Longview Power and affiliates file for bankruptcy
Longview Power LLC, which operates a 700- megawatt coal-fired power plant in Monongalia County, W.Va., just south of the Greene County line, announced Friday that it and several of its affiliates have filed for Chapter 11 bankruptcy protection.
Longview and its affiliates, including Mepco Holdings LLC, whose Dana Mining Co. provides coal to the Longview plant, some of which is mined in Greene County, filed for bankruptcy in U.S. Bankruptcy Court in the District of Delaware.
Both Longview and Mepco intend to operate their businesses as they negotiate a Chapter 11 plan with lenders to restructure their balance sheets, the company said in a release posted on its web page.
Longview's supercritical coal-fired plant went on line in late 2011. The plant, when operating at full capacity, is one of the most efficient coal-fired plants in the country, the company said. It also has one of the lowest air emissions profiles for coal-burning power plants.
In its bankruptcy filing, Longview said the “primary driver” for the company's financial problems stem from failures by contractors that built the plant, which delayed its opening by nine months and has limited the plant's capacity.
Longview and the contractors, Siemens Energy Inc., Foster Wheeler North America Corp. and Kvaerner North American Construction, are currently in arbitration regarding the dispute, the filing said.
The company also cited depressed electricity prices since construction of the plant began in 2007, which resulted from reduced demand during the recession and low-priced natural gas.
The plant was funded by a $1 billion equity investment by First Reserve Corp, a private equity firm, and by about $1 billion in debt. About $557 million in debt matures in February, according to court documents.
“After careful consideration of available alternatives, the company determined that filing for Chapter 11 was a necessary and prudent step that allows us to strengthen and operate our businesses without interruption while continuing to restructure the company's balance sheet,” Jeffery Keffer, Longview's chief executive officer, said in the release.
“The company has been in consensual negotiations with our senior lenders toward a Chapter 11 plan to maximize value; those negotiations remain ongoing. We remain confident that the company and our lenders will reach an agreement on the terms of a Chapter 11 plan in the near term,” he said.
The 11 other affiliates listed in the filing include Shannopin Materials LLC and Dana Mining Co. of Pa. LLC, which operates the 4 West Mine near Bobtown. The company said employees will not be affected by the bankruptcy filing.
“I want to make clear that we will continue to conduct business as usual and our operations and employees will not be affected by the Chapter 11 filing,” said Jim Laurita Jr., chief executive officer of Mepco.
The company expects its initial motions will be heard by the court immediately after Labor Day. Employees should expect all payroll and benefits to continue without interruption, it said.
A company spokesman could not be reached Friday for comment.
The power plant was first proposed in late 2002. After permits were received, a process that included lengthy legal challenges from environmental groups, groundbreaking was held in May 2007.
The plant began commercial production in December 2011. At the time, most of the coal it burned was transported to the plant by a 4.5-mile conveyor belt constructed from Dana's 4 West Mine.
The plant uses water for cooling drawn from the Monongahela River and treated at a plant the company constructed near Poland Mines.
An affiliate of Dana also operates the Steele Shaft treatment plant at the former Shannopin Mine in Bobtown, which Dana has used to remove water from closed Pittsburgh-seam mines in southeastern Greene County. Removing the water has allowed Dana to mine the Sewickley seam coal which is above the Pittsburgh seam in those areas.