FirstEnergy Generation’s West Lorain asset sale procedures approved

By Caroline Salls

Pittsburgh, Dec. 20 – FirstEnergy Generation, LLC obtained court approval of the bid procedures for the sale of its West Lorain facility and related assets to Starwood Energy Group Global, LLC affiliate Vermillion Power, LLC, according to an order filed Wednesday with the U.S. Bankruptcy Court for the Northern District of Ohio.

Under the stalking horse agreement, Vermillion Power has agreed to pay $144 million in cash for the Lorain assets. FirstEnergy said in the bid procedures motion that the total consideration expected to be realized from the sale is roughly $152 million.

The facility is a periodic-start, combustion-turbine generation station located in Lorain, Ohio.

In addition to higher and better bids and approval by the bankruptcy court, the sale is subject to the receipt of customary approvals, including approval of the Federal Energy Regulatory Commission and Hart-Scott-Rodino.

Under the sale procedures, competing bids are due by 5 p.m. ET on Jan. 9.

If Vermillion Power is not ultimately the winning bidder, FirstEnergy will pay a termination fee equal to 2.5% of the initial purchase price and reimburse up to 1% of its sale-related expenses.

Competing bids must provide for a cash purchase price equal to or greater than the sum of $144 million, the amount of the termination fee and expense reimbursement and a $1 million overbid amount.

An auction will be held on Jan. 15, if necessary. Bids at auction must be made in minimum increments of $1 million.

The sale hearing is scheduled for Jan. 25.

If approved, the companies expect to close the transaction in the first half of 2019.

FirstEnergy Solutions is an Akron, Ohio, provider of energy and services to retail and wholesale customers. The company filed for bankruptcy on March 31, 2018 under Chapter 11 case number 18-50757.

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