Longview Power boiler to be fixed at no cost under Foster Wheeler deal

By Caroline Salls

Pittsburgh, Feb. 12 - Longview Power, LLC requested court approval of a settlement with Foster Wheeler North America Corp., according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

Longview said the proposed settlement represents a major step in resolving its operations issues and longstanding disputes with contractors Kvaerner, Siemens and Foster Wheeler.

Specifically, the company said the agreement puts Foster Wheeler in place as the party that will fix operational issues resulting from a boiler that is not operating at what it believes is the appropriate capacity. Longview said the settlement contains a comprehensive scope of work that will govern the parties' efforts over the next 15 months, all of which will be completed at no cost to the company, with specified exceptions.

Foster Wheeler agreed in January 2007 to design and supply a 700 megawatt electric supercritical pulverized coal-fired boiler for the Longview's coal-fired power plant in exchange for $199 million.

Longview said there have been myriad problems with construction of the boiler, which have not yet been fixed.

Longview said it believes that the estimated cost of remediating the known defects in the boiler, all of which Foster Wheeler disputes are its responsibility, is nearly $50 million.

On Dec. 13, Foster Wheeler filed a $16.82 million proof of claim against Longview, which includes a $14.83 million mechanics' lien, while Longview asserted roughly $58 million in contingent claims against Foster Wheeler, plus more than 150 direct warranty claims.

In addition to eliminating the potential costs of fixing the boiler, Longview said it will save significant legal fees under the settlement and obtain a complete release of the roughly $17 million of claims filed against it.

According to the motion, the settlement calls for Foster Wheeler's support of Longview's objectives in the Chapter 11 cases going forward.

Longview said the settlement needs to be approved quickly so the operational fix can be completed as soon as possible and so Foster Wheeler can be removed from the company's adversary list as soon as possible so Longview can move on with its plan process.

A hearing is scheduled for March 4.

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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