FirstEnergy Corp. said Monday it will sell as many as 24.8
million additional shares of common stock to reduce short-term debt,
a move it expects to dilute 2003 earnings per share by about 2.5
FirstEnergy said it now expects to post earnings per share in the
range of $2.61 to $2.81. Earlier, the company said the range would
be between $2.68 and $2.88.
But that amount will be cut even further when the company tallies
up the cost of unusual expenses, as well as the financial effects of
closing its Davis-Besse nuclear power plant, which has been shut
since February 2002 to deal with corrosion problems in the reactor
After those expenses are subtracted, the company said it expects
to post earnings of $1.91 to $2.11 a share -- a decrease of as much
as 34 percent from the company's original guidance.
Separately, the Nuclear Regulatory Commission will begin a
seven-day inspection this week of the reactor cooler system
atDavis-Besse. The company called the inspection ``a pretty
significant milestone'' toward reopening the plant. It said it has
made extensive repairs to Davis-Besse and hopes inspectors will
approve the repairs.
``This test, we believe, will validate the integrity of the
reactor coolant system, the reactor vessel, the new head we put on,
all the new valves, the piping and everything,'' Davis-Besse
spokesman Richard Wilkins said.
As part of the test, the company will raise the reactor coolant
system to operating temperature and pressure, which is about 530
degrees Fahrenheit and 2,155 pounds per square inch. It will hold
that pressure for a week, during which time company and federal
inspectors will visually inspect the equipment.
Wilkins said the company still hopes to restart the nuclear plant
Meantime, FirstEnergy is preparing to sell shares sometime this
week. As of Monday afternoon, the company did not have a price set
on the shares. FirstEnergy did not say how much it expected the new
stock to bring in, beyond earlier statements that it would sell as
much as $2 billion in securities. Citigroup Global Markets Inc. and
Morgan Stanley & Co. will manage the offering.
The company released the information after the market closed.
Shares finished the day at $30.60, up 35 cents. FirstEnergy
currently has 297.6 million shares outstanding.
FirstEnergy attributed the cut in earnings guidance to several
factors, some of which have already been announced. The shutdown at
Davis-Besse is expected to reduce earnings by 49 cents a share. A
previously disclosed second-quarter charge of $63 million from
FirstEnergy's divestiture of Argentine distribution company Emdersa
will take an additional 20 cents a share. The effects of accounting
changes in the first quarter will take away an additional 34
And unusual charges in the second quarter, including disallowed
regulatory assets in New Jersey, the loss from the sale of a natural
gas operations unit and the impairment of a note receivable, will
take away an additional 35 cents.