GenOn second amended disclosure OK’d; plan hearing set for Nov. 13

By Caroline Salls

Pittsburgh, Oct. 6 – GenOn Energy, Inc. received court approval of the disclosure statement for its second amended plan of reorganization, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan confirmation hearing is scheduled for Nov. 13.

GenOn said in an 8-K filed Friday with the Securities and Exchange Commission that it filed the second amended plan and disclosure statement on Oct. 2 to remove a previously contemplated rights offering, consistent with an amended backstop letter and the restructuring support agreement amendment.

As previously reported, the plan is based on a restructuring support and lock-up agreement between GenOn Energy and GenOn Americas Generation, LLC (GAG) and some of their subsidiaries, as well as NRG Energy, Inc., holders of GenOn’s and GAG’s outstanding senior unsecured notes.

GenOn said NRG will facilitate a transition of shared services to a third-party services provider, but will continue to provide services during the transition period.

In addition, if a settlement is approved, GenOn will retain a credit against amounts owed to NRG for the post-bankruptcy period under the current shared services agreement, provided that to the extent GenOn has paid for services during the bankruptcy proceedings and the aforementioned credit has not been applied in full, NRG will, upon request by GenOn, reimburse such payments in cash up to the amount of any unused portion of the credit.

Under the settlement, NRG will provide consideration of $261.3 million in cash, continued and amended shared services, retention of historic pension liabilities under the existing NRG pension plans, including payment of $13.2 million of 2017 pension contributions due on account of GenOn employees, and other consideration in varying forms.

NRG will also consent to the cancellation of its equity interests in GenOn and will be entitled to the related worthless stock deduction for federal income tax purposes.

Under the plan, holders of GenOn notes will receive 100% of the equity of reorganized GenOn, subject to dilution by a management incentive plan.

If a noteholder has executed the restructuring support agreement, that noteholder will also receive a share of a $75 million cash payment and other cash distributions, as well as any new subordinated notes.

Holders of GAG notes will receive cash in the amount of $920 per $1,000 principal amount of notes plus interest through the date of the initial bankruptcy petition filing and, if the noteholder has executed the support agreement, a share of a $14.1 million cash payment and liquidated damages accruing at an annual rate of 6% of the principal amount of GAG notes outstanding plus interest as of the bankruptcy filing date.

Holders of general unsecured claims will be paid in full in cash.

Interests in GenOn will be cancelled, released and extinguished.

GenOn, a Princeton, N.J.-based power producer, filed bankruptcy on June 14. The Chapter 11 case number is 17-33695.

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