U.S. Bankruptcy Judge Alan Koschik has confirmed the Chapter 11 reorganization plan of FirstEnergy Solutions Corp.
The judge on Oct. 16 issued an order confirming the eighth amended plan of reorganization of FirstEnergy Solutions, or FES, its subsidiaries and FirstEnergy Nuclear Operating Co., or FENOC.
FES announced Oct. 15 that the judge "indicated he will confirm the plan that was supported by more than 93[%] of voting creditors." The company expects to emerge from bankruptcy before the end of the year.
FES, its subsidiaries and FENOC filed for Chapter 11 bankruptcy protection in late March 2018.
The approved plan calls for the separation of FES from FirstEnergy Corp. 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 bankrupt subsidiary FirstEnergy Generation will receive $25 million from a $500 million credit revolver facility obtained by FirstEnergy and FES.
FirstEnergy Generation and FENOC also "reached framework agreements" with unions representing workers at its nuclear plants in order for the plan to proceed.
Under the plan, a newly formed holding company will issue up to 250 million shares of new common stock in a private placement to help satisfy claims against the debtors from creditors and the holders of allowed unsecured bondholder claims. The holding company may also use cash on hand, in addition to new common stock, to satisfy claims.
A new eight-member board of directors will be seated to lead the reorganized company, which still must be approved by the Federal Energy Regulatory Commission and the U.S. Nuclear Regulatory Commission.
FES is expected to retain its retail business and generation assets upon emergence from Chapter 11. However, the company has warned that efforts to repeal House Bill 6, a state law granting subsidies to the 908-MW Davis-Besse and 1,268-MW Perry nuclear plants, could jeopardize the assets.
"Unfortunately, any additional negative news from the courts or the successful submission of petitions to put a referendum on the ballot will destabilize the financial situation of those plants," FES said in an Oct. 15 statement. "This will force the company to move back on a path to deactivation if alternative measures to provide needed financial support do not arise quickly."
Gene Pierce, a spokesman for Ohioans Against Corporate Bailouts, said the group is on track to meet the Oct. 21 deadline for submitting the required signatures for the referendum to repeal House Bill 6.