Pennsylvania Power Plant’s Bond Issuer, Files Bankruptcy
Homer City, formed to issue debt securities, listed assets and debt of $500 million to $1 billion each in Chapter 11 papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware.
Edison in September agreed to transfer control of its Homer City coal-fired power plant east of Pittsburgh to General Electric Capital Corp. That agreement is subject to consent by more than two-thirds of bondholders, according to a filing with the U.S. Securities and Exchange Commission.
“The restructuring transactions contemplated by the plan will improve the financial health and future operational viability of the facility,” Homer City said in court papers. Under the proposed plan the reorganized company will be jointly owned by units of GE Capital and by MetLife Inc. (MET)
Homer City’s debt includes $466 million in 8.734 percent notes due in 2026 and $174 million in 8.137 percent notes due in 2019, according to data compiled by Bloomberg News. The bondholder trustee is Bank of New York, court papers show. Homer City failed to make its Oct. 1 payment on existing bonds.
The plant is owned by GE Capital and was leased by Edison Mission Energy. As issuer of the bonds, Homer City Funding is a special-purpose financial entity.
Edison Mission Energy is a unit of Edison International. Southern California Edison Co., another Edison International unit, is California’s second-largest utility, providing power to 14 million people, according to the company’s website. PG&E Corp. (PCG), based in San Francisco, owns California’s largest electric utility.
The Homer facility, located about 45 miles (70 kilometers) from Pittsburgh, includes three coal-fired electric generating units. Edison Mission Marketing & Trading Inc., an affiliate of EME Homer City, sells energy and capacity from the facility. EME Homer City operates the facility.
The company filed what is known as a prepackaged bankruptcy, having solicited votes from creditors on a reorganization plan before seeking court protection, according to court documents.
Holders of at least two-thirds of the outstanding principal of the existing bonds agreed to vote to accept the plan, Homer City said. The company is asking the court to hold a Dec. 6 hearing for both approval of the disclosure statement and confirmation of the plan.
Edison Mission Energy may be forced into bankruptcy should it fail to pay a $97 million interest payment due Nov. 15, Edison International said in a Sept. 30 regulatory filing.
Edison Mission can’t guarantee the interest payment and doesn’t expect to have enough cash to repay $500 million in unsecured debt due in June 2013. Edison Mission began negotiating with bondholders in June.
The case is In re Homer City Funding LLC, 12-13024, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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