The Federal Energy Regulatory Commission on Jan. 21 approved a Dec. 9 application from Longview Power LLC for authorization related to proposed transactions in which Ascribe Capital LLC, Centerbridge Partners LP and KKR Credit Advisors (US) LLC, or funds or investment accounts managed by them, will acquire additional indirect voting equity interests in Longview.
Longview owns the Longview Facility, a 775-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 Power went through bankruptcy reorganization a year or so ago to work out its troubled finances.
Longview is a direct, wholly-owned subsidiary of Longview Intermediate Holdings C LLC (Longview C). On April 13, 2015, the equity interests in Longview’s pre-bankruptcy reorganization direct parent were cancelled and the debt held by its lenders under two separate credit facilities was converted into equity interests in reorganized Longview C. Only three entities – these three companies (called “the Greater Than 10 Percent Owners”) – acquired a 10% or greater equity interest in Longview C.
Specifically, KKR Credit acquired a 31.14% interest, Centerbridge acquired an 11.15% interest, and American Securities LLC (now part of Ascribe) acquired a 10.27% interest. In each case, the equity interests in Longview C are held by funds owned or managed by the relevant Greater Than 10 Percent Owner or its affiliates. Longview C also owns and controls Mepco Holdings LLC, which owns and controls several subsidiaries that are engaged in coal mining in West Virginia and Pennsylvania and supply the Longview power plant.
- American Securities is a United States private equity firm that invests in North American companies. American Securities and its affiliates, including Ascribe Capital, currently have approximately $15 billion under management.
- Centerbridge is an investment management firm focused on private equity and distressed investment opportunities. The firm is headquartered in New York City and manages approximately $25 billion in capital.
- KKR Credit, directly or through its investment advisory subsidiaries, is the advisor to a number of funds and accounts affiliated with KKR & Co. L.P.
Longview told FERC that certain of the lenders who received equity interests in reorganized Longview C (called the “Lender-Owners”) are continuing to buy and sell the equity of Longview C. It is typical in restructuring cases for there to be some consolidation of equity interests for a period following the closing of a reorganization, as smaller debt holders and lenders with equity restrictions or other investment objectives divest their equity positions.
In connection with such trading, Longview requested that the commission authorize:
- KKR Credit to acquire an additional 19.36% voting equity interest in Longview C, resulting in a total voting equity interest of 50.5%;
- Ascribe Capital to increase its voting equity interest in Longview C from 10.27% to up to 20%: and
- Centerbridge to increase its voting equity interest in Longview C from 11.15% to up to 20%.