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Homer City seeks FERC approval of reorganization plan


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Homer City seeks FERC approval of reorganization plan

Homer City Generation LP is asking FERC to approve its planned reorganization after the company emerges from bankruptcy.

Homer City Generation, which operates the financially distressed 1,901-MW Homer City coal plant, on Jan. 11 filed a voluntary petition for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of Delaware. Homer City said the financial restructuring plan is expected to "significantly deleverage the company's balance sheet and provide for an orderly transition of ownership to Homer City's existing secured noteholders."

"Under the plan, the existing equity interests of [Homer City Generation] will be cancelled and all existing equity owners of [Homer City Generation] will lose their current ownership interests in [Homer City Generation]," the company said in its FERC filing. In addition, Homer City said the company will be reorganized and likely converted to a limited liability corporation known as Homer City Generation LLC.

The plan also provides for the formation of a new holding company under which the reorganized Homer City Generation will be a wholly owned subsidiary, according to the FERC filing.

Homer City said its proposed plan of reorganization is backed by approximately 86% of its existing secured noteholders, who signed on to a restructuring support agreement, or RSA, prior to the bankruptcy filing. "Among other things, the RSA provides for the noteholders to become majority equity owners in Homer City and for more than $600 million in principal and accrued interest to be eliminated from Homer City's balance sheet," Homer City said in a Jan. 10 news release.

Under the reorganization plan, "all trade creditors and other general unsecured creditors will be paid in full," Homer City added.

The company said it is soliciting creditor approval for its plan and expects to quickly emerge from Chapter 11 reorganization, possibly as soon as Feb. 15.

Homer City Generation is asking FERC to expedite consideration of the transaction following court confirmation.

"Applicant is seeking this authorization because the indirect ownership of all of the voting interests in [Homer City Generation] will be transferred to a new set of equity holders," the company said. This change in control involves market-based tariffs, contracts and transmission facilities used to interconnect the Homer City coal plant to the electric transmission grid. (FERC docket EC17-65)