JAY – The ownership of a natural gas-fired power plant in Jay will be transferred to International Paper by March 15 along with an additional $1 million to settle $90 million in claims, Androscoggin Energy LLC attorney Bob Keach said Thursday.
The town of Jay will also get about $1 million in property taxes owed for 2004-05 as part of the bankruptcy court decision, Jay Town Manager Ruth Marden said Thursday.
The second half of the 2005-06 property taxes, about $908,140 owed to Jay, will be put in escrow pending the outcome of an abatement process or bankruptcy court decision.
A federal bankruptcy court judge affirmed a plan to give IP the Androscoggin Energy cogeneration center Wednesday, Keach said, to satisfy a jury award of $41 million, which has climbed to $50 million with interest, over a breach-of-service contract and other service contract claims.
Androscoggin Energy filed for Chapter 11 bankruptcy protection Nov. 26, 2004, after the federal jury sided with IP.
The plant, which went online in January 2000 to supply steam to IP to supplement heavy oil to operate its power boilers and to sell electricity to the power grid, has been idle since Nov. 25, 2004, with the exception of eight hours.
The company cited market conditions, senior bank debt of $67 million and about $93 million in unsecured debt, including the disputed jury award to IP, as reasons for filing for bankruptcy protection.
Androscoggin Energy had appealed the jury award and, as part of the bankruptcy court deal, it will be dropped.
Keach said Androscoggin Energy was able to reach resolution with TransCanada Corp. and Portland Natural Gas.
Keach said the bankruptcy court and abatement process will determine if Androscoggin Energy is entitled to a refund of personal property taxes assessed by the town of Jay.
Jay values the plant and its machinery and equipment at more than $116 million. But Androscoggin Energy filed an abatement application in January with Jay for its personal property valuation to be reduced by $26 million from its assessed $108 million.
Keach said the company will seek further reduction on its personal property taxes through the bankruptcy court for both the 2005 and 2006 assessments.
He said the company believes the equipment should be reduced in value to about $10 million for each year.
Creditors connected to the $93 million in unsecured debt are expected to get between 35 cents to 40 cents on the dollar, Keach said, or more, depending on whether there is a reduction in the amount of taxes owed to Jay.
All the documents had not been signed, IP spokesman Bill Cohen said Thursday, but there is an agreement to transfer all the equipment to IP.
“What we’re going to do with all of this, once the paperwork is finalized, is still subject of internal conversations,” Cohen said. “No decisions have been made.”
John Flumerfelt, a spokesman for Calpine Corp., which owns 32.3 percent of Androscoggin Energy and operates the plant, said Thursday that Calpine will no longer operate the facility once IP takes over.
It will be up to IP to decide what will happen with the eight employees remaining at the power plant, he said.
Other owners of the plant are Wisvest Corp., 66.7 percent and IP, 1 percent.
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