The Federal Energy Regulatory Commission on March 9 approved an application by Longview Power LLC for ownership changes related to a debt-for-equity swap that will get this coal-fired power producer out of federal bankruptcy protection.
On Jan. 27, Longview Power filed for authorization for certain additional aspects of a restructuring transaction (Restructuring) in which the current equity interests in its direct parent, Longview Intermediate Holdings C LLC (Longview C) will be cancelled, and the debt held by the applicant’s lenders will be converted into equity interests in a reorganized Longview C (Reorganized Longview C).
Longview was seeking authorization for Centerbridge Partners LP, together with its affiliates, to acquire up to a 35% equity interest in Reorganized Longview C, and for KKR Credit Advisors (US) LLC to increase the maximum equity interest it may acquire in Reorganized Longview C from 35% to 45%.
On Jan. 17, 2014, Longview Power had filed an application with the commission seeking authorization for this restructuring (called the “First Restructuring Application”). In the First Restructuring Application, Longview identified three Lender-Owners that it anticipated would each hold a 10% or greater equity interest in Reorganized Longview C: funds and investment accounts affiliated with American Securities LLC; Sankaty Advisors LLC; and KKR Credit. Longview asserted that none of these entities, together with its respective affiliates, would hold more than 35% of Reorganized Longview C’s equity as of the effective date of the restructuring.
However, as a result of the debt trading that has occurred since Longview filed that first application, Longview now anticipates that one additional Lender Owner, funds and investment accounts affiliated with Centerbridge, will also acquire a 10% or greater equity interest in Reorganized Longview C. Additionally, Sankaty has determined to acquire less than 10% of the equity interest in Reorganized Longview C. Consequently, Longview states that it now expects that only American Securities, KKR Credit, and Centerbridge will acquire a 10% or greater equity interest in Reorganized Longview.
Longview owns the Longview Facility, a 755-MW, coal-fired facility located in Maidsville, West Virginia. The Longview Facility is interconnected with the West Penn Power transmission system, which is under the operational control of PJM Interconnection.
Longview is a direct, wholly-owned subsidiary of Longview C, which in turn is wholly owned by Longview Intermediate Holdings B LLC. Longview B is 93% owned by Longview Intermediate Holdings A LLC and 7% by Siemens Financial Services Inc. (SFS). SFS 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.
There is a March 16 hearing coming up at the U.S. Bankruptcy Court for the District of Delaware on a Longview reorganization plan that is based on this debt-for-equity swap, so getting this FERC approval before that hearing is a key positive for the company. Notable is that Longview affiliate Mepco LLC, which produces Northern Appalachia coal for the Longview plant and other customers, is also in Chapter 11 and will also be reorganized under this plan. Longview on March 6 filed with the court a supplement to the reorganization plan, and promised to file more suppemental material prior to the March 16 hearing.