GenOn Energy enters owner-lessor plaintiff settlement

By Caroline Salls

Pittsburgh, May 1 – GenOn Energy, Inc. said the parties to a settlement with GenOn Mid-Atlantic, LLC (GenMA) and some of its stakeholders finalized the agreement on April 27, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

GenOn said the Dec. 12 order confirming its Chapter 11 plan approved the terms of the settlement.

The company said the settlement resolves all pending litigation with owner-lessor plaintiffs, including two actions pending in the Supreme Court of the State of New York, and the release of some claims and causes of action.

The settlement also calls for cash redemption or purchase of outstanding lessor notes/pass-through certificates, funded by GenMA cash on hand, proceeds from a J.P. Morgan letter-of-credit draw and a $20 million subordinated loan to GenMA by GenOn.

NRG caused a $37.5 million letter of credit to be issued under the settlement as credit support to GenMA in connection with rent obligations.

NRG contributed $5.85 million and GenOn contributed $3.15 million toward the payment of professional fees incurred by the owner-lessor plaintiffs, and the balance of such fees was paid by GenMA.

GenOn will retain $125 million from the pre-bankruptcy transfer from GenMA on account of the J.P. Morgan letter-of-credit draw and all proceeds of NRG’s settlement payment of $261.3 million to be paid to GenOn upon completion of an NRG settlement, subject to set-off of $126.7 million in NRG claims against GenOn under the parties’ intercompany secured revolving credit facility.

Debt and lien covenants will permit a secured working capital facility in an amount not to exceed $75 million.

In addition, GenMA will have one independent director appointed by the owner-lessor plaintiffs.

GenOn, a Princeton, N.J.-based power producer, filed for bankruptcy on June 14, 2017 in the U.S. Bankruptcy Court for the Southern District of Texas. The Chapter 11 case number is 17-33695.

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