AES Eastern Energy Files for Bankruptcy Protection
AES Eastern Energy Limited Partnership and 13 affiliated entities filed petitions for relief under Chapter 11 in the United States Bankruptcy Court for the District of Delaware. AES Eastern Energy and its affiliates are indirect, wholly owned subsidiaries of The AES Corporation. The AES Corporation is not included in the bankruptcy filing. The company listed between $100 million and $500 million in assets.
AES Eastern Energy and its affiliates own or lease six coal-fired electric generating stations in New York state. The bankruptcy filing was necessitated by a number of operational factors, including reduced power prices brought on by low natural gas prices, increased costs for coal and significant costs for air pollution controls. As a result of these operational factors, the company did not have sufficient cash flow to service its debt. AES Eastern Energy sought relief in Chapter 11 to facilitate the sale or transfer of its two operating plants.
The company’s Somerset and Cayuga plants, located in Barker, NY and Lansing, NY will continue operations during the bankruptcy, led by the existing management team. AES Eastern Energy has reached an agreement in principle for the sale of the Somerset and Cayuga plants to an entity sponsored by holders of pass-through trust certificates issued in connection with a leveraged lease transaction that financed the acquisition of the plants. Holders of a majority of the pass-through trust certificates have indicated their support for the transaction, which remains subject to definitive documentation, solicitation of higher and better offers in an auction process, and approval of the sale by the bankruptcy court, all as may be required by the bankruptcy laws.
AES Eastern Energy and its affiliates will use the Chapter 11 process to divest or retire four additional coal-fired generating stations in New York state, all of which are in protective lay-up or cold standby status and are not currently operating.
Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A. are legal counsel to AES Eastern Energy and affiliates. Barclays Capital is serving as investment banker and financial advisor.