Rothschild of New York. "There's been a real strong belief in the analytical community that utilities don't default. It's going to send people back to the drawing board and look differently at utilities, the same way people looked differently at utilities after Three Mile Island," he said, referring to the Pennsylvania plant that in 1979 was site of the nation's worst commercial nuclear accident.
Public Service has been pushed to the brink of bankruptcy by its $2.1 billion investment in the $5 billion Seabrook nuclear plant.
State law prohibits utilities from charging for plants until they operate commercially, and Seabrook, though loaded with nuclear fuel, has been kept from starting by evacuation planning snags and opposition.
Company officials have said they expected creditors would file involuntary bankruptcy proceedings against Public Service if the company defaulted. But they hope a bankruptcy judge would encourage creditors to hold off action and give the company's proposed $1.1 billion debt restructuring plan a chance to work.
The plan, one of three steps the company has taken to avoid filing for reorganization under the federal bankruptcy code, essentially would swap old debt for new. The company also is seeking a 15 percent emergency rate increase and is cutting costs.
Without the rate increase, the company says it will run out of cash by the end of the year.
Company directors today also were considering an alternative bailout plan proposed by Consolidated Utilities and Communications Inc., a New York-based firm that represents a consortium of bondholders.
Public Service's financial albatross, Seabrook, has been stalled in part by Massachusetts Gov. Michael S. Dukakis (D), who has refused to submit evacuation plans for six Massachusetts communities within the plant's 10-mile evacuation zone. The plant also has faced strong opposition from New Hampshire residents, though Gov. John H. Sununu (R) has been an ardent supporter