FirstEnergy Generation has entered into a stalking horse agreement involving the sale of its West Lorain facility and associated assets to Vermillion Power, an affiliate of Starwood Energy Group Global for $144 million in cash, subject to closing adjustments.
The sale is part of a court-supervised bankruptcy auction process intended to maximize the value of the assets being sold by FirstEnergy Generation, which is in Chapter 11 as part of parent company FirstEnergy Solutions' reorganization. The company filed a motion with the U.S. Bankruptcy Court for approval of auction and bid procedures that will allow other competitive bids for the West Lorain facility and assets.
If no better bids are received, Starwood's offer will move forward. The sale is subject to regulatory approvals, including approval of the Federal Energy Regulatory Commission and Hart-Scott-Rodino. If approved, the companies expect to close the transaction in the first half of 2019. The West Lorain Facility -- a 545 MW, periodic-start, combustion-turbine generation station -- is located on 500 acres near Lake Erie in Lorain. It was built in 1973 as a combined-cycle electric generating system with two combustion turbines (Units 1A and 1B), two heat recovery steam generators, and a steam turbine generator.
In 2001, five additional combustion turbines were installed (Units 2–6) and placed in operation.
The plant currently operates on fuel oil, but is also capable of operating on natural gas. FirstEnergy Solutions' bankruptcy is proceeding in U.S. Bankruptcy Court for the Northern District of Ohio in Akron. Information can be found at https://cases.primeclerk.com/FES. Akin Gump Strauss Hauer & Feld LLP is serving as legal counsel and Lazard is serving as investment banker to FirstEnergy Solutions. King & Spalding LLP is serving as legal counsel to Starwood.