【破产新闻】News: Dow Jones FirstEnergy Generation Units File for Bankruptcy After Seeking Federal Bailout

April.1,2018  By Andrew Scurria and Becky Yerak 

 

FirstEnergy Corp. placed its power-generation businesses into chapter 11 bankruptcy on Saturday, underscoring the financial pressures on the nation's coal- and nuclear-power plant operators as the Trump administration considers intervening on their behalf.

 
 

The Saturday chapter 11 filing in U.S. Bankruptcy Court in Akron, Ohio, covers FirstEnergy Solutions Corp., which sells power to retail and wholesale customers primarily in the Midwest and Mid-Atlantic regions of U.S.

 

First Energy and its affiliates operate seven power facilities in Midwestern competitive power markets, where aggressive competition from cheaper gas-fired and renewable energy sources have undercut the economics of traditional nuclear and coal plants.

 

The Ohio-based company said it would operate those plants normally while state and federal regulators consider its recent requests for a bailout.

 

FirstEnergy on Thursday petitioned the U.S. Energy Department to prop up coal and nuclear plants across the Midwest by forcing the region's grid operator to cut favorable deals that shift more of their costs onto consumers.

 

The FirstEnergy parent company isn't part of the chapter 11 case, nor are other company subsidiaries that operate in regulated electricity markets. But creditors are considering asserting claims that the parent failed to honor its financial obligations to the bankrupt units, a person familiar with the matter said.

 

The companies filing for bankruptcy have more than 3,000 employees and total debt of about $3.8 billion, according to court documents. FirstEnergy Solutions Corp. alone has $1.5 billion in debt, including a $150 million revolving credit note with Allegheny Energy Supply Co. under which $102 million is currently outstanding and due Monday.

 

First Energy says the bankrupt units have access to $550 million in cash that will allow them to meet their obligations to employees, suppliers and customers while under court protection.

 

FirstEnergy President Donald Schneider said the chapter 11 filing "represents our best path forward as we continue to pursue opportunities for restructuring, asset sales and legislative and regulatory relief."

 

The company's collection of coal and nuclear plants had been flirting with bankruptcy since last year when FirstEnergy announced it would exit competitive power markets and refocus on its regulated businesses.

 

Yet even while exiting unregulated markets, FirstEnergy has pleaded for financial lifelines from regulators that the company said would allow its plants to stay open under new ownership. Ohio lawmakers largely ignored its pleas for a bailout amid opposition from an alliance of consumer advocates, environmentalists and manufacturing interests.

 

The company has argued that consumers should be made to compensate coal and nuclear plant operators for making the power grid more reliable, during winter months especially, and for providing diversity to the country's power supply.

 

Rebuffed by state lawmakers, FirstEnergy last week turned to the Energy Department with an application that, if granted, would obligate grid operator PJM Interconnection LLC to negotiate new contracts treating nuclear and coal plants as regulated assets and guarantee that their costs could be recovered from ratepayers.

 

First Energy Solutions has hired law firm Akin Gump Strauss Hauer & Feld LLP, turnaround firm Alvarez & Marsal North America, LLC and financial adviser Lazard Ltd. to guide it through bankruptcy. Judge Alan M. Koschik is handling the bankruptcy case, docket number 18-50757.

 

Write to Andrew Scurria at Andrew.Scurria@wsj.com and Becky Yerak at becky.yerak@wsj.com

 

Source:http://news.morningstar.com/all/dow-jones/us-markets/20180401706/firstenergy-generation-units-file-for-bankruptcy-after-seeking-federal-bailout.aspx

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