Judge confirms Southern reorganization
By Clair Johnson
U.S. Bankruptcy Judge Ralph Kirscher on Friday confirmed the reorganization plan for Southern Montana Electric Generation and Transmission Cooperative, the first wholesale power cooperative in Montana to go bankrupt.
The 41-page order filed on Friday follows a hearing last week in which Kirscher gave tentative approval to Southern’s plan.
Scott Sweeney, Southern’s interim manager and general manager of Fergus Electric Cooperative, said Friday, “I’m glad we’re to this point.”
The only thing left to do, Sweeney said, is to sign some paperwork.
“Our goal is to get that done next week,” he said.
Going into last week’s hearing, Southern had negotiated agreements with its creditors. Southern had reached a settlement earlier with its noteholders, who were the secured creditors, and then worked out agreements with remaining unsecured creditors.
“I think it ended up with both the debtor and noteholders having to give a little and work together. Each side had to give a little bit and compromise a little,” Sweeney said.
In the end, Southern reached settlements with all of its creditors, he said.
The plan calls for Southern to pay its noteholders $22 million of the $85 million it borrowed to build the Highwood Generating Station, a seldom-used gas-fired plant near Great Falls.
The Highwood plant will go into a holding trust managed by the noteholders, Sweeney said. The goal is to sell the power plant.
Southern’s payments to the noteholders will be made over four years, with customer power rates held at current levels.
At the end of the period, Southern’s members, who are four rural co-ops, will be able to decide whether to stay together or disband and find other power sources for their members. Southern’s members are the Beartooth, Fergus, Tongue River and Mid-Yellowstone co-ops.
Southern, which has been buying power on the market on a monthly basis, will try to get a power contract for a three or four year period to reduce potential risks, Sweeney said.