New plan filed in Southern bankruptcy - Court grants motion to expedite
On April 21, Southern Montana Electric Generation and Transmission Cooperative (Southern) filed in U.S. Bankruptcy Court a plan for reorganization. Malcolm Goodrich, counsel for Southern, requested an expedited process for confirming the plan.
The plan follows an agreement between Southern and its primary secured creditors, collectively referred to as the Noteholders, that was announced last month. Southern, its four member co-ops, and the Noteholders who provided financing for the Highwood Generating Station located near Great Falls, reached the settlement after mediation and extended negotiations.
Southern declared bankruptcy in October of 2011 with debt that included construction loans for the Highwood Generating Station, and monthly revenue shortfall of $1-2 million for purchase of excess power. Over the next two years, bankruptcy proceedings led to a reorganization plan filed by the court-appointed Southern trustee. With the four remaining member co-ops unanimously opposed to the trustee’s plan, the court removed the trustee in December 2013.
The new reorganization plan proposes to restructure the Noteholder debt. Southern would pay $21 million over four years. In addition to the restructured note, a trust will be formed to dispose of the Highwood Generating Station with the proceeds going to the Noteholders. Details of the restructured note and the trust are expected in supplemental filings.
“The judge granted Southern’s motion to expedite the hearing on the plan,” commented Arleen Boyd, a Beartooth board member who also sits on the board of Southern. “Although anything can happen, and parties can object, it is possible this plan could be confirmed by the end of May,” Boyd added.
The plan provides that Beartooth may terminate its membership in Southern and its all-requirements contract by paying a portion of the restructured note and upon other, yet-to-be determined terms agreed to between the other three member co-ops and Beartooth.
Beartooth’s board chairwoman, Roxie Melton stated, “This has been a long process and there is still a lot of work to do to protect the interests of our members today and in the future. Negotiations for a possible exit from Southern are currently underway.”