Longview Power LLC, which has been in Chapter 11 bankruptcy protection since August 2013, on March 12 got a key approval from the Federal Energy Regulatory Commission that sets the stage for it to emerge from bankruptcy with new ownership in a debt-for-equity swap.
On Jan. 17, Longview Power requested authorization from FERC for a restructuring transaction in which the current equity interest in applicant’s direct parent, Longview Intermediate Holdings C LLC, will be cancelled, and the debt held by applicant’s lenders will be converted into equity interests in a reorganized Longview C. Post-transaction Longview C will be called “Reorganized Longview.”
Longview owns the 775-MW, coal-fired Longview power plant, which is located in Maidsville, W.Va., on the Monongahela River just north of Morgantown, W.Va. The company, and affiliated coal supplier Mepco LLC, filed for Chapter 11 protection at the U.S. Bankruptcy Court for the District of Delaware due to low prices for its market power output and operational problems for its relatively new power plant. It recently settled issues over those operational problems with one of three power plant contractors and is due for court-ordered mediation later this month with all three.
Equity interests in Reorganized Longview will be distributed to: lenders that are party to the 2007 Longview credit agreement; and lenders party to the debtor-in-possession financing agreement worked out after the bankruptcy filing. As a result of the transaction, these “Lender-Owners” will hold 85% to 90% of the equity interests in Reorganized Longview. The only equity in Reorganized Longview that will not be distributed to the Lender-Owners is equity that may be distributed to the Management Equity Incentive Plan.
Three of the Lender-Owners – American Securities LLC, Sankaty Advisors LLC and KKR Asset Management LLC – each will hold greater than 10% of the equity interests in Reorganized Longview, but none of the entities will hold more than 35% of such equity interests.
Longview C is currently wholly owned by Longview Intermediate Holdings B LLC, which is owned 93% by Longview Intermediate Holdings A LLC and 7% owned by Siemens Financial Services. Siemens is an indirect wholly-owned subsidiary of Siemens AG, a German stock company. An upstream affiliate of Longview A is affiliated with First Reserve Corp., which is a global private equity firm focusing on the energy industry.