Texas power producer Optim Energy LLC and related companies on Sept. 8 filed their latest reorganization plan and disclosure statement, which signals the start of a voting period on the plan by creditors that extends to Oct. 7.
The U.S. Bankruptcy Court for the District of Delaware has approved Oct. 7 as the voting deadline for the plan. The Optim companies have the option to extend the voting deadline, in their discretion, without further order of the bankruptcy court. The court is due for an oct. 14 confirmation hearing on the plan.
Optim Energy, which last year sold its coal-fired plant in Texas, had earlier this year tried to sell its two gas-fired plants, but didn’t get any takers at an acceptable price. So this reorganization plan basically involves a debt-for-equity swap with creditors.
Said the Sept. 8 disclosure statement about that process: “The Bidding Procedures were approved on April 22, 2015, with the Bid Deadline set on May 1, 2015. After the adjournment of the April 22, 2015 hearing, the Debtors awaited any bids above the $355 million Reserve Price. However, the Debtors receive no satisfactory bids by the Bid Deadline. With the option of an auction and sale thereby eliminated, the Debtors proceeded to formulate the Third Amended Plan, which provided for, among other things: (i) the delivery of the equity interests in the Gas Plant Portfolio to the Pre-Petition Secured Parties in exchange for the Pre-Petition Secured Parties Secured Claims against the Reorganizing Debtors (rather than a sale of the Gas Plant Portfolio); (ii) the reorganization of the Reorganizing Debtors while leaving the remaining Debtors for another day; and (iii) the execution of a $110 million Exit Facility and a $50 million Second Lien Note.”
Under this plan, Optim Energy and Optim Energy Twin Oaks LP (the former owner of the coal plant) are known as the “Liquidating Debtors,” and OEM 1 LLC, Optim Energy Marketing LLC, Optim Energy Generation LLC and Optim Energy Twin Oaks GP LLC are called the “Merging Debtors.”
The Optim gas plants to be turned over to creditors are:
- The Altura Cogen Plant is a natural gas-fired plant capable of producing 600 MW, located in Harris County, Texas. It sells the majority of its energy in the Electric Reliability Council of Texas market. The Altura Cogen Plant has been commercially operating since 1985 and is located within a complex of petrochemical facilities owned by Lyondell Chemical Co.
- The Cedar Bayou Plant is a gas-fired plant capable of producing 550 MW, located in Chambers County, Texas. It operates in ERCOT’s Houston Zone. Optim Energy Cedar Bayou 4 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 generation facilities owned by NRG Texas Power LLC.