Optim proposed sale of Twin Oaks facility draws multiple objections

By Kali Hays

New York, June 27 – Optim Energy, LLC’s proposed $60 million sale of some of Optim Energy Twin Oaks, LP assets has drawn objections from U.S. Trustee Roberta A. DeAngelis and creditors Walnut Creek Mining Company and Carlyle Investment Management, LLC, according to separate Friday filings with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Optim Energy Twin Oaks owns an electric generating plan known as Twin Oaks Power Station in Robertson County, Texas.

Major Oak Power, LLC is the stalking horse bidder.

DeAngelis’ objection lies in a requirement under the proposed bid procedures that says any qualified bidder must state that “its officers, employees, affiliates and/or representatives have not had any discussions with Walnut Creek Mining Co.”

Walnut Creek is Optim’s largest non-insider creditor and the sole supplier of coal for the Twin Oaks facility.

While DeAngelis notes that the company is concerned about bid collusion, she claims that any bidder who has had discussions with Walnut Creek is “unusual” and “should not be approved given its propensity to chill bidding,” according to the objection.

She also says “the high qualifying bid amount is excessive and may chill bidding.”

As previously reported, competing bids are due by June 23 and must exceed the stalking horse bid by at least $5 million, plus a $1.8 million breakup fee and up to $1 million in expenses to be paid if Major Oak is not the winning bidder.

An auction is scheduled to take place Aug. 4 if Optim receives one or more qualified bids.

Walnut Creek denies “the insinuation that it has engaged in collusive bidding tactics” and objects to approval of the sale and bid procedures because there is no longer a “legitimate basis to restrict communications among prospective purchasers and Walnut Creek,” as Optim has selected the highest and best offer for the facility, according to the objection.

Meanwhile, Carlyle Investment also objected to the sale and procedures based on the “proposed gag order” between prospective bidders and Walnut Creek, which it claims will affect the value of the assets “by foreclosing any opportunity to renegotiate an above market fuel supply contract,” while also taking issue with the required overbid amount that “unnecessarily chills bidding.”

A hearing date to consider the objections and proposed sale procedures is set for July 2.

Optim, a Silver Spring, Md.-based power plant owner, filed for bankruptcy on Feb. 12. The Chapter 11 case number is 14-10262.

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