BY Fraser Tennant
In a move designed to improve the viability of its operations and restructure more than $1bn of debt, power generator FirstEnergy Solutions (FES) has filed for voluntary petitions under Chapter 11 of the Federal Bankruptcy Code.
The filing by FES with the US Bankruptcy Court in the Northern District of Ohio also includes FirstEnergy Nuclear Operating Company (FENOC) which, like FES, is a subsidiary of parent company FirstEnergy Corp. However, FirstEnergy Corp. and its other subsidiaries are not part of the Chapter 11 process.
"The six million customers of our regulated utilities will continue to receive the same reliable service, while our regulated generation facilities will continue normal operations, with the same longstanding commitment to safety and the environment,” said Charles E. Jones, president and chief executive of FirstEnergy Corp. “We will remain focused on creating long-term value for customers, employees and shareholders."
Collectively, Chapter 11 filers FES and FENOC own and operate two coal-fired plants, one dual fuel gas/oil plant, one pet-coke fired plant and three nuclear power plants in the competitive, or non-regulated, power-generation industry. Furthermore, FES and FENOC believe that the $550m-plus they have is sufficient liquidity to continue normal operations and meet post-petition obligations to employees, suppliers and customers.
In addition, FES has stated that it will continue seeking legislative and regulatory relief at the state and federal level. The relief is being sought under Section 202(c) of the Federal Power Act, which gives the secretary extraordinary powers to address emergencies.
"Given the prospective timing of federal and state review and our ongoing cash needs and debt service obligations, the FES and FENOC boards of directors determined that the Chapter 11 filing represents our best path forward as we continue to pursue opportunities for restructuring, asset sales and legislative and regulatory relief,” said Donald R. Schneider, President of FES.
Serving as legal counsel to FES and FENOC is Akin Gump Strauss Hauer & Feld LLP. Lazard Freres & Co. is serving as investment banker and Alvarez & Marsal North America, LLC is serving as restructuring adviser. Chief restructuring officer for both entities is Charles Moore.
Mr Schneider concluded: “We believe that the decision to facilitate an orderly financial restructuring under Chapter 11 will best serve our customers, employees and business partners."