Entergy New Orleans granted court approval for plan of reorganization

By Jennifer Lanning Drey

Portland, Ore., May 3 - Entergy New Orleans Inc. obtained court approval for its fourth-amended plan of reorganization on Thursday from the U.S. Bankruptcy Court for the Eastern District of Louisiana, according to a company news release.

The company expects to emerge from bankruptcy during the week of May 7.

All of Entergy's creditors will be compensated under the plan, according to the release.

Also 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.

• 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% of their claims. 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;

• Holders of $26 million in general unsecured claims will recover 100% of their claims 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;

• 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;

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

• Preferred interests will remain outstanding; and

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

Work to continue

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 were critical to the company's emergence.

To date, Entergy New Orleans has incurred more than $213 million in Hurricane Katrina restoration costs, and the company expects it will incur roughly $465 million in future costs to rebuild its natural gas system, according to the release.

"While [Thursday's] news is good, we must recognize that our work is not done. We have a devastated gas system, and we must rebuild it," Rod West, president and chief executive officer of Entergy New Orleans, said in the release.

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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