U.S. Energy Biogas tweaks Countryside claim treatment in amended plan

By Caroline Salls

Pittsburgh, May 21 - U.S. Energy Biogas Corp. filed an amended plan of reorganization Monday with the U.S. Bankruptcy Court for the Southern District of New York to change the distribution to Countryside Canada Power Inc.

As previously reported, the plan is based on a settlement agreement with Countryside Power Income Fund that will allow U.S. Energy Biogas and parent U.S. Energy Systems, Inc. to establish new financing for U.S. Energy Biogas.

The agreement gives Countryside Canada Power Inc., a subsidiary of Countryside Income Fund, a $99 million secured claim against U.S. Energy Biogas, which will be the only allowed claim that Countryside will have in the Chapter 11 case.

Countryside has agreed to forgo any claim concerning U.S. Energy Biogas' April 8, 2004 royalty agreement with Countryside as well as any claim against U.S. Energy under its April 8, 2004 development agreement with Countryside.

Under the amended plan, Countryside will receive full payment on its claim in cash.

Originally, Countryside was slated to receive full payment of its claim in either cash plus interest or cash for the full amount of the claim plus interest, minus $2 million but plus a U.S. Energy Systems contribution.

The secured claim must be paid in full by May 31.

Treatment of creditors under the plan will include:

• Administrative claims and priority tax claims will be paid in full in cash;

• Holders of priority non-tax claims, general unsecured claims and other secured claims will have their claims reinstated, entitling the holder to full payment;

• Countryside will receive full payment of its claim in cash;

• Holders of Illinois Commerce Commission claims will receive $5.25 million in cash, of which $250,000 will be placed in escrow and distributed according to terms of an Illinois Commerce Commission settlement agreement; and

• Holders of interests will have the rights to their interests reinstated.

U.S. Energy Biogas received a proposal for a seven-year $80 million term loan exit facility from Silver Point Finance LLC.

The proposed facility would bear interest at either Libor plus 450 basis points or Base rate plus 300 bps, at U.S. Energy Biogas' option.

U.S. Energy Biogas has agreed to work exclusively with Silver Point in connection with the proposed exit facility until May 31.

The plan confirmation hearing is scheduled for May 23.

U.S. Energy Biogas, an Avon, Conn.-based renewable energy business, filed for bankruptcy on Nov. 30, 2006. Its Chapter 11 case number is 06-12827.

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