JAY – Androscoggin Energy LLC is proposing to sell its power plant to International Paper in a bankruptcy court deal that would settle the paper company’s complaint against owners of the natural gas-fired cogeneration center.
The deal still needs to be approved by a U.S. Bankruptcy Court judge in Bangor, said Bob Keach, an attorney for Androscoggin Energy, on Friday.
Androscoggin Energy filed for Chapter 11 bankruptcy protection Nov. 26, 2004, after a federal jury in Chicago awarded IP $41 million in a breach of services suit against the power plant owners.
The plant has been idle since Nov. 25, 2004, with the exception of eight hours.
The company filed for bankruptcy protection for a number of reasons, Michael Fagone, an attorney for Androscoggin Energy, said in February 2005. Those reasons included market conditions and Androscoggin Energy’s senior bank debt of about $67 million and $92 million in unsecured debt, which includes a disputed jury award to IP over steam supply.
If the deal is approved, Keach said the cogeneration center would be sold to IP to satisfy about $89 million in claims the paper company has against Androscoggin Energy.
The $41 million jury award is now about $50 million with interest, he said, and there are energy services contract claims.
Androscoggin Energy had appealed the $41 million jury award. If the court approves the deal with IP on Feb. 14 in Bangor, Keach said, Androscoggin Energy would drop its appeal.
There are about $200 million in additional disputed claims filed by other utility companies against Androscoggin Energy, which is owned 66.7 percent by Wisvest Corp. 32.3 percent by Calpine Corp. and 1 percent by IP.
But Keach said the claims are closer to $40 million. If things work out, creditors would get up to 40 cents on a dollar, which is good for a bankruptcy case, Keach said.
Androscoggin Energy plans to liquidate, he said.
IP spokesman Bill Cohen said Thursday that he was not able to comment on a case in litigation, but there are proceedings going on. An attorney for IP, John McVeigh, was not available for comment.
The power plant was built in the late 1990s and went on line in January 2000 with the intention of selling steam to IP to supplant its reliance on heavy oil to run its power boilers and selling electricity to the power grid. IP filed the lawsuit over breach of services contract in October 2000.
The town of Jay values the plant and its machinery and equipment at more than $116 million, although Androscoggin Energy has asked for $26 million in valuation to be removed from its assessed $108 million personal property.
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