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Calpine gets court OK of bid procedures for sale of Rumford TransCanada Pipelines contract
By Caroline Salls
Pittsburgh, July 26 - Calpine Corp. obtained court approval of bidding procedures for the proposed sale of Rumford Power Associates, LP's contract with TransCanada Pipelines Ltd., according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
TransCanada Pipelines provides Rumford with natural gas transportation to a power plant in Maine that the company is no longer operating, the motion said.
The contract is through the end of October 2010.
Rumford said in the motion that the contract is a financial drain on its estate that causes it to incur costs of approximately C$521,000 per month.
The company said in the motion it believes another party may be able to derive value from the contract.
Rumford also said it has pinpointed parties that may be interest in purchasing the assets.
The initial overbid at auction must be for at least $100,000 more than the minimum bid. Each successive bid must be for at least $100,000 more than the previous bid.
Rumford previously leased the Maine property and power plant to PMCC Calpine New England Investment, LLC, which in turn leased the power plant back to Rumford.
In February, Rumford attempted to reject its lease and surrender the power plant to PMCC.
The court approved a transition agreement transferring the plant back to PMCC in June.
However, the TransCanada contract was not included in the transition agreement.
The auction will be held Aug. 14, and the sale hearing is scheduled for Aug. 15.
Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20, 2005. Its Chapter 11 case number is 05-60200.
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