Tonopah Solar Energy in bankruptcy; will emerge under Cobra ownership

By Caroline Salls

Pittsburgh, July 30 – Tonopah Solar Energy, LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware.

Treasurer Justin D. Pugh said in a statement filed with the court that Tonopah has filed a Chapter 11 plan to restructure its balance sheet, as well as first-day motions intended to allow the company to operate effectively as possible during the Chapter 11 process, remediate its power plant and maximize the value of its assets.

Pugh said a series of events, set off by a March 2019 hot salt tank leak, led to the bankruptcy filing, including termination of Tonopah’s power purchase agreement following a January 2019 notice of default.

The treasurer said repair activities have continued at Tonopah’s power plant since the termination of the PPA.

“Given the shifts in the market dynamics since the execution of the PPA nearly 10 years ago, there is not an equivalent PPA available today nor is there a PPA that would permit TSE to satisfy the repayment of the [Department of Energy] loan and satisfy its own operating costs even if the power plant were operational,” Pugh said.

Under the plan, the DOE will receive $200 million in cash and a $100 million contingent note to be guaranteed by Cobra in full satisfaction of its loan claim.

Cobra Thermosolar Plants, Inc. and Cobra Energy Investments, LLC, an affiliate of ACS Servicios Comunicaciones y Energía SL (collectively, Cobra) will fund Tonopah’s obligations under the plan through new debt financing and cash, and Cobra will own 100% of the company upon completion of the restructuring.

Interests granted under security documents will be released.

All other claims will remain unimpaired.

The company is seeking court approval to use the cash collateral of its pre-bankruptcy secured parties to fund its operations while in bankruptcy.

According to court documents, Tonopah has $500 million to $1 billion in assets and $100 million to $500 million in debt. Specifically, Pugh said the company has $432 million in outstanding debt obligations.

The company’s largest unsecured creditor is PIC Group, Inc. of Marietta, Ga., with a $1.22 million trade claim. No other unsecured creditors were listed with claims of $1 million or more.

Young, Conaway, Stargatt & Taylor LLP is representing Tonopah in its Chapter 11 proceedings.

Santa Monica, Calif.-based Tonopah constructs, owns, and operates the Crescent Dunes Solar Energy Project. The Chapter 11 case number is 20-11884.

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