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October 16, 2018 – NRG REMA (“NRG REMA” or the “Company”) and 64 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 18-35808. In its Chapter 11 petition, the Company stated that it will seek joint administration with GenOn Energy, Inc. (“GenOn,” of which it is an indirect, wholly-owned subsidiary) and its affiliates’ jointly administered cases filed with the same Court on June 14, 2017 (Case No. 17-33695). The Chapter 11 filings are part of the Company’s efforts to implement the prepackaged chapter 11 plan of reorganization announced on October 11, 2018. NRG REMA is represented by Zack A. Clement of Zack A. Clement PLLC. Further board-authorized engagements include Kirkland & Ellis as Company counsel; Akin Gump as counsel to the governance committee of the board of directors; Rothschild Inc. as the Company’s financial advisor and investment banker; and Alvarez & Marsal as restructuring advisor. NRG REMA’s petition notes between 1,000 and 5,000 creditors; estimated assets between $500 million and $1 billion; and estimated liabilities between $1 billion and $10 billion.
In a press release announcing the filing, the Company noted “The Plan is supported by REMA, the independent directors of GenOn (who are advised by independent advisors), the independent directors of REMA (who are advised by independent advisors), more than 90% of holders of those certain Series C Pass-Through Trust Certificates due 2026, Public Service Enterprise Group and the steering committee of GenOn noteholders. REMA intends to complete its restructuring during the fourth quarter of 2018 and have petitioned the court for a November 1, 2018 confirmation hearing.”
In an 8-K filed with the SEC on October 2, 2018, GenOn announced that NRG REMA had entered into a pair of RSAs (with “PSEG” and “PTC Holders,” respectively) relating to the implementation of restructuring and related transactions with respect to NRG REMA’s indebtedness (the “Restructuring Transactions”), including its obligations under REMA’s leveraged lease agreements and tax Indemnity agreements relating to certain Series C pass-through certificates due 2026 (the “PTCs”) and that those restructuring transactions would be implemented either on an out-of-court basis or an in-court, Chapter 11 basis. That choice has now been made. In its 8-K, GenOn noted, “The Restructuring Transactions represent a global resolution of REMA’s obligations under the Facility Leases, and are supported by REMA’s key third-party and affiliate stakeholders, including PSEG and more than 90% of PTC holders, the disinterested directors of GenOn, and the Steering Committee of GenOn noteholders, which noteholders were restricted, participated in settlement negotiations directly and through their advisors, and support the Restructuring Transactions on the terms outlined herein. The Restructuring Transactions are expected to utilize $109 million of REMA’s cash-on-hand to settle third-party Keystone and Conemaugh lease rejection and tax indemnity claims and as consideration for amendments to the Shawville facility lease. GenOn will retain a 100% ownership of REMA, comprising a total of 1,733 megawatts of gas and oil-fired generating capacity located in the PJM Interconnection, LLC market. Other creditors will be unimpaired. The REMA portfolio continues to include existing non-leased assets and Shawville leasehold interest. Additionally, the Restructuring Transactions implement amendments to the Shawville facility lease, which amendments management believes will enhance the lessee’s flexibility to monetize some or all of the portfolio and/or renew the lease upon expiration in 2026, without modifications to the cash rent obligations. The Restructuring Transactions are expected to be implemented prior to the outside date of December 1, 2018, subject to extension for regulatory purposes.”
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