Longview Power makes lender-supported pre-packaged Chapter 11 filing

By Caroline Salls

Pittsburgh, April 14 – Longview Power LLC made a pre-packaged Chapter 11 bankruptcy filing Tuesday in the U.S. Bankruptcy Court for the District of Delaware “as a result of substantially lessened demand for electricity due to long term power-pricing pressure caused by cheap natural gas, an unseasonably warm winter and the Covid-19 pandemic and resulting economic impact,” according to a news release.

The company said it will continue to operate in the ordinary course as it quickly restructures its balance sheet.

Longview said unprecedented low energy prices prompted it to take this step to facilitate the efficient transition of ownership to its senior secured lenders through a restructuring and deleveraging of its balance sheet to eliminate its now unsustainable debt burden.

The company said it will enter into a $40 million new-money exit facility. Under Longview’s pre-packaged plan of reorganization, some of the company’s pre-bankruptcy term loan lenders have committed to provide this facility in exchange for 90% of the common equity of the reorganized company.

Other pre-bankruptcy term lenders will receive 10% of the reorganized equity.

Pre-bankruptcy subordinated notes and equity will be cancelled in exchange for a release.

All vendors will be paid in the ordinary course of business.

General unsecured claims will remain unimpaired and “ride through” the Chapter 11 cases.

Longview said the plan will equitize all of its pre-bankruptcy funded debt, eliminating about $350 million of first-lien and subordinated debt.

Longview is asking the court to schedule the plan confirmation hearing for May 22.

Additionally, the company said it reached an agreement with the pre-bankruptcy term lenders on a proposed form of order for the consensual use of cash collateral, including roughly $14 million in cash held in the Longview debtors’ debt service reserve account.

The company said the cash collateral use will provide it with liquidity to fund the administration of the Chapter 11 cases.

“This filing is unfortunate but necessary given the current depressed power prices, which have further dropped more recently due to the terrible Covid-19 pandemic sweeping the nation and dramatic effects of the pandemic on the economy,” chief executive officer Jeffery Keffer said in the release.

“We do not anticipate any change in the development of the Longview natural gas and solar projects as the two expansion project entities are not included in this Chapter 11 bankruptcy filing.”

According to court documents, Longview has $100 million to $500 million in both assets and debt.

No unsecured creditors were listed with claims of $1 million or more.

The company emerged from a previous Chapter 11 case, which was filed on Aug. 30, 2013, in April 2015.

Richards, Layton & Finger, PA and Kirkland & Ellis LLP are representing Longview in the Chapter 11 proceedings.

Longview, an integrated power generation enterprise based in Maidsville, W.Va. The Chapter 11 case number is 20-10951.

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