Reliant Energy agrees to sell Channelview Cogeneration plant for $468 million

By Caroline Salls

Pittsburgh, Feb. 25 - Reliant Energy has agreed to sell its Channelview Cogeneration Plant and related contracts to an affiliate of Kelson Energy for $468 million, according to a company news release.

Reliant said the sale is expected to provide value to Reliant Energy for its equity interest in the project and to resolve the Chapter 11 bankruptcy proceedings of four subsidiaries related to the Channelview plant.

Specifically, sale proceeds will be used to settle the claims of secured creditors, including roughly $379 million of debt, accrued interest and make-whole payments as of Jan. 31; to settle $29 million in unsecured claims; and for a cash-sharing agreement in an amount subject to a bankruptcy court ruling.

Reliant said it will keep the residual proceeds.

The sale is subject to approval by the U.S. Bankruptcy Court for the District of Delaware.

According to an 8-K filed with the Securities and Exchange Commission, the sale is expected to close in the second or third quarter of 2008.

Reliant reported in the 8-K that an impairment could be recognized if the net proceeds and remaining assets, including cash and working capital, do not exceed the company's $83 million in net investment and receivables from Channelview.

Reliant subsidiary Reliant Energy Channelview, a Houston-based provider of electricity and energy services to retail and wholesale customers, filed for bankruptcy on Aug. 20, 2007. Its Chapter 11 case number is 07-11160.

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