FirstEnergy Solutions Corp. has filed a new reorganization plan that details its separation from FirstEnergy Corp. and its emergence from bankruptcy as a privately held company.
FirstEnergy Solutions, or FES, on Oct. 11 filed its eighth amended plan of reorganization with the U.S. Bankruptcy Court for the Northern District of Ohio. FES, its subsidaries and FirstEnergy Nuclear Operating Co., or FENOC, filed for Chapter 11 bankruptcy protection in March 2018.
The latest plan calls for the separation of FES from FirstEnergy upon the effective date and incorporates a court-approved agreement between the two entities. Under the terms of the agreement, FirstEnergy will pay $225 million and issue $628 million of senior notes due December 2022 to FES and FENOC.
In addition, FES will receive $475 million and FirstEnergy Generation will receive $25 million from a $500 million credit revolver facility obtained by FirstEnergy and FES.
The reorganized debtors will receive FirstEnergy Generation's portion of proceeds from the sale of the Bay Shore, West Lorain and R.E. Burger power plants.
On the effective date of the plan, FirstEnergy's equity interests in FES and FENOC "shall be cancelled" and "all of the new common stock" of the reorganized debtors shall be contributed to a new holding company.
The new holding company will issue new common stock to help satisfy claims against the debtors from creditors and the holders of allowed unsecured bondholder claims, while such securities will "not be listed for public trading on any securities exchange."
Under the plan, the holding company would be authorized to issue up to 250 million shares of common stock. The holding company may also use cash on hand, in addition to new common stock, to satisfy claims.
On the effective date, FES may transfer certain assets and liabilities to the new holding company.
A new eight-member board of directors, headed by John Kiani, will be seated to lead the reorganized company.
U.S. Bankruptcy Judge Alan Koschik delayed a decision on the bankruptcy plan in late August, ordering FES to continue negotiations with unions representing workers at its nuclear plants.
FirstEnergy Generation and FENOC have "reached framework agreements" with the unions that call for the debtors to assume modified collective bargaining agreements, the plan states.