Boston Generating, a unit of US Power Generating Co., is moving too quickly to sell its assets and hasn’t ensured it’s getting the best deal, creditors said in filings yesterday in U.S. Bankruptcy Court in Manhattan.
The sale process “is nothing more than a fire sale of a fundamentally healthy company,” said MatlinPatterson Global Advisers LLC, which owns second-lien debt. It called the Constellation bid “artificially low.”
Boston Generating filed for bankruptcy in August with plans to sell five power plants in the Boston area to Baltimore-based Constellation, according to Constellation. Boston Generating plans to seek higher bids at an auction. It will seek court approval for the auction process at an Oct. 4 hearing.
Now is one of the worst times for Boston Generating to sell its assets because of “regulatory uncertainty,” MatlinPatterson said. New regulations will increase the value of the company’s assets, it said. Creditors also complained the auction schedule and rules will discourage competitive bidding.
The sale is backed by lenders who hold about half of Boston Generating’s $1.1 billion in first-lien debt, according to court papers. The company also has about $773 million in second-lien and mezzanine debt.
Lawrence McDonnell, a Constellation spokesman, declined to comment on the objection. John Reese, a US Power Generating spokesman, couldn’t be reached for comment.
Fortress and CarVal Investors LLC said in their objection that they are prepared to invest “substantial amounts” of new equity into Boston Generating as well as provide a loan to the company during its bankruptcy. They say any sale should take place only as part of a bankruptcy plan, which would require creditor support.
The case is In re Boston Generating LLC, 10-14419, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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