Longview Power LLC, which owns a relatively new coal-fired power plant in West Virginia, said Aug. 30 that it and certain of its affiliates, including coal producer Mepco Holdings LLC and its affiliates, have sought Chapter 11 bankruptcy protection.
The filing was in the U.S. Bankruptcy Court for the District of Delaware. Both Longview and Mepco intend to operate their businesses as they continue to negotiate a chapter 11 plan with their lenders to “de-risk” their balance sheet.
When able to operate at full capacity, Longview’s 700-MW supercritical coal-fired plant in northern West Virginia, near Morgantown, is one of the most efficient coal-fired power plants in the country and has one of the lowest air emissions profiles of any such power plant. “Construction failures and defects have prevented the power plant from operating reliably at its designed capacity,” Longview said.
Longview’s Mepco affiliate and its predecessors have engaged in coal mining and processing operations in and around West Virginia for more than 50 years. Longview is basically a minemouth plant designed to take coal from nearby Mepco mines. Currently, Mepco owns or operates three active underground mines and one active surface mine located in northern West Virginia and southwestern Pennsylvania.
“After careful consideration of available alternatives, the Company determined that filing for Chapter 11 was a necessary and prudent step that allows us to strengthen and operate our businesses without interruption while continuing to restructure the Company’s balance sheet,” said Jeffery Keffer, CEO of Longview Power. “The Company has been in consensual negotiations with our senior lenders toward a Chapter 11 plan to maximize value; those negotiations remain ongoing. We remain confident that the Company and our lenders will reach an agreement on the terms of a Chapter 11 plan in the near term.”
“I want to make clear that we will continue to conduct business as usual and our operations and employees will not be affected by the Chapter 11 filing,” said veteran coal operator Jim Laurita Jr., CEO of Mepco. “We will continue to provide our customers with the level of service they have come to expect from this great company and its employees. This is the best option the Company has to negotiate its balance sheet with the Company’s lenders.”
The company has filed customary “first day” motions to ensure the company obtains the benefits of the Chapter 11 filing and continues to operate its business in the ordinary course and without interruption. The company expects that these motions will be heard by the court immediately after Labor Day and that it will continue to operate in the ordinary course in the meantime. Employees should expect that all payroll and benefits will continue as they have without interruption.
The company has engaged Lazard as its investment banker and Alvarez & Marsal North America, LLC as its restructuring advisor. The company is represented by Kirkland & Ellis LLP as primary restructuring counsel, and Dentons US LLP for all issues related to Longview’s pending arbitration proceedings.