Blackstone Advisory Partners picked to lead sale of two Dynegy power plants

The Official Committee of Unsecured Creditors for Dynegy Holdings LLC and related companies in bankruptcy asked the bankruptcy court on July 17 for approval to expand the scope of its deal with advisor Blackstone Advisory Partners LP so Blackstone can lead the sale of facilities at the coal-fired Danskammer plant and gas-fired Roseton plant.

Dynegy Holdings and related companies, including Dynegy Danskammer LLC and Dynegy Roseton LLC, have been in Chapter 11 protection since November 2011 at the U.S. Bankruptcy Court for the Southern District of New York. They have gotten the court to reject their leases for the Danskammer and Roseton plants, but they are still operating the plants for the owners, which are units of Public Service Enterprise Group (NYSE: PEG). The parties, including PSEG, are currently working to sell those assets and they want Blackstone’s help in that process.

“The Committee, with the support of the Debtors and the Lease Trustee (in its capacity as the largest prepetition and administrative expense creditor of the Dynegy Roseton and Dynegy Danskammer estates), seeks authority to amend Blackstone’s retention to provide that Blackstone will lead the efforts to market and sell the Facilities as contemplated by the Settlement Agreement approved by this Court on June 1, 2012,” said the July 17 committee filing. “Since the execution of the Settlement Agreement on May 1, 2012, the Debtors, the Committee, and various other interested parties have begun discussions regarding the sale of the Facilities operated by Debtors Dynegy Danskammer and Dynegy Roseton. The Debtors (with the support of the Committee and Lease Trustee) have concluded that Blackstone is uniquely qualified to manage the Facilities Sale Process and assist the parties in maximizing value for the Debtors’ estates.”

Blackstone has expertise in marketing and selling assets in the energy industry, as well as in the context of large, complex bankruptcy restructuring cases, the committee noted. “Further, Blackstone, by virtue of its retention as financial advisor to the Committee, has familiarity with the Facilities, the Debtors’ businesses and these chapter 11 cases, which will allow Blackstone to provide these services in an efficient manner. Finally, the Committee believes and the Debtors agree that, as an advisor to the Committee, Blackstone is an independent party that can focus on maximizing value for the benefit of all creditors, which properly aligns its incentives with those of the Debtors and all stakeholders. Accordingly, the Committee respectfully requests that the Court approve this Application to amend Blackstone’s retention to manage the Facilities Sale Process.”

To be clear, although Blackstone had previously been retained as the committee’s financial advisor in these cases, Blackstone will serve as advisor to the debtors in the asset sale process, the committee noted.

“Pursuant to the Settlement Agreement, the Debtors, with the cooperation of the PSEG Entities, shall use their commercially reasonable best efforts to sell (the ‘Facilities Sale Process’) the Roseton and Danskammer power generation facilities (including all of the power generation units and other structures and equipment, the related land and all other assets related to the operation thereof) (all such assets together, the ‘Facilities’), including all of the Debtors’ and the PSEG Entities’ interest in the Facilities, as soon as reasonably practicable,” said the committee motion. “The Settlement Agreement also provides that the Debtors and the PSEG Entities cannot execute a binding sale agreement or ancillary agreement without the prior written consent of the Lease Trustee and the Committee, and without prior consultation with the Consenting Senior Noteholders.”

Independent power producer Dynegy Inc. (NYSE: DYN), said July 6 that it has filed a voluntary petition to reorganize under Chapter 11 at this same court. The parent company filing was made to facilitate the implementation of the transactions contemplated under an amended and restated settlement agreement entered into, by and among Dynegy, Dynegy Holdings, and certain Dynegy Holdings debtors and the primary creditor constituencies in the Dynegy Holdings Chapter 11 case. Among other things, the settlement, which has already been approved by the court, provides for Dynegy and Dynegy Holdings to merge.

A major coal supplier to Dynegy Danskammer, out of Venezuela, is Peabody COALTRADE International, which is in a legal battle over what Dynegy Danskammer claims is a failure to deliver coal in late 2011. Their dispute is being pursued in an adversary proceeding, which is something like a lawsuit that is handled as an ancillary to the bankruptcy court proceeding.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.