Longview Power disclosure statement approved; confirmation Feb. 10

By Jim Witters

Wilmington, Del., Dec. 18 - Longview Power, LLC received approval of the disclosure statement for its Chapter 11 plan of reorganization during a Dec. 18 hearing in the U.S. Bankruptcy Court for the District of Delaware.

In addition, the debtors received approval to exercise their option to acquire the equity of non-debtor affiliate Dunkard Creek Water Treatment System, LLC and AMD Reclamation, Inc. that are necessary and critical to ongoing operations.

Longview is paying $4.5 million for the equity interests.

The debtors were able to resolve disclosure statement objections from five parties by incorporating additional language and provisions.

But the contractors who have asserted $350 million in mechanics liens in the case said they reserved their rights to object to plan confirmation.

Kvaerner North American Construction, Foster Wheeler North America Corp. and Siemens Energy, Inc. have been embroiled in a dispute over responsibility for failures at a $2 billion 700-net-megawatt, supercritical, coal-fired power generation facility in Maidsville, W.Va.

The dispute has been in arbitration for more than three years.

Plan details

The proposed plan will eliminate more than $1 billion of debt from the Longview debtors' balance sheet, provide the capital necessary to fund distributions to creditors and to repair the company's power facility and give the debtors the working capital necessary to fund ongoing operations.

To implement the plan, Longview will cancel existing interests and will issue new common equity to lenders and the holders of swap and hedge claims.

Treatment of creditors includes:

• Administrative claims and other priority claims will be paid in full in cash;

• If a debtor-in-possession conversion occurs, each allowed DIP facility claim will be exchanged for a share of exit facility obligations. If the conversion does not occur, the claims will be paid in full in cash. In addition, holders of DIP facility claims will receive a share of a DIP lender equity distribution;

• Other secured claims will either be paid in full in cash or reinstated;

• Holders of Longview credit facility claims will receive a share of a pre-bankruptcy lender equity distribution;

• Holders of mechanics' lien claims will either be paid in full in cash, have their claims reinstated or receive notes equal to the value of the claim if the claims are deemed to be secured and senior to the credit agreement claims and a disputed claims resolution is waived.

If the claims are found to be unsecured, creditors will receive a share of an unsecured-creditor cash pool or rejecting creditor cash pool, depending on whether the class votes to accept the plan;

• Holders of general unsecured claims will receive a share of either an unsecured creditor cash pool or an unsecured-rejecting-creditor cash pool, depending on whether the class votes to accept the plan;

• Intercompany claims and intercompany interests will be either reinstated or cancelled without distribution; and

• All existing interests will be canceled without distribution.

The plan confirmation hearing is scheduled for 10 a.m. ET on Feb. 10.

Longview, an integrated power generation enterprise based in Maidsville, W.Va., filed for bankruptcy on Aug. 30. The Chapter 11 case number is 13-12211.

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