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A New Jersey administrative law judge requested for the second time that Akron, Ohio-based FirstEnergy Corp. and Morristown, N.J.-based GPU Inc. continue settlement talks with parties seeking to intervene in the $4.5 billion electric utility merger. The judge asked the companies to continue negotiations until July 20. Those talks were previously extended from June 29 to Monday, July 9. Eventually, the judge must make a recommendation about the merger to the two commissioners of the N.J. Board of Public Utilities. New Jersey is the last state to review the deal. FirstEnergy continues to work toward completion of the merger, a company spokesman said Monday. Both companies provided an update on the progress of talks with parties that have opposed aspects of the merger application, the spokesman said. But a GPU spokesman declined to comment. The parties seeking to intervene in the merger process include the state office of the Rate Payer Advocate, suppliers of energy to the merging companies and energy marketers. The issues in the settlement talks include the depth of cost savings analysis provided by the companies and whether to retain New Jersey executives with knowledge of the state’s rate-payer culture. Another issue is the commitment to keep GPU’s transmission system in the region’s power pool. “The parties were back [Monday] before the [administrative law judge], but there was no stipulation of settlement,” Blossom Peretz, the N.J. ratepayer advocate, said. She added that the “parties are still hopeful we can reach a negotiated settlement.” If talks continue in earnest, an agreement could be reached by July 20, Peretz said. Risk arbitrageurs said the extension was a sign that talks had progressed well. “I think they are getting close,” one arb said. Last week, the intervening parties and the two companies were getting closer to an agreement, one arb said. If the judge was not comfortable with the progress of talks, he could have said he would issue a decision or re-opened the record, which would have further delayed the review, the arb said. “They seem to be getting down to the final points,” the arb said. But the state board staffers are at a conference, and the talks may not advance until next week, he said. The deal spread opened by $0.17 to $2.47, or 6.9 percent. On an annualized basis, using a Sept. 30 close, the gross return on the deal was 27.5 percent. At $2.47, the spread seems “a little wide,” an arb said. Arbs have been uneasy about the deal, he said. “The spread has never traded as the news flow has gone,” he said. Copyright (c)2001 TDD, LLC. All rights reserved.

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