Facility receivership could trigger Environmental Power bankruptcy

By Caroline Salls

Pittsburgh, July 9 - A receiver has been appointed for MST Estates, LLC's Huckabay Ridge facility at the request of tax-exempt bond trustee Wells Fargo Bank, NA, according to an Environmental Power Corp. news release.

Huckabay Ridge is owned by Environmental Power subsidiary MST Estates, which is also a subsidiary of Microgy Holdings, LLC.

According to the release, the tax-exempt bonds were issued by the Gulf Coast Industrial Development Authority of Texas for the purpose of financing the Huckabay Ridge facility and other facilities being developed in Texas by Microgy Holdings.

Environmental Power said Microgy Holdings was declared in default of its bond obligations, and the bonds were accelerated in full.

The Huckabay Ridge facility was pledged as collateral to secure the bond obligations.

Environmental Power said it expects the receivership to be the first step in a process to monetize the Huckabay Ridge collateral for the benefit of the bondholders.

The company said it does not know if there will be proceeds remaining for distribution to Microgy Holdings or, ultimately, Environmental Power, after the disposition of this collateral and the satisfaction of the past-due obligations to the bondholders.

"We are obviously disappointed by the developments at Huckabay Ridge and hoped that the bondholders would follow up on proposals made by the company for restructuring of the debt to bondholders, without having to resort to receivership," Environmental Power chief executive officer Richard Kessel said in the release.

"Unfortunately, with the receivership, the possibility of a bankruptcy filing for the remaining EPC companies has increased."

Tarrytown, N.Y.-based Environmental Power is a developer, owner and operator of biogas renewable energy projects.

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