Union/Panda Gila on track for initial confirmation, need more time for hearings

By Ellen Chang

Houston, March 23 - The Union and Gila River power stations are on track for the scheduled initial confirmation hearing but will need more court time to examine expert witnesses, according to a status report filed Wednesday with the U.S. Bankruptcy Court for the District of Arizona.

The initial confirmation hearing will be on April 5 and will be used for administrative matters.

The companies, Citibank, NA, administrative agent for the pre-bankruptcy lenders, and dissenting bank lenders Aretex LLC and Franklin Mutual Advisers, LLC have agreed that the April 19 and 20 continued confirmation hearings will be used to focus on testimony from Houlihan Lokey Howard & Zukin, PA Consulting LLC and Jefferies & Co.

Houlihan Lokey and PA Consulting will testify in support of the plan of reorganization and Jefferies is an expert witness hired by the dissenting banks, the filing said.

However, the status report says a day to 1½ days of additional time will likely be needed for the testimony.

John Duff, president of the companies, is also expected to testify and Michael Schuyler, who is in charge of the companies' energy trading activities, could testify.

The companies are also requesting two additional days of trial time for the week of May 10 to hear any other arguments regarding confirmation objections. The companies also seek four additional days of trial time the week of May 16 through May 27 to adjudicate the insider allegations of the two dissenting banks.

The status report noted that much of the discovery requested by the dissenting banks so far relates to their claim that the administrative agent and other lenders that signed the restructuring agreement dated Jan. 24 are insiders and therefore their votes in favor of the plan should be disregarded.

The dissenting banks also said they do not expect to be ready to litigate the insider allegations on April 19 and 20 as scheduled, according to the filing.

Union and Gila River - officially Union Power Partners LP, Panda Gila River LP, Transunion Interstate Pipeline LP and UPP Finance Co. - said they believe it is "critical to have the confirmation hearing concluded as quickly as possible, and certainly no later than the end of May 2005, in order to provide continued stability to their trading counterparties (with whom they buy gas and sell power) and to take advantage of enhanced revenue opportunities as the summer months approach."

A hearing on the status report will be held Thursday.

The disclosure statement for TECO Energy, Inc.'s Union and Gila River power stations was approved by the U.S. Bankruptcy Court for the District of Arizona in March.

The two projects filed for Chapter 11 after failing to receive support for a restructuring agreement from all their lenders.

Union and Gila River filed for Chapter 11 on Jan. 27. The case number is 05-01143.

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