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Longview Power and coal miner Mepco Holdings said they intended to continue operations while working to “de-risk” their balance sheet.
The 700Mw Longview power plant is one of the nation's newest and cleanest coal-fired power plants. More than $500 million of its $2 billion price tag was dedicated to environmental and air-quality controls.
The plant was funded by a $1 billion equity investment by First Reserve Corp, a private equity firm, and about $1 billion in debt. About $557 million of that debt matures in February, according to documents filed in the US Bankruptcy Court in Delaware.
Longview blamed its bankruptcy primarily on “construction failures and defects” that delayed the plant’s commencement date, preventing “the power plant from operating reliably and at its designed capacity”
Longview CEO Jeffery Keffer called the bankruptcy filing a necessary and prudent step to strengthen the business.
“The company has been in consensual negotiations with our senior lenders toward a Chapter 11 plan to maximize value. Those negotiations remain ongoing,” Keffer said.
“We remain confident that the company and our lenders will reach an agreement on the terms of a Chapter 11 plan in the near term.”
Both companies said there would be no interruption to business and employees would not be affected by the Chapter 11 filing.
Mepco has engaged in coal mining and processing operations in and around West Virginia for more than 50 years. Mepco owns or operates three active underground coal mines and one active surface mine in northern West Virginia and southwestern Pennsylvania.
“I want to make clear that we will continue to conduct business as usual, and our operations and employees will not be affected by the Chapter 11 filing,” Mepco CEO Jim Laurita Jr added.
GenPower Holdings is Longview's ultimate parent.
The company has engaged Lazard as its investment banker and Alvarez & Marsal North America as its restructuring adviser.
Longview is represented by Kirkland & Ellis LLP, as primary restructuring counsel, and Dentons US LLP for all issues related to company's pending arbitration proceedings.
The case is in Longview Power LLC, Case No. 13-12211, US Bankruptcy Court, District of Delaware.
