New York City, August 19, 2010 — EBG Holdings LLC, a wholly-owned and indirect unit of US Power Generating Co., its principal operating subsidiary Boston Generating and its five other wholly owned units filed a voluntary petition under Chapter 11.
Additionally, as part of the filing, the company is seeking a sale of its assets pursuant to Section 363 of the U.S. Bankruptcy Code.
As previously announced on August 9, 2010, Constellation Energy was selected as the stalking horse bidder for the 2,950 MW fleet, the third largest power-generating portfolio in the New England region.
Constellation Energy signed an asset purchase agreement for about $1.1 billion. The proposed transaction is expected to be consummated through the bankruptcy proceedings, in which Constellation Energy’s bid is considered the price to be beat in an asset auction.
The company hopes to complete the sale process in 120 days or less, to minimize any disruption to its business.
The majority of the creditors of BostonGen‘s $1.1 billion first-lien term bank loan, its $250 million first-lien synthetic letter of credit and its $70 million first-lien revolving credit facility have signed a sales support agreement.
The company intends to continue its business operations throughout the administration of the bankruptcy case and has filed a series of first-day motions in the bankruptcy court, seeking to ensure that there will be no material disruption to its operations during the bankruptcy process and that it will exit the proceedings through a sale as a going concern.
Current management will remain in place throughout the process, ensuring that there will be no reliability issues and that the community that relies on the power generated by BostonGen will not be impacted.
Mark Sudbey, CEO of USPowerGen said, “BostonGen is a solid operation. The purpose of these actions, as well as those we have taken over the past several months, is to maximize the value of the business for creditors and to provide a stable working environment for our employees. We will continue to support the communities we serve with uninterrupted power generation. I am confident that these actions will position the assets for long term success.”
The company has the requisite funding in hand to operate in Chapter 11 and with the consent of its first-lien lenders will use cash generated from continuing operations to meet its working capital needs during the bankruptcy process.
USPowerGen, through its subsidiaries Astoria Generating Co. Holdings, L.L.C. and EBG Holdings LLC, owns and operates eight power generation facilities with a total capacity of over 5,000 MW.
These subsidiaries sell their energy and capacity into the NYISO and ISO-New England deregulated markets, representing generation sufficient to serve about 20 percent of the overall load in New York City as well as about 50 percent of the overall load in the Boston metropolitan area.