SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 2001
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York Research Corporation
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(Exact name of registrant as specified in charter)
Delaware 0-72 06-0608633
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
280 Park Avenue, Suite 2700 West, New York, NY 10017
(Address of principal executive offices)
Registrant's telephone number, including area code: (212-557-6200)
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
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On October 2, 2001, York Research Corporation ("York") and certain of
its subsidiaries signed an Agreement of Purchase and Sale of Social Quotas (the
"Agreement") with NRG Energy, Inc. and one of its subsidiaries (together,
"NRG"). Pursuant to the Agreement, York agreed to sell to NRG its 215 megawatt
generating facility in Trinidad and Tobago (the "Trinidad Project") for
$140,000,000. Consummation of the Agreement is subject to various conditions,
including consent of the Trinidad and Tobago Electricity Commission ("T&TEC"),
the national utility for Trinidad and Tobago, and receipt by York of amounts
sufficient to allow it to cause the discharge of the US $150,000,000 12% Senior
Secured Bonds due October 30, 2007 issued by York Power Funding (Cayman) Limited
(the "Portfolio Bonds"). There can be no assurance that such conditions will be
satisfied or that the transactions contemplated by the Agreement will be
consummated. Pursuant to the terms of the Agreement, if the closing fails to
occur by November 21, 2001, either York or NRG has the right to terminate the
Agreement upon three days written notice to the other party.
Item 5. Other Events
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Pursuant to the terms of the Portfolio Bonds, a payment in the amount
of approximately $10,345,000 is scheduled to be made on October 30, 2001, such
payment consisting of a principal payment of $1,605,000, with the balance
interest. York does not believe that it will be able to cause such payment to be
made either on October 30, 2001, or within the ten day grace period provided by
the indenture governing the Portfolio Bonds. If it does not, it will be an
automatic default under the terms of the Portfolio Bonds, giving the holders of
the Bonds the right to cause the acceleration of the maturity of the Portfolio
Bonds and to seek to exercise remedies against the collateral securing the
Portfolio Bonds. Such collateral includes all of York's interest in the Trinidad
Project, York's 34 megawatt wind project in Big Spring, Texas (the "Big Spring
Project"), York's indirect interest in the 286 megawatt Brooklyn Navy Yard
Project (the "Brooklyn Navy Yard Project"), and certain notes payable to York
and affiliates of York by the 38 megawatt Warbasse Project (the "Warbasse
Project").
There has also been a default under the provisions of the documents
governing the Portfolio Bonds as a result of approximately $17,500,000 of funds
generated by the Trinidad Project over the last eighteen months being advanced
to York for York's general corporate purposes.
As a result of the foregoing, Robert M. Beningson will no longer serve
as Chairman, President and Chief Executive Officer of York (although he will
remain a director), and is taking an unpaid leave of absence. Michael
Trachtenberg, York's Executive Vice President and Chief Financial and Accounting
Officer, will no longer serve as Chief Financial Officer. Robert C. Paladino,
York's Executive Vice President, has agreed to become President and Chief
Executive Officer. The Board also authorized the retention of an independent
auditor to review the situation and to report to York's independent directors.
Separately, one of the holders of the Portfolio Bonds has sent York a
notice claiming that the fact that the Portfolio Bonds were not registered under
the US Securities Act of 1933 on or before March, 1999 constituted a violation
of the documents governing the Portfolio Bonds. Such holder claims that this
unregistered status resulted in an additional .50% in interest being payable
with respect to the Portfolio Bonds from and after such date.
As previously disclosed, York has been in negotiations with certain
creditors of York's 85% owned subsidiary, North American Energy Conservation,
Inc., which filed for Chapter 11 bankruptcy protection on February 29, 2000.
These creditors have asserted claims against York arising out of alleged York
guarantees of NAEC obligations. Although, as previously reported, a settlement
agreement had been reached and approved by the bankruptcy court, York was unable
to satisfy the conditions to consummation of such agreement, and discussions
thereafter continued. To date, these discussions have not proven fruitful. York
understands that the ad-hoc committee of such creditors is considering whether
to commence an involuntary bankruptcy proceeding against York. If such a
proceeding is commenced, York will seek to convert it to a reorganization
proceeding under Chapter 11 of the Bankruptcy Code.
York is unable to predict the reaction of the holders of the Portfolio
Bonds, or the NAEC creditors, to the default under the Portfolio Bonds. However,
should the holders of the Portfolio Bonds seek to exercise their rights against
York's assets pledged as collateral, York would expect a proceeding to be
commenced in bankruptcy court to seek to stay such actions. Although the
structure of the Portfolio Bonds was intended to provide some measure of
protection against a bankruptcy of York, there can be no assurance that such
structure will be efficacious.
This Current Report on Form 8K contains forward looking statements as
to which there can be no assurance. Reference is made to York's Annual Report on
Form 10-K for information as to, and risks inherent in, such forward looking
statements. However, it is impossible to predict the effect the matters
disclosed in this Current Report, or a bankruptcy proceeding involving York,
will have on any of York's current projects under development, or its ability to
continue in business.
Exhibits:
Exhibit 1. Press Release
Exhibit 2. Agreement of Purchase and Sale of Social Quotas dated
October 2, 2001
Pursuant to the requirements 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.
YORK RESEARCH CORPORATION
(Registrant)
By: /s/ Michael Trachtenberg
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Michael Trachtenberg,
Executive Vice President
Dated: October 30, 2001