Longview Power seeks FERC approval of debt-for-equity deal


Longview Power LLC, which sought Chapter 11 bankruptcy protection in August 2013, applied Jan. 17 at the Federal Energy Regulatory Commission for expedited approval of a reorganization plan that would see equity interests in the company being acquired by certain lenders.

It is asking for commission authorization for a restructuring transaction under which the current equity interests in its direct parent, Longview Intermediate Holdings C LLC, will be cancelled, and the debt held by applicant’s lenders under two separate credit facilities will be converted into equity interests in a reorganized Longview C. As a result of the transaction, applicant will become an indirect, wholly-owned subsidiary of Reorganized Longview, the equity of which will be almost wholly-owned by the lenders under those credit facilities.

It is anticipated that only three Lender-Owners – funds and investment accounts advised by American Securities LLC, Sankaty Advisors LLC and KKR Asset Management LLC - will have a 10 percent or greater equity interest in Reorganized Longview as a result of the transaction.

On Nov. 13, 2013, the debtors, including an affiliated coal producer called Mepco, filed a Joint Plan of Reorganization with the U.S. Bankruptcy Court for the District of Delaware. This transaction that needs FERC approval is part of that plan. The debtors have scheduled a Feb. 10 hearing on the plan. If the plan is confirmed on or about that date, and if certain other conditions to consummation of the plan are met or waived, the transaction will occur in early March.

The commission has previously authorized such “debt-to-equity” conversions that would result in multiple acquirors obtaining equity in a reorganized holding company, the Jan. 17 application noted.

In order to allow for expedited approval, applicant requests that the commission establish a 21-day comment period in order to allow for the issuance of an order on or before March 3. Expedited approval of this application will permit the transaction to close as soon as possible and, in any event, prior to March 7.

Longview Power has a principal place of business in Maidsville, W.Va. It owns the Longview Facility, a 775-MW (nameplate rating) supercritical cycle pulverized coal-fired facility located in Maidsville, which commenced operations earlier this decade. The Longview Facility is interconnected with the West Penn Power d/b/a Allegheny Power transmission system. The company has said depressed power markets and persistent mechanical problems with the new plant are primary reasons why it had to seek Chapter 11 protection. It is in protracted legal battles with the plant contractors about those mechanical problems.

This article was republished with permissions from Generation Hub

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