Progress Energy Announces Settlement Of CVO Litigation

RALEIGH, N.C., Nov. 2, 2011 /PRNewswire/ -- Progress Energy (NYSE: PGN) announced today that it has settled litigation concerning interpretation of provisions of the documents governing its contingent value obligations ("CVOs") previously filed by Davidson Kempner Partners, M.H. Davidson & Co., Davidson Kempner Institutional Partners, L.P., and Davidson Kempner International, Ltd. (jointly, " Davidson Kempner").

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As part of the settlement, Progress Energy purchased all of Davidson Kempner's CVOs at a negotiated price of $0.75 per CVO.  Progress Energy determined that the purchase price included in the settlement represented the fair value of all outstanding CVOs, which, in turn, caused a third-quarter pre-tax loss of $63 million.  Consistent with prior practice concerning changes in the fair value of the CVOs, this loss will be excluded in computing Progress Energy's ongoing earnings.

In connection with the settlement, Progress Energy intends to commence a tender offer for any and all outstanding CVOs at the same purchase price per CVO that was paid in the settlement.  The offer will be subject to the terms and conditions described in offering materials that Progress Energy intends to mail to holders of its CVOs following its third-quarter earnings release.

This announcement is not an offer to purchase or the solicitation of an offer to sell with respect to the CVOs.  The tender offer will be made solely by an offer to purchase and related materials that Progress Energy will send to holders of CVOs upon commencement of the tender offer.  Holders of CVOs should read those materials carefully because they will contain important information, including the terms of, and conditions to, the tender offer.

Overview of CVOs

There are currently 98.6 million CVOs issued and outstanding. CVOs were issued as a result of the Progress Energy and Florida Progress Corporation share exchange, which occurred Nov. 30, 2000.  For every Florida Progress Corporation share owned at that time, one CVO was issued.  Each CVO represents the right of the holder to receive contingent payments, based on certain after-tax cash flow generated by the synthetic fuels plants previously owned by Solid Energy LLC, Ceredo Synfuel LLC, Solid Fuel LLC and Sandy River LLC.

About Progress Energy

Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 500 energy company with more than 22,000 megawatts of generation capacity and approximately $10 billion in annual revenues. Progress Energy includes two major electric utilities that serve about 3.1 million customers in the Carolinas and Florida. The company has earned the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence, and was the first utility to receive the prestigious J.D. Power and Associates Founder's Award for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. Progress Energy celebrated a century of service in 2008.

SOURCE Progress Energy

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