Longview Power files bankruptcy to continue negotiations with lenders

By Caroline Salls

Pittsburgh, Aug. 30 - Longview Power, LLC and some of its affiliates, including Mepco Holdings, LLC, filed Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the District of Delaware.

According to a news release, both Longview and Mepco intend to operate their businesses as they continue to negotiate a Chapter 11 plan with their lenders to "de-risk their balance sheet."

"The company has been in consensual negotiations with our senior lenders toward a Chapter 11 plan to maximize value; those negotiations remain ongoing," Longview chief executive officer Jeffery Keffer said in the release.

"We remain confident that the company and our lenders will reach an agreement on the terms of a Chapter 11 plan in the near term."

Longview said construction failures and defects have prevented its power plant from operating reliably at its designed capacity.

In addition, Keffer said in a statement filed with the court that the bankruptcy filing was prompted by an impending interest payment due on Aug. 30 and the need to protect $59 million in letters of credit that are part of the collateral package under a Longview credit agreement.

First-day motions

The company said it filed customary first-day motions to allow it to obtain the benefits of the Chapter 11 filing and continue to operate in the ordinary course.

Among those first-day motions was a request by the company to use the cash collateral of its pre-bankruptcy lenders to fund its operations while in bankruptcy.

The proposed cash collateral budget runs for 45 days from the bankruptcy filing date.

Parties with interest in the cash collateral include Longview credit agreement administrative agent Citicorp North America, Inc., Longview amended security agreement collateral agent Union Bank, NA and the credit agreement lenders.

A hearing on interim access to cash collateral and approval of the other first-day motions is scheduled for Sept. 3.

Debt details

According to court documents, Longview Power has more than $1 billion in both assets and debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Alvarez & Marsal North America, LLC is Longview's restructuring adviser. The company is represented by Kirkland & Ellis LLP, as primary restructuring counsel, and Dentons US LLP for all issues related to pending contractor arbitration proceedings related to damages arising from the power facility's construction and design.

Longview and Mepco are an integrated power generation enterprise based in Maidsville, W.Va. The Chapter 11 case number is 13-12211.

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