Entergy New Orleans' disclosure statement approved; plan confirmation hearing to begin May 3

By Jennifer Lanning Drey

Portland, Ore., Jan. 25 - Entergy New Orleans, Inc. obtained court approval of the disclosure statement for its amended plan of reorganization on Thursday, according to Lisa Futrell, an attorney with Jones, Walker, Waechter, Poitevent, Carrere & Denegre, the firm representing the company in bankruptcy court.

The plan of reorganization confirmation hearing is scheduled for May 3 and May 4 at the U.S. Bankruptcy Court for the Eastern District of Louisiana.

As previously reported, the proposed plan follows extensive efforts with federal, state and local regulators and lawmakers to gain support for Community Development Block Grants, rate relief and insurance proceeds that are critical to the company's emergence.

Under the plan, the company's first-mortgage bonds and the preferred and common shares will remain outstanding.

In addition, cash payments will be made to parent Entergy Corp. for the debtor-in-possession financing it provided, as well as to unsecured creditors, while Entergy affiliates will receive notes for their claims.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of $26.7 million in debtor-in-possession financing claims will recover 100% in cash, provided that the court will resolve disputes on the amount of the claim;

• Holders of $2.03 million in priority tax claims will recover 100% in deferred cash payments over a six-year period, plus interest accruing from the effective date;

• Holders of $960,000 in Capital One secured claims will recover 100% in cash;

• Holders of $229.94 million in bond claims will recover 100% under two options.

Under option A, bond collateral will continue to secure the claims, interest will accrue at the non-default interest rate after expiration of a bond interest moratorium period and the disbursing agent will distribute cash to the bond trustee for any interest accrued between expiration of the moratorium period and the plan effective date.

Under option B, if the court determines that option A impairs the bond claims and the bond claimants do not vote to accept the plan, the bondholders will receive a treatment that is equitable to the bond claims;

• Holders of $26 million in general unsecured claims will recover 100% of their claims under one of two options.

Under option A, if they vote to accept the plan, these creditors will recover 100% in cash plus interest on the principal amount of the claim accruing at 6% from the bankruptcy filing date to Dec. 31, 2005; 8% from Jan. 1, 2006 through Dec. 31, 2006; and the Louisiana judicial interest rate plus 1% from Jan. 1, 2007 until the claim is paid.

If the claim is allowed by the effective date, the claim will be paid within 15 days of the plan effective date. If it is not allowed on or before the effective date, the claim will be paid 15 days after the earlier of a final order allowing the claim or a claim stipulation between the holder and the company.

Under option B, if the general unsecured creditors vote to reject the plan, they will receive a general unsecured claim note in the amount of the claim, which will mature on the third anniversary of the plan effective date. The note will bear interest at 6% from the bankruptcy filing date to Dec. 31, 2005; 8% from Jan. 1, 2006 through Dec. 31, 2006; and the Louisiana judicial interest rate plus 1% from Jan. 1, 2007 until the claim is paid.

The note will be issued within 15 days of the effective date if the claim is allowed, or within 15 days of the earlier of an order allowing the claim or a stipulation by the claimant;

• Holders of $67 million in intercompany claims will recover 100% via an intercompany note equal to the claims amount, plus interest accruing at 6% from the bankruptcy filing date to Dec. 31, 2005; 8% from Jan. 1, 2006 through Dec. 31, 2006; and the Louisiana judicial interest rate plus 1% from Jan. 1, 2007 until the claim is paid.

• Holders of $4 million to $18.5 million in litigation claims will recover 100% in retention of the rights to the claim;

• Holders of $1.5 million in workers' compensation claims will recover 100% in retention of the rights to their claim;

• Holders of $250,000 in government environmental claims will recover 100% through distributions to the State of Louisiana and the U.S. Government; and

• Holders of $8.3 million in disputed Odom claims will recover 100% in treatment as a general unsecured claim.

In addition, holders of preferred interests will have two options for recovery. Under option A, the preferred interests will remain outstanding. Under option B, if the class does not vote to accept the plan, preferred interest holders will receive equitable treatment for their interests and the interests will be cancelled on the plan effective date.

Holders of equity interests will retain their interests under the plan.

Entergy New Orleans provides electric and natural gas service to customers in New Orleans and is the smallest of Entergy Corp.'s five utility companies. Entergy New Orleans filed for Chapter 11 on Sept. 23, 2005. Its case number is 05-17697.

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