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Power News

01 November 2002

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NEG walks away from GenHoldings

PG&E's National Energy Group has walked away from its investment in the GenHoldings I portfolio and has effectively handed over the assets to its lenders. The move is the first time in recent memory that a sponsor has resorted to such drastic action, and has not pursued a strategic sale. As such it demonstrates the central attraction of non-recourse structures to sponsors ? that such a burden can be abandoned ? and opens up the possibility of further similar actions by distressed corporates.The GenHoldings portfolio consists of the Millennium project, a 360MW plant located in Massachusetts that is operating, a 1080MW plant located in Athens, New York, the 1092MW Harquahala facility in Arizona, and a 1170MW Covert, Michigan plant. Harquahala was originally a synthetic lease candidate, and Covert was only to be included if the GenHoldings portfolio raised enough in syndication. The Citi- and SG-led financing raised $1.46 billion towards a $1.7 billion target. The difference of $240 million was...

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