Bankruptcy to keep power plant running, owner says
The giant Homer City power plant continues to generate electricity as up to $750 million in new pollution control equipment is installed — and a bankruptcy filing on Tuesday by a related entity will keep that process going, the plant's primary owner said.
Homer City Funding LLC, the issuer of bonds for the coal fired plant operated by a unit of Edison International, filed for Chapter 11 bankruptcy protection from creditors in Delaware.
“This is all part of the plan to keep the plant running, and to continue construction of the scrubbers” on two of the facility's three generating units, said Andy Katell, spokesman for the subsidiary of General Electric Co. that is the plant's primary owner.
“It's a prepackaged bankruptcy, meaning it's voluntary, and it's a consensus among the parties involved.”
Business continues as usual at the 1,884-megawatt plant that employs 250 people. In addition, 460 workers are involved in the scrubber installations to lessen emissions and even more workers are completing planned routine maintenance, he said.
The pollution control work that began April 3 is more than 30 percent complete. It is scheduled to be finished in August 2014, though the company has said it may take longer.
By year's end, the investment in the scrubbers is expected to be about $400 million, Katell said,
The Homer City entity that was formed several years ago to issue debt securities listed assets and debt of $500 million to $1 billion each in the bankruptcy filing.
Edison in September agreed to transfer control of the power plant to the GE unit. That agreement is subject to consent by more than two-thirds of bondholders, according to a filing with the Securities and Exchange Commission.
Under the proposed restructuring plan, the reorganized company will be jointly owned by units of GE and by MetLife Inc.
Homer City Funding's debt includes $466 million in 8.734 percent notes that mature in 2026 and $174 million in 8.137 percent notes maturing in 2019, according to data compiled by Bloomberg News. The bondholder trustee is Bank of New York Mellon Corp., court papers showed.
Homer City Funding failed to make its Oct. 1 payment on existing bonds.
Holders of at least two-thirds of the outstanding principal of the existing bonds agreed to vote to accept the plan, Homer City Funding 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.
Kim Leonard is a staff writer for Trib Total Media. She can be reached at 412-380-5606 or email@example.com. Bloomberg News contributed to this report.