Restructuring Update for August 9th

Tuesday, August 14, 2018
After last week’s announcement of the Settlement Agreement, we have received several questions submitted to the FES employee question email box.  Below, you will find answers to the recent questions regarding the impact of the Settlement on employees and the status of the restructuring.  
  1. FES, FENOC and the other companies (the debtors) are separated from the FirstEnergy consolidated statements, are these entities now separate, privately-held (not publicly traded) companies owned by the Creditors?

    The debtors continue to be owned by FirstEnergy Corp., which will continue to own the debtors until the effective date of a plan of reorganization.

  2. Does FirstEnergy reserve the right to back track and include FES, FENOC and the other debtors in their consolidated statements? 

    On an accounting basis, because of the bankruptcy filing, the entities are not included in the FirstEnergy Corp. consolidated financial statements. 

  3. Will the accounting situation change based on the revised FE/ FES /Creditor agreement and after the exit from bankruptcy? 

    Upon the effective date of a plan of reorganization, it is anticipated that the reorganized debtors will no longer be owned by FirstEnergy Corp. and would be owned by its creditors. 

  4. Is FES acting as a holding company for the debtor companies?

    FES is the parent company for all the debtors other than FES and FENOC, which are owned by FirstEnergy Corp.

  5. How will health benefits for 2019 and beyond be handled?

    No changes in the health benefits are expected to occur prior to an effective date of a plan of reorganization.

  6. Will FirstEnergy continue to act as the sponsor/interface with the administrators of the HSA and FSA accounts?

    Yes, so long as FirstEnergy Corp. owns the debtors.

  7. What activities are covered under the “shared services” contract?

    Shared services covers many departments and administrative activities including:  CFO Organization, Communications & Marketing, Controllers, Corporate, Customer Operations, External Affairs, Human Resources, Information Technology, Legal, Rates & Regulatory Affairs, Generation Support and Supply Chain.

  8. Why was FENOC not included in the revised FE/FES/Creditor agreement related to any potential VERO prior to the effective date of the FES Restructuring Plan?

    Although deactivation notices were filed for all the nuclear units, they will continue to run until the deactivation date at a minimum.  We are currently working to retain FENOC personnel to operate the units through deactivation.  Currently, we don’t anticipate any significant staffing reductions at FENOC prior to deactivation.

  9. What are the Supplemental Executive Retirement Plan (SERP) and the Cash Balance Pension Plan discussed in the revised settlement?

    Non-qualified pension plans that have few employees or former employees of the debtors as participants/beneficiaries.

  10. At the time of the bankruptcy filing it was announced that FES employees would still participate in STIP.  With the complete separation just announced where is the pool of money coming from to fund the STIP?

    The debtors pay for the costs of the STIP for their employees. No changes for the STIP are expected for 2018 or 2019.

  11. Based on the news of the settlement with the creditors, once it is approved by the court, are we still FirstEnergy employees? 
Yes, all employees are still employees of their respective organizations – FES, FG and FENOC – until the effective date of the plan of reorganization. All employees will continue to participate in the FE Benefit Plans.