Bicent Holdings LLC can send its reorganization plan to creditors for a vote.
Chief Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware in Wilmington on June 8 signed an order approving the amended disclosure statement for the Lafayette, Colo., electricity producer.
A confirmation hearing for the related reorganization plan is scheduled for July 30.
Bicent's amended plan, filed June 8, would hand substantially all Bicent's existing equity to its first-lien lenders.
Holders of administrative claims, owed about $1.5 million, would be paid in cash on the effective date of the plan.
Holders of first-lien secured claims would receive a pro rata share of 95% of Bicent's reorganized common equity on the effective date for a recovery of roughly 38.3% to 60.4% on their prepetition debt.
Barclays Bank plc is agent on the first-lien debt. The debt comprises letters of credit -- subsequently rolled up into the debtor's $57 million postpetition financing -- a $330 million term loan with $117.1 million outstanding, a $30 million revolver with $16.4 million outstanding and $13.8 million in reimbursement obligations. The debt, issued on July 10, 2007, matures on July 30, 2014.
The $57 million debtor-in-possession loan from the first-lien lenders, in addition to containing a $32 million synthetic letter-of-credit facility, which replaced the debtor's $31.6 million in outstanding letters of credit, also has a new-money $25 million term loan.
First-lien lenders GSO Capital Partners LP and Strategic Value Partners LLC, which have agreed to backstop an exit financing that could refinance the DIP, will receive the remaining 5% of new common shares as a fee. Court papers did not reveal whether an exit financing has been finalized.
Second-lien lenders, meanwhile, would receive a pro rata share of $1.5 million in cash and warrants for new shares for an approximate 4.4% recovery on their claims.
U.S. Bank NA is collateral and administrative agent on the second-lien debt, issued on July 10, 2007, and maturing on Dec. 31, 2014. The second-lien lenders are owed $128.5 million plus interest.
All outstanding first- and second-lien agent fee claims would be paid in cash on the effective date.
Priority tax ($930,541) and other secured creditors ($41,740) would be paid in cash no later than 30 days after the effective date.
Mezzanine creditors led by Barclays, owed $65.62 million on a credit agreement due June 30, 2015, would not receive any recovery under the plan.
General unsecured creditors, owed $25.37 million, also would be wiped out.
Equity interests in Bicent Holdings and three of its debtor affiliates would be wiped out, but Bicent would retain the equity interests in its other subsidiaries.
Negotiations with first-lien lenders began in late 2011 and spread to include second-lien lenders in March. The debtor and more than two-thirds of both first- and second-lien lenders executed a restructuring support agreement, or RSA, on April 18, court papers show. Bicent said it anticipated emerging from bankruptcy protection as soon as August.
Bicent filed for Chapter 11 protection on April 23 with 12 affiliates. The cases are jointly administered.
The portfolio company of private equity firm Natural Gas Partners operates two electric power generating facilities in Lathrop, Calif., and Hardin, Mont., which together produce more than 168 megawatts of energy. The Lathrop natural gas-fired plant produces 48 MW, while the Hardin plant, located outside of Billings, Mont., produces 120 MW and is one of the cleanest-burning coal-fired plants in operation due to a new distributed control system, Bicent said.
Nondebtor affiliates produce 237 MW of power at two natural gas-fired plants in Brush, Colo. Bicent could move to sell the plants during its bankruptcy, with any proceeds going to first-lien lenders, although it has yet to do so.
Bicent sells the capacity and energy generated by the plants, which continue to operate, under power purchase and sale agreements.
According to a declaration filed by CFO Christopher Ryan, Bicent filed for Chapter 11 because of "a series of unexpected and unforeseen events," which left it unable to meet covenants in its credit agreements or refinance its debt, a portion of which matures in 2012.
The debtor said its loans, made when it acquired its plants in 2007, assumed the business would grow and capital markets remain stable, allowing for the debt to be refinanced. In addition, a drop in natural gas prices by 60% to 70% from June 2007 to April 2012 reduced the value of Bicent's collateral -- its plants -- as they have a lower potential future earnings capacity.
Finally, an arbitration loss by Bicent unit Colorado Energy Management LLC related to the completion of a New Mexico power plant resulted in a loss of more than $50 million in cash flow.
Bicent ultimately defaulted on its first-lien debt on Dec. 31 and its second-lien debt on March 30. It entered a forbearance agreement with first-lien lenders Feb. 24 following negotiations, but second-lien lenders accelerated the debt on April 6.
In court papers, Bicent listed no assets or liabilities, but indirect subsidiary Bicent Power LLC listed $7.02 million in assets and $308.1 million in liabilities.
Affiliates of Natural Gas Partners indirectly own 87.07% of Bicent.
Joel Waite and Pauline K. Morgan of Young Conaway Stargatt & Taylor LLP are debtor counsel. Brian S. Hermann and Samuel E. Lovett of Paul, Weiss, Rifkind, Wharton & Garrison LLP are special corporate and transactions counsel for Bicent.
Moelis & Co. LLC is the company's financial adviser and investment banker.
Albert A. Pisa, Abhilash M. Raval and Michael E. Comerford of Milbank, Tweed, Hadley & McCloy LLP represent first-lien agent Barclays. RPA Advisors LLC is financial adviser for the lender.
Andrew Goldman of Wilmer Cutler Pickering Hale and Dorr LLP is counsel to second-lien agent U.S. Bank.