The bankruptcy court for Edison Mission Energy and related companies on Nov. 6 approved some key applications from the company, including approval of an Oct. 18 exit plan based around a sale of EME to NRG Energy (NYSE: NRG).
The U.S. Bankruptcy Court for the Northern District of Illinois also approved assumption by EME of its side of two joint-venture agreements with Chevron (NYSE: CVX) related to two gas-fired cogeneration plants in California. Chevron, since right after this bankruptcy case began in December 2012, had been trying to argue that EME’s bankruptcy meant that it could buy out EME’s shares of these partnerships. EME was able to successfully argue that it had not defaulted under these agreements and that, once assumed, they are valuable assets of its bankruptcy estate.
Each of the subject gas-fired cogens, called Kern River and Sycamore, has 300 MW of total capacity, is 50% controlled by EME affiliates, and is located near Bakersfield, Calif. They serve adjacent oil processing operations.
Another order issued by the court on Nov. 6 approved extension of a shared services agreement under which former EME parent Edison International (NYSE: EIX) shares certain management services with the bankrupt companies. The extension runs until EME’s bankruptcy plan is confirmed, or right after the unlikely occurrence that the deal with NRG lapses without being consummated.
EME and bankrupt affiliates, including coal-concentric Midwest Generation, control a number of power plants across the country. The deal with NRG allows EME to market to outside parties some of EME’s smaller assets, like its share of a small, coal-fired power plant in West Virginia.