Optim Energy LLC and related companies in bankruptcy told their court on April 10 that they have reviewed the Round Two bids on their two gas-fired power plants in Texas and now propose a path from here to sell the plants.
Optim and affiliates (known as the “Debtors”) on April 10 filed with the U.S. Bankruptcy Court for the District of Delaware amended versions of their reorganization plan and accompanying disclosure statement.
Said the amended disclosure statement: “The Debtors, in consultation with their advisors, independent directors and the Consultation Parties, reviewed the bids received from Round Two Participants. The Debtors have determined that the best path forward for a potential Sale of the Gas Plant Portfolio is through the Plan and pursuant to the proposed Bidding Procedures in the form substantially attached hereto as Exhibit E. The Plan, filed contemporaneously herewith, contemplates a potential Sale of the Gas Plant Portfolio at a value to the Debtors in Cash of at least $355 million (net of all deductions and/or adjustments and with no right of set off) (the ‘Reserve Price’), on terms satisfactory to the Debtors and the Consultation Parties, to serve as a floor for further bidding.”
Exhibit E says that a qualifying bidder that desires to make a bid has to by May 1 to the counsel for the Debtors, Bracewell & Giuliani LLP. If more than one bid comes in, then there would be an auction on an unspecified date.
“If the Debtors receive only one Qualifying Bid that meets or exceeds the Reserve Price on terms satisfactory to the Debtors and the Consultation Parties, the Debtors intend to execute a Membership Interest Purchase and Sale Agreement with such Qualifying Bidder in the form substantially attached hereto as Exhibit D and seek Confirmation of the Plan to effectuate the Sale to the Qualifying Bidder pursuant to the Bidding Procedures,” the confirmation plan added.
“Alternatively, if the Debtors receive more than one Qualifying Bid that meets or exceeds the Reserve Price on terms satisfactory to the Debtors and the Consultation Parties, the Debtors intend to conduct an auction for the Sale of the Reorganized OEG Equity Interests pursuant to the Bidding Procedures, after which the Debtors intend to execute a Membership Interest Purchase and Sale Agreement and seek Confirmation of the Plan to effectuate the Sale to the Prevailing Bidder.
“Finally, if the Debtors do not receive a Qualifying Bid that meets or exceeds the Reserve Price on terms satisfactory to the Debtors and the Consultation Parties by the Bid Deadline (as defined in the Bidding Procedures), the Debtors will suspend the Sale process and seek Confirmation of the Plan, which in such circumstance, would in part, provide for the delivery of the Reorganized OEG Equity Interests and the Second Lien Facility to the Pre-Petition Secured Parties in full satisfaction of the Allowed Pre-Petition Secured Parties Secured Claims. Whether a Sale is ultimately pursued or not will very likely not affect Plan recoveries on General Unsecured Claims.
“Alternatively, the Debtors reserve the right to seek approval of the Sale of the Gas Plant Portfolio through one or more asset sales pursuant to a chapter 11 plan of reorganization or, inter alia, sections 363 and 365 of the Bankruptcy Code, in the event that an asset sale is determined by the Debtors, in their discretion, but after consultation with the Consultation Parties, to maximize value for the Gas Plant Portfolio.”
The amended reorganization plan distinguishes between two categories of Debtors: the Reorganizing Debtors (Optim Energy Generation LLC, Optim Energy Cedar Bayou 4 LLC and Optim Energy Altura Cogen LLC) on the one hand, and the Liquidating Debtors (Optim Energy, Optim Energy Marketing LLC, OEM 1 LLC, Optim Energy Twin Oaks GP LLC and Optim Energy Twin Oaks LP) on the other hand.
The Optim companies sought Chapter 11 protection in February 2014 and later that year sold the Twin Oaks coal-fired plant in Texas, leaving them with two gas-fired plants that now make up the Gas Plant Portfolio. Twin Oaks was sold to an affiliate of Blackstone Capital Partners VI LP and Blackstone Energy Partners LP. The remaining plants are:
- The Altura Cogen Plant is a natural-gas powered plant capable of producing 600 MW located in Harris County, Texas, and sells the majority of its energy in the ERCOT market. The Altura Cogen Plant has been commercially operating since 1985 and is located within a complex of petrochemical facilities owned by Lyondell.
- The Cedar Bayou Plant is a natural-gas-fired plant capable of producing 550 MW located in Chambers County, Texas, and operates in ERCOT’s Houston Zone. Debtor Cedar Bayou owns a 50% undivided interest in the Cedar Bayou Plant and NRG Cedar Bayou Development Co. LLC owns the remaining 50% undivided interest. The Cedar Bayou Plant began operating in 2009. It is located within a complex of electric generation facilities owned by NRG Texas Power LLC, which owns the real property upon which the Cedar Bayou Plant is situated.