AES Corporation (NYSE: AES) announced that its subsidiary, AES Eastern Energy, has filed for chapter 11 bankruptcy protection citing a depressed power generation market in New York.
In its filing, the units seek to sell or transfer the 675 MW coal-fired Somerset Generating Station and the 306 MW coal-fired Cayuga power plant, as part of a settlement with bondholders. Under the preliminary $300 million deal, investors will serve as the lead bidder for the plants, subject to higher offers at auction.
“The settlement provides the only foreseeable pathway to a prompt and efficient transfer of the Somerset and Cayuga facilities to a new owner,” Peter Norgeot, president of AES NY, said in the filing. “By so doing, it preserves not only the going-concern value of the Somerset and Cayuga facilities, but also the jobs of a substantial portion of the debtor’s employees.”
In February AES announced during an earnings call for investors that the company would sell four of its coal-fired power plants owned and operated by AES subsidiary AES Eastern Energy in New York. The company outlined in its fourth-quarter report that AES Eastern Energy had recorded an impairment charge of $827 million, primarily due to a decline in power prices relative to rising coal costs in the North American market.
In a release on its website, AES outlined that it did not expect the bankruptcy filing to impact it’s previously disclosed guidance metrics on diluted earnings per share, adjusted earnings per share or cash flow for the year ending December 31, 2011.
