Astoria Generating Company, L.P. commences sale process for floating power generating barges

Source: US Power Generating Company

Astoria Generating Company, L.P. (" Astoria Generating") announced today that it is exploring the sale of two floating power barges and up to three fuel barges. The units are currently located at Astoria Generating’s Gowanus Station in Brooklyn, New York. The sale process is being launched in response to actions taken by the New York Independent System Operator (“NYISO”) which have resulted in dramatically lower market clearing prices for generating units in New York City.

Astoria Generating, along with TransCanada Corporation, filed a complaint with the Federal Energy Regulatory Commission (“FERC”) in July 2011 seeking to overturn NYISO’s decision allowing a government subsidized generating project to be exempt from rules governing uneconomic entry into the market place.

“NYISO has created a situation where these barges will have significantly greater value in another location. As a result, it is incumbent upon the company to explore a sale process to improve our financial position,” said Mark Sudbey, CEO of US Power Generating Company, Astoria Generating’s parent. “These are unique and valuable assets. They are highly mobile generating resources and there is a global market for a rapidly deployable instant supply of power generation.”

The two barges for sale consist of 16 oil-fired generating units with a total generating capacity of 309 MW. The potential sale could also include up to three fuel barges that each have capacity to store 930,000 gallons (3,520,000 liters) of fuel oil.

In order to implement this sales process, Astoria Generating has made the requisite filings at the New York Public Service Commission to facilitate the removal of the Barges, as well as to take Unit 20, a 180 MW gas fired steam unit in Astoria Queens out of service. This was done because the actions taken by the NYISO make it impossible for Unit 20 to recover its operating costs.

In addition to the sales process, which is being managed by Steven Walsh of Tier One Capital Management LLC, on September 2, 2011, Astoria Generating announced that it retained financial advisory firm Perella Weinberg Partners and the law firm of Kirkland & Ellis, LLP to provide guidance on a potential restructuring.

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