YORK RESEARCH CORP

YORK RESEARCH CORP

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Company Overview
York Research Corporation is a Canadian company engaged in the development, construction and operation of energy production facilities that utilize natural gas as fuel to produce thermal and electric power, and renewable energy projects that convert wind energy into transmittable electric power (Greenpower). The company’s Greenpower business is comprised of five facilities: a 38 megawatt (mw) Warbasse cogeneration facility (the Warbasse facility) and a 286 mw Brooklyn Navy Yard cogeneration facility (the BNY facility) in New York City; a 34 mw wind energy facility (the Big Spring facility) and a 6. 6 mw wind energy project (the West Texas project) in Big Spring, Texas; and a 225 mw natural gas-fueled power project in the Republic of Trinidad and Tobago (the Trinidad project). The company was incorporated in 1941 and has its headquarters located in New York, New York.
York Research also administers power projects in the United States and other countries, which are in earlier stages of development. The company conducts business through subsidiaries, partnerships and joint ventures, in some of which affiliates of York have an interest. York holds majority stakes in B-41 Management Corp. (B-41MC), Cogeneration Technologies, Inc. (Cogen) and York Internet Power Services, Inc. York Research competes with the following companies: Cogen America, Inc., Indeck Energy Services, Inc., and Sithe Energies USA, Inc.
Business Summary
York Research Corporation is a developer, owner and marketer of environmentally friendly projects and products. Through subsidiaries, partnerships, joint ventures and affiliates, the Company is in the business of developing, constructing and operating energy production facilities, including those that utilize natural gas as fuel to produce thermal and electric power (cogeneration), and renewable energy projects that convert wind energy into transmittable electric power (Greenpower). Within the Greenpower business, there are five facilities currently in commercial operation. In June 2002, the Company filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code.
Description and history
York Research Corporation is a developer, owner and marketer of environmentally friendly projects and products. Through its subsidiaries, partnerships, joint ventures and affiliates, the Company is in the business of developing, constructing and operating energy production facilities, including those that utilize natural gas as fuel to produce thermal and electric power (cogeneration) and renewable energy projects that convert wind energy into transmittable electric power (Greenpower). In June 2002, the Company filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code.

Within the Company’s Greenpower business, there are five facilities currently in commercial operation: in New York City, a 38 megawatt (mw) Warbasse cogeneration facility (the Warbasse facility) and a 286 mw Brooklyn Navy Yard cogeneration facility (the BNY facility); in Big Spring, Texas a 34 mw wind energy facility (the Big Spring facility) and a 6. 6 mw wind energy project (the West Texas project); and a 225 mw natural gas-fueled power project in the Republic of Trinidad and Tobago (the Trinidad project). Other power projects, both domestic and international, are in earlier stages of development. During fiscal 2001, substantially all of the revenues were derived from operating power projects. Each of the power projects is dependent on one customer, typically a utility, for substantially all of its revenues.

York’s Greenpower project development strategy is to increase development activities selectively around the world, giving priority to negotiated, rather than publicly bid opportunities. The Company expects the market for wind energy projects will grow as wind power becomes increasingly competitive as a source of energy, as a function of its price and environmental benefits.

Greenpower

On October 21, 1997, York acquired 100% of the partnership interest in New World Power Texas Renewable Energy Limited Partnership, whose significant asset was a power purchase agreement (PPA) with Texas Utilities Electric Company (TU Electric). York began commercial operation of the Big Spring Renewable Energy Facility wind power project in May 1999 in accordance with the PPA. The facility has a capacity of 34 mw and includes 46 turbines, including four 1,650 kilowatt (kw) wind turbines (V-66 turbines).

On February 12, 1998, InnCOGEN Limited (InnCOGEN), a wholly owned indirect Trinidadian subsidiary of York, signed a 30-year PPA with Trinidad and Tobago Electricity Commission (T&TEC), the government owned transmission and distribution company, under which T&TEC will purchase the bulk of the project output. The Company constructed a 225 mw natural gas-fueled combustion turbine project, which achieved commercial operation in September 1999 in accordance with the PPA. Fixed capacity payments, primarily tied to United States inflation rates, constitute the majority of project revenues. T&TEC has the obligation to supply and pay for fuel for the project, thereby eliminating InnCOGEN’s fuel risk. T&TEC’s obligations under the PPA are supported by a guarantee of the Trinidad government. The Trinidad project may also supply energy to several proposed new industrial developments. The Trinidad facility utilizes three General Electric turbines.

