ExGen Texas Power LLC

• 11/7/17 Recap: The last 12 months haven't been friendly to companies in the power space. The following have filed for bankruptcy: Panda Temple Power LLC, Westinghouse Electric Company LLC, GenOn Energy Inc., Illinois Power Generating Co., and La Paloma Generating Company LLC. Here, the owner of five natural-gas-fired power generation projects in the great state of Texas filed for bankruptcy in the face of significant headwinds. Literally. In its bankruptcy papers, the company primarily blames decreased demand and, in turn, decreased revenue, on an increase in wind production. And mild weather. Indeed, unlike retailers who incessantly blame weather for poor performance, this is actually believable. The company notes, "public policy initiatives and incentives continue to promote the development of additional wind capacity, placing downward pressure on wholesale power prices. Such additional capacity, coupled with low natural gas prices and mild and windy weather, have exacerbated the Debtors' financial struggles. By way of example, the cost per megawatt hour in 2008 was more than $70; in 2016, it was less than $25, and just prior to the Petition Date, it was approximately $25. These factors have persisted, as additional wind and other capacity is being added to the grid, which has driven down prices in light of relatively flat demand, thereby further constricting the Debtors' revenues and cash flow." In light of these issues, the company hired a banker to market the assets and only non-Debtor Exelon Generation Company LLC bit on one of the five debtor projects to the tune of $60mm (plus various forms of other consideration). The debt in the other four projects will be equitized and the term lenders will now be owners of power generation projects, subject to approval of a plan of reorganization. Interestingly, this all comes in the same week that a proposed tax overhaul bill by the House Republicans seeks to significantly curtail wind energy production tax credits. 
• Jurisdiction: D. of Delaware (Judge Shannon)
• Capital Structure: $660mm first lien TL (funded, ex-interest)(Bank of America NA)     
• Company Professionals:
  • Legal: Richards Layton & Finger PA (Daniel DeFranceschi, Paul Heath, Zachary Shapiro, Joseph Barsalona)
  • Financial Advisor/CRO: FTI Consulting (David Rush)
  • Investment Banker: Scotia Capital (USA) Inc.
  • Independent Board of Director: Alan Carr
  • Claims Agent: KCC (*click on company name for docket)
• Other Parties in Interest: 
  • Asset Purchaser: Exelon Generation Company LLC
    • Legal: DLA Piper (US) LLP (Richard Chesley, Daniel Simon)
  • TL Agent: Bank of America NA
    • Legal: Norton Rose Fulbright US LLP (Louis Strubeck, Greg Wilkes) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
  • Commodity Hedge Counterparty: Merrill Lynch Commodities Inc.
    • Legal: Davis Polk & Wardwell LLP (Marshall Heubner, Angela Libby) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)

Updated: 11/8/17 at 1:00pm CT (No UCC)