National Energy seeks approval for deal to downsize $800 million insurers' claim to $312 million

By Jeff Pines

Washington, April 5 - National Energy & Gas Transmission Inc. is seeking approval of an agreement that would give a group of insurance companies a $312 million claim instead of the nearly $800 million they were previously seeking.

Duke Energy North America LLC formed Attala Generating Co. LLC to build and operate a power plant in Attala County, Miss. Attala Power Corp., an indirect wholly-owed subsidiary of National Energy bought all of Duke Energy's interests.

National Energy, based in Bethesda, Md., issued a guarantee to Attala Generating Co. capped at $300 million in the event Attala Energy Corp. failed to provide the raw materials to be converted into energy and to pay Attala Generating to convert it into electricity.

In connection with the power plant, Attala Pass Through Trust sold $237 million of 10.32% passthrough certificates. HSBC is the trustee for the notes and was given a first priority security interest.

Attala Generating defaulted on its facility leases, which caused cross-defaults on the certificates. The noteholders, mostly insurance companies, created Central Mississippi Generating Co. LLC, which bid on the plant and won the auction for it. Central Mississippi then pressed Attala Generating for a $300 million claim.

HSBC and the certificate holders believe their claim is worth $800 million. Attala Generating puts its claim at more than $500 million, but the settlement rejects and expunges the Attala Generating claim.

In an April 2 filing with the U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division, the company asked for an April 15 hearing on the motion.

National Energy's Chapter 11 case number is 03-30459.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.