On February 26, 1999 a second PPA was signed with TU Electric for 6.6 mw of capacity from a wind energy facility to be located on property adjacent to the Big Spring facility. The Company has developed and is operating this second facility, which is owned by a partnership of York and Primesouth, Inc. With this West Texas Renewable Energy Project, the new contract requires TU Electric to buy all of the power generated by the four V-66 turbines, commercially operating in North America, for 15 years plus options for two additional five-year periods, in a similar manner to the Big Spring facility. Power from this facility will be dedicated for use in Waco, Texas, as part of a renewable energy program called TU Renew, being offered to customers of TU Electric/Lone Star Gas.

The 38 mw combined cycle Warbasse Cogeneration facility, which is owned by Warbasse-Cogeneration Technologies Partnership L.P. (WCTP), supplies all of the thermal and electric needs of Amalgamated Warbasse Houses, Inc. (AWH) and the full capacity requirements of WCTP’s 21 mw electric power contract with Consolidated Edison Company of New York, Inc. (Con Edison), as dispatched. York constructed the Warbasse facility and continues to operate it under a long-term operations and maintenance agreement.

Brooklyn Navy Yard Cogeneration Partners, L.P. (BNYLP), is owned equally by a subsidiary of Edison Mission Energy (Mission), which is an indirect wholly owned subsidiary of Edison International, and B-41 Associates L.P. (B-41LP) an entity in which York holds an indirect 74.7% equity interest. BNYLP was formed to develop, construct, finance, own and operate the 286 mw natural gas fired combined cycle BNY Facility.

The facility has been operational since 1996 and supplies Con Edison with both electricity and steam under a 40-year contract. Steam is delivered to Con Edison’s New York City district steam system through a tunnel under the East River. The BNY facility currently provides more than 15% of Con Edison’s total steam in New York City. Electric energy delivered represents about 3% of peak power demand in the service territory. The facility also supplies energy to the host industrial park and to an adjacent wastewater facility.

The Company has been funding development work on a variety of large and small potential projects in the United States and internationally. There can be no assurances that any of these projects will be completed or successful.

Subsidiaries, Partnerships and Joint Ventures

The Company conducts a substantial portion of its business through subsidiaries, partnerships and joint ventures, in some of which affiliates of York have an interest. York owns 100% of the outstanding shares of B-41 Management Corp. (B-41MC), Cogeneration Technologies, Inc. (Cogen) and York Internet Power Services, Inc.

York and its subsidiaries own 74.7% of B-41LP, the 50% partner in BNYLP, as a result of the following: B-41MC holds a 5% general partnership interest in B-41LP; Cogen holds a 22% limited partnership in B-41LP; York holds a 90% limited partnership interest in York Cogen Partners L.P. (YCP), which, in turn, holds a 53% limited partnership interest in B-41LP; and RV Associates L.P. (RVA), an entity in which the chairman is an indirect minority partner, holding a 5% general partnership interest and a 15% limited partnership interest in B-41LP.

A portion of B-41LP’s partnership interest in BNYLP has been pledged as collateral to unaffiliated third parties to secure certain obligations of B-41LP. York, through wholly owned subsidiaries, some of which are offshore, owns 100% of the Big Spring facility and the Trinidad project.

WCTP is a limited partnership whose 25% general partner is RRR’S Ventures Ltd. (RRR’S). York’s chairman is a shareholder in RRR’S. Entities unaffiliated with York or RRR’S own an aggregate of 75% limited partnership interest in WCTP. RRR’S also holds a 10% general partnership interest in YCP.

The West Texas Renewables Limited Partnership is a partnership whose 1% general partner is a subsidiary of York, and whose 99% limited partner is Primesouth, Inc. York continues to own 85% of NAEC. York’s chairman controls the remaining 15%. On March 2, 2000, North American Energy Conservation, Inc. (NAEC), an 85% owned subsidiary of the Company, filed a voluntary petition under Chapter 11of the United States Bankruptcy Code with The United States Bankruptcy Court for the Southern District of New York. As of February 28, 2000, the Company accounted for the NAEC wholesale and retail natural gas marketing business as a discontinued operation, as well as the electric marketing business, which was discontinued previously. On April 20, 2000 NAEC sold its retail natural gas marketing business to Amerada Hess Corporation.

Business Line
Develops, constructs and operates energy production facilities that utilize natural gas as fuel to produce thermal and electric power, and renewable energy projects that convert wind energy into transmittable electric power (Greenpower)
Subsidiary

Advisor
GRANT THORNTON LLP
IPO date

US SIC Code
4924
Company Address
Suite 2700 West
280, Park Avenue
City province or state postal code
10017, NEW YORK, NY
Phone: +1 212 557 6200
Fax: +1 212 557 5678
Country address: UNITED STATES OF AMERICA
Website url: www.yorkresearch.com