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FirstEnergy Solutions – Requests Court Approval of “Milestone” Comprehensive Settlement Agreement

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August 26, 2018 – FirstEnergy Solutions (“FES”) requested Court approval of a settlement agreement [Docket No. 1224] by and among (i) the Debtors, (ii) FirstEnergy Corp. (“FE Corp.”) and its affiliates and subsidiaries other than the Debtors (collectively with FE Corp., the “FE Non-Debtor Parties”), (iii) the ad hoc noteholders group, (iv) the Bruce Mansfield Certificate Holders Group and (v) the Official Committee of Unsecured Creditors (the “Committee”) that would address all potential claims among the settling parties and other creditors of FES and FENOC (“the Settlement Agreement”). The motion requesting approval explains, “The Settlement Agreement represents a critical milestone in these chapter 11 cases as it resolves a material aspect of the Debtors’ restructuring, maximizes value for the Debtors’ estates and establishes the cornerstone on which the Debtors and their stakeholders can build a reorganization plan and eventually exit from chapter 11….The Settlement Agreement sets forth an integrated and comprehensive set of obligations and covenants among the Settlement Parties in consideration for narrowly tailored releases of the claims and causes of action that the Debtors and their creditors could potentially bring against the FE Non-Debtor Released Parties. In particular, the Settlement Agreement provides that the FE Non-Debtor Parties will contribute significant value to the Debtors’ estates in the form of more than $1.1 billion in cash and debt instruments, comprehensive waivers of secured and unsecured claims, and the provision of ongoing Shared Services (as defined herein), and tax and workforce support through the Debtors’ chapter 11 cases. Among the primary benefits being received by the Debtors’ estates are: $225 million in cash, not subject to setoff or reduction; $628 million in principal amount of new unsecured notes issued by FE Corp.; the value of the Pleasants Power Plant (presently owned by an FE Non-Debtor Party with a book value of approximately $70 million), which will be provided to the Debtors either through the transfer of ownership of the plant or through the contribution of the net cash proceeds of the sale of such plant by the FE Non-Debtor Parties, as well as the FE Non-Debtor Parties paying of up to $18.0 million of the costs associated with an upcoming maintenance outage; the continued provision of Shared Services by the FE Non-Debtor Parties to the Debtors, along with a credit of up to $112.5 million for postpetition costs for such services; the payment of certain substantial employee and retiree obligations that would otherwise be borne by the Debtors; the continued performance by the FE Non-Debtor Parties under the existing intercompany tax allocation agreement for all periods or portions thereof ending on or before the Plan Effective Date, including (i) a guaranteed purchase of at least $66 million in value of the Debtors’ tax attributes for tax year 2018, (ii) the waiver of certain overpayments to the Debtors for tax year 2017 and (iii) the reversal of a March 2018 prepayment for certain of the Debtors’ tax attributes which prepayment offsets the Debtors’ Non-Utility Money Pool balance; and the waiver of all prepetition claims the FE Non-Debtor Parties may have against the Debtors, as well as the waiver of certain postpetition administrative expense claims.” The Court scheduled a September 25, 2018 hearing to consider the motion.

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The post FirstEnergy Solutions – Requests Court Approval of “Milestone” Comprehensive Settlement Agreement appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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