Longview Power global settlement allowed, paving way for emergence

By Kali Hays

New York, Jan. 20 – Longview Power, LLC obtained approval of a global settlement with First American Title Insurance Co. and settling contractors Kvaerner North American Construction Inc. and Siemens Energy, Inc. on Tuesday from the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Longview said the interlocking settlement agreements with First American, Kvaerner and Siemens resolve the status of the companies’ asserted rights to title policy proceeds available under a $775 million First American title insurance policy, more than $335 million of mechanics’ liens asserted by the contractors in connection with the Longview Power facility and related properties and pending state court actions seeking enforcement of those liens, a pending lien priority action filed by First American and mutual claims.

Longview said the settlements are based on a substantial contribution of value by Siemens in the form of repairs, technical services and related warranties for the turbine generator portion of the Longview Power facility at no cost to the Longview debtors.

Settlement terms

The key terms of the settlement include the following:

• First American will contribute $41 million in cash in exchange for a full resolution of all outstanding claims among the Longview debtors, first-lien asset collateral agent MUFG Union Bank, NA, First American and the contractors, including in connection with title insurance policies issued for the Longview Power facility;

• Siemens will contribute $12.5 million in cash and undertake repairs to the facility in full resolution of all outstanding claims among Siemens and the debtors;

• Kvaerner will receive $48 million in cash in full satisfaction of its claims against the Longview debtors and their estates. The payment can occur before the effective date of Longview’s Chapter 11 plan;

• Siemens and Kvaerner will provide full releases and discharge of the disputed mechanics’ liens against the facility and related properties; and

• The parties will try to complete the transactions called for in the settlement, apart from repairs to the facility, no later than Feb. 18. The parties also committed to support Longview’s plan.

As a result of the payments in the various settlement agreements, the net payment by Longview to settle the disputes will be $2 million, to be paid to Kvaerner, the motion said.

However, as a result of issues with the Longview Power facility that are not being cured by these settlements or a settlement with Foster Wheeler North America Corp. approved by the court in March 2014, Longview said it will still incur costs of roughly $45 million to $55 million to perform all of the necessary repairs to the facility.

The company said the settlement will pave the way for its prospective emergence from Chapter 11 near the end of the first quarter.

Longview, an integrated power generation enterprise based in Maidsville, W.Va., filed for bankruptcy on Aug. 30, 2013. The Chapter 11 case number is 13-12211.

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