Coal plant operator Longview Power LLC's struggle with weak power demand resulted in its second bankruptcy filing in less than a decade.
The company on April 14 announced it has filed a prepackaged reorganization plan, which will transfer the company's ownership to senior secured lenders. Over 85% in interest of Longview Power's senior secured lenders support the prepackaged plan, according to a news release.
Longview Power is a project-financed entity that operates the 700-MW Longview Power coal-fired power plant in Monongalia County, W.Va. The plant sells its output into the PJM Interconnection.
"This filing is unfortunate but necessary given the current depressed power prices, which have further dropped more recently due to the terrible COVID-19 pandemic sweeping the nation and dramatic effects of the pandemic on the economy," CEO Jeffery Keffer said in the news release.
The ownership transition will occur through a restructuring and deleveraging of Longview Power's balance sheet to eliminate unsustainable debt. Rating agencies expected this development, with S&P Global Ratings on March 20 downgrading the company over the "virtual certainty" of revolver default.
In response to the bankruptcy filing, Fitch Ratings noted that Longview has been one of the agency's "Top Loans of Concern" since August 2017.
Under the plan, Longview Power will enter into a $40 million new money exit facility. There will be no staffing changes and the company will continue to pay vendors in the ordinary course of business.
The bankruptcy filing does not include the company's natural gas and solar projects, which were recently approved by West Virginia regulators.
Longview Power previously filed for Chapter 11 bankruptcy protection in August 2013, along with coal-mining affiliate Mepco Holdings LLC. Longview Power claimed that ongoing design, construction, equipment defects and failures, and other operational issues left it unable to pay interest on debt used to fund construction of the $2 billion Longview Power project. The power plant was completed in 2011.
Longview said it had funded debt of approximately $1 billion at the time of its 2013 bankruptcy petition.
The U.S. Bankruptcy Court for the District of Delaware confirmed Longview Power's previous restructuring plan in March 2015.