As part of its Chapter 11 bankruptcy restructuring, La Paloma Generating Co. LLC is planning to sell its 1,022-MW combined-cycle, natural gas-fired facility and associated interconnection facilities to a newly formed affiliate of Beal Bank USA.
Under the terms of the asset purchase and sale agreement to be finalized, La Paloma proposes to divest the project, located in Kern County, Calif., to Beal affiliate CXA La Paloma for a credit bid of $150 million and the assumption of certain liabilities.
The Federal Energy Regulatory Commission was requested to approve the transaction no later than Oct. 30 to meet the target deal close date of Oct. 31. If La Paloma continues to own the facility by Nov. 1, significant payment obligations will become due and will reduce the assets available to pay creditors in accordance with the bankruptcy plan, according to an Oct. 10 FERC application.
In December 2016, La Paloma filed for Chapter 11 bankruptcy restructuring, saying it cannot continue to operate the power plant in California's "inhospitable" power market without relief from creditors.
Rockland Capital Partners LLC owns a controlling portion of the ownership shares in La Paloma. A Beal Bank affiliate in 2016 acquired a partial interest in a similarly troubled gas-fired power plant, the Gila River Project in Arizona. (FERC docket EC18-3)