NGI The Weekly Gas Market Report
NGI Archives | NGI All News Access
PG&E Merchant Energy Unit Gets Lender Reprieve on Two Power Plants
In a reprise of action two months ago, PG&E Corp.’s financially struggling National Energy Group (NEG) announced late last Thursday that it agreed with lenders to provide funding for two of the merchant energy developer’s new electric generating plants — the 840 MW natural gas/fuel oil-fired Lake Road plant in Connecticut and 1,121 MW gas-fired, combined cycle La Paloma unit in California.
As part of its continuing efforts to restructure debt and shore up its sagging liquidity, NEG said the latest funds will allow LA Paloma in the southern end of the state’s central valley near Bakersfield to be completed, provide additional working capital facilities enabling both projects to continue to buy fuel and other services and support collateral that may be required by their natural gas transportation suppliers. Citibank N.A. is the administrative agent for each group of lenders.
“Subsidiaries of NEG will continue to manage the completion of construction of La Paloma, provide operating services to both projects, and provide energy management services,” the merchant energy unit said in a written announcement on the new funding arrangement.
NEG said that the agreement requires that each facility be transferred to its lenders or their designees on or before June 8, 2003, and the funding is without “further recourse to NEG.” PG&E’s merchant energy unit also is required to work with the lenders “to replace its energy trading entity as the energy management services provider.”
The Lake Road plant in Connecticut started operations selling into the New England market last June. La Paloma is scheduled to begin operations some time in the first half of 2003.
Complicating all of NEG’s work to restructure debt, sell assets and reorganize its operations is the fact that it has defaulted on several of its major credit agreements as a result of failing to repay $431 million under its revolving credit facilities that matured Nov. 21, 2002, and failing to make various interest payments. “These payment defaults have created cross-defaults under various loan facilities, including the Lake Road and La Paloma facilities,” NEG said in its announcement, noting also that the abandonment, sale or transfer of both Lake Road and La Paloma could eventually be part of a so-called “global debt restructuring” that the company has been working on since the summer.
Â©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |