Ralph R. Mabey, trustee in the Chapter 11 bankruptcy proceedings of Cajun Electric Power Co-op., has entered into an amended asset-purchase agreement with Louisiana Generating LLC for the purchase of Cajun's nonnuclear assets. Louisiana Generating LLC is the joint-venture affiliate of NRG Energy, Inc. and Zeigler Coal Holding Co.
The NRG/Zeigler bid was selected in April, but on July 15, the bankruptcy court rejected the plan's buyer-protection provisions. Mabey believes the amended agreement addresses the concerns of the court and other bidders, while providing a new wholesale electric rate to co-op members, which should help force a consensus. Most of Cajun's members prefer a reorganization plan proposed by Southwestern Public Service Co.
Mabey noted that the amended buyer protections would not prevent him from facilitating negotiations among competing parties, soliciting new bids, or amending the plan once consensus is reached. The revised agreement calls for acquiring Cajun's assets for $1.09 billion, and lowering the co-op's average wholesale electric rate from 4.32 to 4 cents per kilowatt-hour (¢/Kwh).
The SWEPCO proposal offers to acquire Cajun's assets for $405 million. In contrast to the NRG/Zeigler plan, Cajun would cease to exist. The initial wholesale rate to members would be slightly under 4¢/Kwh and members would make future payments to the Rural Utilities Service (em Cajun's largest creditor (em based on projected growth and equipment reliability.
The bankruptcy court has scheduled reorganization plan confirmation hearings for mid-December.
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