Defaults by four companies leave assets
Platts T&D - 02/25/2004
| Since November 2002 four companies have handed
over--or said they planned to hand over--15 merchant plants in seven
states totaling 14,065 MW. The aggregate total held by banks was 570 MW higher until Feb. 18, when ABN AMRO announced the sale of the Brazos Valley plant in Texas to Calpine. The first to go, in November 2002, was PG&E National Energy Group, the ring-fenced merchant division of PG&E Corp. now known as National Energy & Gas Transmission. NEG defaulted on $2.3-billion in loans and credit facilities and $605-million in equity guarantees covering eight facilities. As its parent had done in April 2001, NEG entered bankruptcy proceedings in July 2003. NRG Energy, the merchant unit of Xcel, in early 2003 turned over to creditors led by ABN AMRO one unit prior to declaring bankruptcy in May 2003. The Minneapolis-based merchant firm came out of bankruptcy in December 2003. Last August, Exelon Corp. walked away from its $700-million equity stake in six units owned by its Boston Generating LLC subsidiary, which was created from its acquisition of former Sithe Energies' holdings. Boston Generating then defaulted on $1.1-billion in loans. On Dec. 31, 2003, El Paso finally walked away from its investment in the long-troubled Millford, Conn., facility, while earlier this month, on Feb. 5, TECO Energy defaulted on $2.2-billion of loans arranged in July 2001 that financed the construction of two of North America's largest merchant units. When, and if, all the foreclosures are finalized, Societe Generale could be in charge of as much as much as 6,015 MW of capacity, while Citibank would control 4,106 MW. French bank BNP Paribas could hold 3,400 MW, and Belgian bank KBC could end up with 544 MW. On Feb. 18, ABN AMRO became the first bank to sell when Calpine agreed to pay $175-million in cash to the Dutch bank for the 570-MW gas-fired Brazos Valley plant near Houston that was formerly owned by NRG Energy. With TECO, Societe General and Citibank/Salomon Smith Barney are the co-managers of a 38 bank syndicate. The two co-leads will eventually share the responsibility of managing the 2,200-MW Union Station gas plant outside of El Dorado, Ark., and the 2,145-MW combined-cycle, gas-fired Gila River station near Gila Bend, Ariz. Additionally, Citibank is due to assume control July 31 of NEG's 840-MW Lake Road plant in Killingly, Conn., and the 1,121-MW combined-cycle La Paloma facility in Kern County, Calif. Roughly a month ago, on Jan 20, DTE Energy Services, a subsidiary of DTE Energy, said it signed an agreement with Lake Road Generating Co. L.P. to provide asset management and operation and management services for the Lake Road facility. Soc Gen is due to assume control of four GenHoldings LLC facilities March 31. Those units are the 360-MW Millennium Power in Charlton, Mass , the 1,175-MW Harquahala plant in Tonopah, Ariz., the 1,200-MW Covert plant in Covert, Mich., and the 1,080-MW Athens facility in Athens, N.Y. GenHoldings is a subsidiary of NEG. Leading an 18 bank syndicate, BNP Paribas is still involved in negotiations with Boston Generating, the former Exelon subsidiary. That portfolio includes the combined 1,000 MW of capacity of the Mystic-4, -5, -6 and -7 units, the combined-cycle Mystic-8 and -9 units, each with 800 MW of capacity located outside Boston, and the 800-MW Fore River facility located in Weymouth, Mass. BNP Paribas Director Kate Quinn said that Capstone Corporate Recovery LLC, of Saddle Brook, N.J., is advising the lenders in the negotiations. PA Consulting is advising the lenders in the restructuring. Calls to Capstone were not returned by press time. The one unit that has actually changed hands is the 544-MW Millford unit that El Paso began construction on in 1999. KBC now controls Millford Power Holdings LLC. Competitive Power Ventures has been designated by the lenders to manage the facility. The first 272-MW unit at the facility entered service Feb. 11. CPV is majority owned by the private investment firm Warburg Pincus LLC. |
Reprinted with thanks from: