Constellation Is Successful Bidder For Boston Generating Assets
November 15 2010 - 4:33PM
Dow Jones News
Boston Generating said Monday that Constellation Energy Group
Inc. (CEG) is the winning bidder for its assets, setting the stage
for a bankruptcy judge to decide later this week whether to approve
the transaction.
Boston Generating auctioned the assets in front of a special
committee, with Constellation's $1.1 billion bid winning, according
to court papers. Boston Generating filed for Chapter 11 protection
in U.S. Bankruptcy Court in Manhattan in August with the
Constellation sale in place, subject to higher bids at the
auction.
In addition to Constellation, Short Hills, N.J.-based Energy
Capital Partners made a preliminary bid, according to a partially
redacted court filing made by Boston Generating earlier Monday. An
Energy Capital spokesman didn't immediately respond to a request
for comment.
A second group that submitted a preliminary bid was a group of
Boston Generating's second-lien lenders, including CarVal Investors
LLC and Fortress Investment Group (FIG).
Those two have previously come out against the sale, and the
official committee of unsecured creditors have called nonsenior
lenders victims of "a fire sale of a fundamentally healthy
company.
The initial Constellation deal would likely provide the
company's senior lenders with close to a full recovery but would
wipe out more junior creditors. Lawyers for CarVal and Fortress
didn't immediately respond to a request for comment.
Court papers containing the preliminary bidding information were
partly redacted. However, when the papers were saved to a
word-processing program, the redactions disappeared.
Representatives of Constellation and Boston Generating didn't
immediately respond to a request for comment.
In the earlier Monday court filing, the company struck back at
creditors trying to halt a sale of its assets, saying second-lien
lenders have waged "unwarranted attacks" on the utility's business
judgment.
Boston Generating said its sale process--both before and after
filing for bankruptcy protection--was appropriate and
"well-managed," and that it has discussed with the objecting
lenders its alternatives if a sale isn't concluded by 2011.
In the filing, Boston Generating said J.P. Morgan Chase &
Co. (JPM) contacted 242 potential bidders as part of the
post-bankruptcy filing sales process, and by Saturday only one
acceptable bid existed.
To creditors' arguments that the company should file a plan to
reorganize itself in bankruptcy court, Boston Generating said,
"There is no evidence to suggest that a plan of reorganization can
be fully negotiated and completed before the debtors run out of
cash in 2011."
Boston Generating added that it probably wouldn't be able to get
a favorable debtor-in-possession loan if it tried to reorganize
outside of a sale.
Judge Shelley C. Chapman of U.S. Bankruptcy Court in Manhattan
approved the rules governing the auction back in September, but
said she could revisit the matter to decide whether a sale itself
showed sound business judgment. The sale hearing is scheduled for
Wednesday.
--By Joseph Checkler; Dow Jones Newswires; 212-416-2152;
joseph.checkler@dowjones.com
--Patrick Fitzgerald contributed to this article.
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