Homer City Generation LP, which operates the 1,884-MW Homer City coal plant in Pennsylvania, announced Nov. 21 that it has further extended its previously announced forbearance agreement with certain holders of its outstanding secured notes to the earlier of 11:59 p.m. (Eastern Standard Time) on Nov. 30, 2016, or the occurrence of certain events specified in the forbearance agreement, unless further extended by the parties.
As previously announced, Homer City is in discussions with certain noteholders regarding a comprehensive financial restructuring with the intent to significantly deleverage its balance sheet and provide for an orderly transition of its ownership. Homer City continues to expect to operate its facilities and meet its obligations in the ordinary course.
Under the terms of the forbearance agreement, over 75% of the holders of the vompany’s outstanding 8.137% Senior Secured Notes due 2019 and 8.734% Senior Secured Notes due 2026 agreed to forbear from exercising any and all remedies available to them as a result of the company not making the payment due on the notes on Oct. 3.
Homer City Generation, controlled by General Electric (NYSE: GE), is engaged in the business of operating and selling energy and capacity from its three coal-fired units and related facilities located near Pittsburgh, Pennsylvania. The plant sells its power into wholesale electricity generation markets in PJM Interconnection and the New York ISO.
Homer City has also released a financial statement for the third quarter of this year that underscores its financial issues.
Said the report: “Operating income (loss) from the Homer City plant was $(802) thousand and $154 thousand for three months ended September 30, 2016 and 2015, respectively and $(2,967) thousand and $47,371 thousand for the nine months ended September 30, 2016 and September 30, 2015, respectively.
“The gross margin of the Facility (revenues less fuel cost) was $45,098 thousand and $39,510 thousand for three months ended September 30, 2016 and 2015, respectively and $139,387 thousand and $173,819 thousand for the nine months ended September 30, 2016 and September 30, 2015, respectively.
“Revenues for the three and nine months ended September 30, 2016 were lower than the three and nine months ended September 30, 2015 due to lower realized energy prices. Total operating expenses were lower for the three and nine months ended September 30, 2016 compared to the three and six months ended September 30, 2015 due to lower fuel expenses.”
The company noted that GE Capital entered into an EPC contract in April 2012 with Kiewit Corp. to construct Novel Integrated Desulfurization System (NIDs) scrubberds on Units 1 and 2. Unit 3 already had a scrubber. NIDs are designed to reduce various emissions, including SO2 and particulate matter. As of September 2016, construction of the NIDs has been completed.