AES Power Direct LLC, a retail electric provider, completed itspurchase of the entire stock of bankrupt marketer Titan Energy Inc.of Toronto for an estimated $6 million in cash last Thursday aftera bankruptcy judge in Georgia authorized the sale earlier in theweek.

In a 16-page order issued last Tuesday, Judge W. Homer Drake ofthe U.S. Bankruptcy Court for the Northern District of Georgiadirected AES Power Direct, a subsidiary of AES Corp. in Arlington,VA, to close its transaction with Titan Energy by no later thanThursday afternoon so it could begin to “promptly cure anydefaults” of the natural gas marketer, which sought Chapter 11protection on July 1.

The order requires AES Power to immediately pay off TitanEnergy’s principal creditors, establish an escrow to take care ofother creditors, surrender Titan’s Georgia marketing certificate tothe Georgia Public Service Commission, and to notify Titan Energy’sgas customers in Ohio that the company has been restructured.

Some of Titan Energy’s biggest energy-related creditors were:Duke Energy’s DukeSolutions (to be paid $6 million), Columbia GasTransmission ($1.7 million), Columbia Gas of Ohio ($28,000 per daysince July 1), Columbia Gas of Pennsylvania (amount not specified),Peoples Natural Gas (amount not specified), Cincinnati Gas &Electric ($56,246), Pacific Gas and Electric (amount notspecified), California Polar Power Brokers ($146,843), WashingtonGas & Light ($2,283 per day since July 1), Coenergy Trading Co.($1.675 million plus $400,000 for gas storage), Utiliread Inc.(about $341,000), Atlanta Gas Light ($468,000), and Alliance GasServices ($456,207). Nearly all of the major creditors signed offon AES Power’s acquisition of Titan Energy, as well as the OhioConsumers Counsel, the Pennsylvania Consumer Advocate Office andthe Ohio Public Utilities Commission.

In addition, the order called for AES Power Direct to allot”sufficient funds” for Titan Energy to quickly resume supplying gasto its remaining 91,000 gas customers in the Ohio and Pennsylvaniamarkets. Titan Energy of Georgia, a subsidiary of Titan Energy, had50,000 customers in Georgia, but they were purchased in early Julyby Energy America, a joint venture between Sempra Energy and DirectEnergy Marketing of Canada. Titan also has a small cadre of gascustomers in Virginia, Maryland and California.

Titan Energy cut off service to its customers in Ohio andPennsylvania on July 1, forcing Columbia Gas of Ohio, Columbia Gasof Pennsylvania and Cincinnati Gas and Electric to step in andsupply gas to customers being served under the choice programs.

Titan Energy sought Chapter 11 bankruptcy protection after itswholesale gas supplier, DukeSolutions, filed a lawsuit against thegas marketer in federal court in Houston, accusing it of breach ofcontract. DukeSolutions estimated Titan Energy owed it $10 million.

Judge Drake’s order contemplates that Titan Energy under theownership of AES Power will emerge from bankruptcy shortly, said alawyer who attended last Tuesday’s hearing.

AES Power President Mead Babcock said the company bought TitanEnergy because it would give AES Power, whose experience has beenlimited to the retail electric market, access to retail gascustomers in two prime markets – Ohio and Pennsylvania. The McLean,VA-based retail energy company, which started up a year ago,currently provides electricity to retail customers in New Jerseyand eastern Pennsylvania.

He said the gas marketer, which will be a subsidiary of AESPower, will continue to operate under the name of Titan Energy, atleast for the short term. “In the long term, it’s yet to bedetermined.” Babcock was unable to predict what changes, if any,would be made to the company. “It’s been a very fast-movingtransaction. We’ll get into a transition period very shortly, anddecide where we go from here.” He doesn’t anticipate any changes toTitan Energy’s management. “Part of the acquisition is that we’regetting the talents, the abilities and the experience of the peoplethere.”

Susan Parker

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.