Entegra Power files for bankruptcy, to cede control to lenders
Aug 5 (Reuters) - Independent power company Entegra Power Group LLC filed a prepackaged bankruptcy and expects to emerge from Chapter 11 under the control of its junior secured lenders, according to documents in Delaware's U.S. Bankruptcy Court.
Entegra owns El Dorado, Arkansas-based Union River Power Station, which has an operating capacity of 2,100 megawatts, and Trans-Union Interstate Pipeline, a 42-mile natural gas transmission facility that supplies the station. The company is also an indirect co-owner of Gila River, a 2,334 megawatt power plant in Arizona.
The company's second-lien lenders, who are owed $237 million, are set to receive a combination of new third-year, Series A second-lien notes and cash that would be raised from new Series B second-lien notes.
Entegra's third-lien lenders will exchange their $1.3 billion in claims for $550 million in new third-lien debt and controlling ownership in the company when it emerges from bankruptcy, according to documents filed late on Monday.
A prepackaged bankruptcy can slash the amount of time a company spends in Chapter 11. Entegra is aiming to exit bankruptcy in September.
The company's current shareholders will be left with residual equity interests that are activated once third-lien lenders accumulate $1.3 billion of distributions.
All of the second-lien lenders and over two-thirds of the third-lien lenders support the restructuring plan, according to court documents.
Union and Gila were built for $2.8 billion over a decade ago by TECO Energy. The power projects were restructured in bankruptcy in 2005. (Reporting by Billy Cheung in New York; Editing by Grant McCool)