Defaults

Aquila Inc. last week said that its near-term liquidity won’t be affected as a result of MEP Pleasant Hill LLC’s defaulting on $270 million of construction loans that were used to fund construction of a 580 MW, gas-fired combined cycle power plant located near Pleasant Hill, MO. Aquila holds a 50% interest in MEP Pleasant Hill.

Adding to the company’s current troubles, Mirant announced Friday that its Mirant Americas Generation LLC (MAG) subsidiary received on June 6 a notice of default on credit facilities from Lehman Brothers Commercial Paper Inc. The company also said that it is actively “seeking acceptances” from its bank lenders of the proposed pre-packaged Chapter 11 reorganization plan, which was sent out earlier this month as a worst-case alternative to its debt restructuring proposal (see NGI, June 9).

Adding to the company’s current troubles, Mirant announced Friday that its Mirant Americas Generation LLC (MAG) subsidiary received on June 6 a notice of default on credit facilities from Lehman Brothers Commercial Paper Inc. The company also said that it is actively “seeking acceptances” from its bank lenders of the proposed pre-packaged Chapter 11 reorganization plan, which was sent out earlier this month as a worst-case alternative to its debt restructuring proposal (see Power Market Today, June 3).

Shares of Allegheny Energy Inc. were off by more than an eye-popping 50% at one point last Tuesday after the company said that it is in technical default under its principal credit agreements and those of its subsidiaries, Allegheny Energy Supply Company LLC and Allegheny Generating Co., after it declined to post additional collateral in favor of several trading counterparties.

As Pacific Gas & Electric Co. announced Friday it wasdefaulting on payments to power generators, the state of Californiawas issuing an RFP to bankers for a plan to issue bonds to raise upto $10 billion to finance power purchases for the PG&E utilityand SoCal Edison. The banks have until Wednesday to respond.

Unseasonally high natural gas prices have narrowed margins andcaused defaults by unhedged marketer customers, resulting in a$24.4 million second quarter loss for MCN Energy Group’s energymarketing division.

Unseasonally high natural gas prices have narrowed margins andcaused defaults by unhedged marketer customers, resulting in a$24.4 million second quarter loss for MCN Energy Group’s energymarketing division.

After power price spikes, contract defaults and costly supplydeals cost Cinergy $73 million in July, the company said it wasseriously considering quiting the supply business altogether. (SeeDaily GPI, Aug. 9, Aug. 11, and Aug.13) But CEO James E. Rogerssaid yesterday the company’s board of directors has unanimouslydecided Cinergy should stick with it as the industry moves to acompetitive environment.

Coho Energy was notified by its lenders last week that it wasin default on an $89.6 million over-balance. The company failed tomake the first of five scheduled payments on the balance, whichresulted from an overall $239.6 million debt. The lenders reservedall rights, remedies and privileges as a result of the paymentdefault, but Coho said it expects to continue to discuss afinancing alternative with the bank group.