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Merchant Generator Enters Restructuring Agreement Ahead Of Prepackaged Bankruptcy Filing

June 12,2018



New MACH Gen, LLC ("NMG" or the "Company") announced that it and certain of its subsidiaries have entered into a Restructuring Support Agreement ("RSA") with its first lien lender and its equity owner. The transactions contemplated by the RSA, as further described below, will reduce NMG's overall indebtedness, result in the extension of additional credit to NMG from its equity owner, and align NMG's balance sheet with anticipated future financial performance, the company said

NMG owns and manages a portfolio of three natural gas-fired electric generating facilities located in the United States: (1) a 1,080 MW facility located in Athens, New York, that achieved commercial operation on May 5, 2004; (2) a 1,092 MW facility (Harquahala) located in Maricopa County, Arizona, that achieved commercial operation on September 11, 2004; and (3) a 360 MW facility, located in Charlton, Massachusetts, that achieved commercial operation on April 12, 2001.

The RSA contemplates that the restructuring will be implemented through a voluntary prepackaged plan of reorganization filed under Chapter 11 of the U.S. Bankruptcy Code in Delaware. The Company is working closely with its suppliers and business partners to ensure its business continues uninterrupted. During the pendency of its reorganization proceedings, the Company expects to continue to meet all its third-party obligations. The Company anticipates completion of its restructuring quickly and efficiently, with emergence from bankruptcy expected in the second half of 2018. The transactions contemplated by the RSA are subject to required regulatory approvals (including from the Federal Energy Regulatory Commission (the "FERC")), confirmation of NMG's proposed plan of reorganization by the bankruptcy court, and the satisfaction of other typical closing conditions.

"Since taking over management of the Company in June 2017, CEO Dale Lebsack and I have made it a priority to partner with our lender and equity owner to improve our capital structure," said John Chesser, Chief Financial Officer of NMG. "The Company's existing balance sheet assumed higher capacity payments and higher margins from our three assets, but poorer-than-expected results delivered lower cash flows, impeding our ability to service debt. The Company and its advisors have worked closely with its first lien lender to consensually restructure its credit facility. We're pleased to announce that we've reached a mutually-agreeable plan to restructure our balance sheet, providing for a continued path forward as markets recover."

Under the terms of the RSA, subject to the approvals and conditions noted above, (1) NMG will transfer its interest in the Harquahala facility to its first lien lender in exchange for a reduction of its indebtedness under its refinanced first lien credit facility, (2) the first lien credit facility will be refinanced to modify its economic terms and extend its maturity to 2023, and (3) NMG's equity owner will provide additional new financing to NMG. The restructuring is expected to result in a balance sheet aligned with NMG's anticipated future financial performance.

NAES will continue to support the Company's operations during the bankruptcy proceedings. NAES is a leading, independent services company dedicated to optimizing the performance of energy facilities across the power generation, oil & gas, and petrochemical industries.

Tags:
New MACH Gen   Finance   M&A  

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