Entergy 2006 Annual Report Download - page 110

ENTERGY CORPORATION AND SUBSIDIARIES 2
2000066
94
The fair value of debt securities, summarized by contractual
maturities, at December 31, 2006 and 2005 are as follows (in millions):
2006 2005
Less than 1 year $ 82 $ 80
1 year – 5 years 309 357
5 years – 10 years 472 382
10 years – 15 years 106 116
15 years – 20 years 72 73
20 years + 112 97
Total $1,153 $1,105
During the years ended December 31, 2006, 2005, and 2004, pro-
ceeds from the dispositions of securities amounted to $778 million,
$944 million, and $679 million, respectively. During the years ended
December 31, 2006, 2005, and 2004, gross gains of $5 million, $5
million, and $4 million, respectively, and gross losses of $10 million,
$8 million, and $3 million, respectively, were reclassified out of other
comprehensive income into earnings.
NOTE 18. ENTERGY NEW ORLEANS BANKRUPTCY PROCEEDING
Because of the effects of Hurricane Katrina, on September 23, 2005,
Entergy New Orleans filed a voluntary petition in the United States
Bankruptcy Court for the Eastern District of Louisiana seeking reor-
ganization relief under the provisions of Chapter 11 of the United
States Bankruptcy Code (Case No. 05-17697). Entergy New Orleans
continues to operate its business as a debtor-in-possession under the
jurisdiction of the bankruptcy court and in accordance with the appli-
cable provisions of the Bankruptcy Code and the orders of the
bankruptcy court.
On September 26, 2005, Entergy New Orleans, as borrower, and
Entergy Corporation, as lender, entered into the Debtor-in-Possession
(DIP) credit agreement, a debtor-in-possession credit facility to
provide funding to Entergy New Orleans during its business restora-
tion efforts. On December 9, 2005, the bankruptcy court issued
its final order approving the DIP Credit Agreement. The credit
facility provides for up to $200 million in loans. The facility enables
Entergy New Orleans to request funding from Entergy Corporation, but
the decision to lend money is at the sole discretion of Entergy
Corporation. As of December 31, 2006, Entergy New Orleans had out-
standing borrowings of $52 million under the DIP credit agreement.
On February 5, 2007, Entergy New Orleans filed an amended plan
of reorganization and a disclosure statement with the bankruptcy
court. The bankruptcy court entered an order on February 13, 2007
that approves the adequacy of Entergy New Orleans’ disclosure state-
ment. The Unsecured Creditors’ Committee also filed a plan of
reorganization on February 5, 2007. The Unsecured Creditors’
Committee’s plan is similar in some respects to Entergy New Orleans’
plan, but contains several differences. The significant differences
are noted below. A hearing regarding confirmation for both plans of
reorganization is scheduled for May 3 and 4, 2007.
Entergy New Orleans’ plan of reorganization reflects its continuing
effort to work with federal, state, and local authorities to resolve the
bankruptcy in a manner that allows Entergy New Orleans’ customers
to be served by a financially viable entity as required by law. The plan
of reorganization provides full compensation to Entergy New Orleans’
creditors whose claims are allowed by the bankruptcy court.
Conditions precedent proposed in Entergy New Orleans’ plan of
reorganization before it can become effective include:
■A final confirmation order from the bankruptcy court approving
the plan of reorganization;
■Receipt by Entergy New Orleans of insurance proceeds of at least
$50 million;
■Receipt by Entergy New Orleans of $200 million in CDBG
funding; and
■No material adverse change shall have occurred from and after the
confirmation date of the plan of reorganization.
In addition, key factors that will continue to influence the timing and
outcome of Entergy New Orleans’ recovery efforts include the level of
economic recovery of New Orleans and the number of customers that
return to New Orleans, including the timing of their return. Entergy
New Orleans currently estimates that approximately 95,000 electric cus-
tomers and 65,000 gas customers have returned and are taking service.
Prior to Hurricane Katrina, Entergy New Orleans had approximately
190,000 electric customers and 144,000 gas customers.
The Unsecured Creditors’ Committee’s plan does not contain the
conditions precedent regarding receipt by Entergy New Orleans of
insurance proceeds and CDBG funds. Instead, the Unsecured
Creditors’ Committee’s plan proposes exit financing of up to $150
million, with a maturity of up to 5 years, and with an estimated inter-
est rate of 10.5%, increasing by 1% per year. Obtaining this exit
financing is a condition precedent to the Unsecured Creditors’
Committee’s plan.
The bankruptcy judge set a date of April 19, 2006 by which credi-
tors with prepetition claims against Entergy New Orleans, with
certain exceptions, had to file their proofs of claim in the bankruptcy
case. Approximately 560 claims, including amending claims, have
been filed thus far in Entergy New Orleans’ bankruptcy proceeding.
Entergy New Orleans is currently analyzing the accuracy and validity
of the claims filed, and is seeking withdrawal or modification of
claims or objecting to claims with which it disagrees. Several of the
filed claims have been withdrawn or disallowed by the bankruptcy
court. Entergy New Orleans currently estimates that the prepetition
claims that will be allowed in the bankruptcy case will approximate
the prepetition liabilities currently recorded by Entergy New Orleans.
Entergy New Orleans’ plan of reorganization proposes to pay the
third-party prepetition accounts payable in full in cash and to issue
three-year notes in satisfaction of the affiliate prepetition accounts
payable, and proposes that its first mortgage bonds will remain out-
standing with their current maturity dates and interest terms. The
plan of reorganization proposes that Entergy New Orleans’ preferred
stock will also remain outstanding on its current dividend terms, with
payment of unpaid preferred dividends in arrears. The Unsecured
Creditors’ Committee’s plan is similar, but would pay the affiliate
prepetition accounts payable in cash.
NOTESto CONSOLIDATED FINANCIAL STATEMENTS continued