In a voluntary Chapter 11 petition filed in a federal bankruptcy court in Chicago, EME listed assets of $5.13 billion and liabilities of $5.09 billion. Wells Fargo Bank was identified as the largest unsecured creditor but several coal companies, including Peabody Coal Sales, a subsidiary of Peabody Energy, and Arch Coal Sales, a subsidiary of Arch Coal, were among the 30 largest unsecured creditors. EME said it owed $591,406 to Peabody and $269,796 to Arch. Since it acquired six coal plants from Chicago-based Commonwealth Edison for more than $4 billion in 1999, Midwest Gen has operated as a merchant generator, selling power on the wholesale market. That market has been depressed since the depths of the United States’ recession in 2008, which also reduced electricity demand, and merchant power peddlers like Midwest Gen have seen their profits plunge.
In September, Midwest Gen prematurely retired two coal plants in Chicago, Crawford and Fisk, under a deal negotiated by Chicago Mayor Rahm Emanuel. For years, the two plants had been the target of environmentalists who claimed they were too polluting.
Three of Midwest Gen’s remaining four plants in Illinois—Will County, Waukegan and Joliet, are in the Chicago area, though not inside the city. The fourth plant, Powerton, is located near Pekin, across the Illinois River from Peoria. Together, their generating capacity exceeds 4,200 mw.
Doug McFarlan, a Midwest Gen spokesman, said the plan is to operate the four plants during the bankruptcy, which could take two years to complete.
In a statement, EME President Pedro Pizarro called the bankruptcy filing “an important first step in the process to reduce our debt, enhance our liquidity profile and position EME for continued operation.”
In addition to the coal plants in Illinois, EME owns more than 3,000 mw of additional natural gas-fired and wind generation in several other states. EME is owned by Edison International of Santa Ana, Calif.
EME also faced expensive pollution control projects at the coal plants to comply with both state and federal clean air rules. Bankruptcy was viewed as a possible outcome for EME after Edison International executives said in a November 1 shareholder call that the company did not plan to make the major environmental investments.
Then, in mid-November, EME essentially telegraphed the impending bankruptcy by disclosing in a federal Securities and Exchange Commission filing it had failed to make a $97 million interest payment. EME said it would attempt to restructure its debt over the next 30 days but, if unsuccessful, most likely would file for bankruptcy.
Pizarro claimed EME is “operationally healthy,” and with the support of its creditors will emerge from bankruptcy “as a restructured company separate from Edison International.”
