The U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division has approved National Energy & Gas Transmission Inc.’s (NEGT) plan of reorganization, paving the way for the power generation, marketing and pipeline company to emerge from bankruptcy in the next couple months. The company expects the plan to become effective by the end of May or early June.

NEGT will issue to its unsecured creditors 100% of the equity of the reorganized company, $1 billion in notes, and cash. In addition, it will become unaffiliated with PG&E Corp., which will no longer have any equity interest in the company. NEGT’s creditors, a diversified group of banks and bondholders, will become the new equity holders.

“Our restructuring efforts focused on maximizing the value of the company’s strong-performing assets while facilitating an orderly negotiation among creditors,” said NEGT CEO Joseph Bondi. “The consensus among NEGT’s creditors is demonstrated by their overwhelming support for the plan of reorganization.”

Upon emergence from bankruptcy, NEGT will have a new board comprised of Bondi and Sanford L. Hartman, NEGT’s vice president and general counsel, as well as William E. Redmond Jr., Steven P. Chwiecko, James G. Ivey, Barry P. Simon and Randolph I. Thornton. The board members were selected by creditors.

NEGT, formerly called PG&E National Energy Group, voluntarily filed for protection under Chapter 11 on July 8, 2003, along with its energy trading subsidiaries and USGen New England Inc., after suffering through a series of credit rating downgrades and defaulting on several loans. NEGT’s subsidiaries own more than 4,700 MW of electric generating facilities and a 5.2% ownership in the Iroquois Gas Transmission System.

The company announced last week that it accepted a $1.703 billion bid from TransCanada Corp. to buy NEGT’s Gas Transmission Northwest Corp. (GTN), subject to bankruptcy court approval. GTN owns a 1,350-mile pipeline in the Pacific Northwest and the 80-mile North Baja system in the Southwest. An NEGT spokeswoman said TransCanada’s bid was the only one submitted (see Daily GPI, April 30).

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.