PG&E National Energy Group gets funding for two projects; Chapter 11 filing possibility

By Sara Rosenberg

New York, Dec. 13 - PG&E National Energy Group Inc.'s lenders have agreed to provide funding for two power-plant projects, Lake Road Generating and La Paloma Generating. Citibank is the administrative agent for each syndicate of lenders.

Furthermore, the company announced that if further agreements are not reached the parent company and some of its subsidiaries may be forced to file for bankruptcy protection under Chapter 11.

The funding agreement for the two projects "requires that each facility be transferred to its lenders or their designees on or before June 8, 2003," a news release said. "The company also is required to work with the lenders to replace its energy trading entity as the energy management services provider."

As was previously disclosed, the company has defaulted on several of its credit agreements due to failure to repay $431 million under its revolver that matured on Nov. 21, 2002. In addition, the company failed to make interest payments. These payment defaults have created cross-defaults under various loan facilities, including the Lake Road and La Paloma facilities. The company is currently involved in active negotiations regarding a global restructuring of its debt with lenders.

PG&E National Energy Group is a Bethesda, Md. developer, builder, owner and operator of electric generating and natural gas pipeline facilities.

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