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AES power plants in the US file for bankruptcy.

LOS ANGELES: AES Corporation units that either own or lease six coal-fired power plants in New York state filed for Chapter 11 bankruptcy protection, citing the depressed economic environment for the electric power industry.

AES Eastern Energy and 13 other AES Corporation affiliates listed as much as $1 billion in debt in filings yesterday in US Bankruptcy Court in Delaware. AES Eastern listed $100 to $500 million in assets.

The units want to sell or transfer their only two plants in active operation, in Cayuga and Somerset, as part of a settlement with certificate holders, Peter Norgeot, president of AES NY, said in a court filing.

"The debtors are out of options," Norgeot said in the filing. "After vigorously marketing their assets for almost a year and soliciting 58 potential buyers/investors, it is abundantly clear that, in the current economic environment and with the debtors complicated leveraged lease structure, an out-of-court restructuring sale is not possible."

Moody's Investors Service in July lowered its rating of AES Eastern because competitors with gas-fired plants were benefiting from low natural gas prices while AES's operating costs had risen as a consequence of higher coal prices.

Corporation had already written its interest in AES Eastern down to zero and was looking for a buyer, Moody's said at the time.

Fitch downgraded debt

Fitch Ratings on December 20 downgraded $433.1 million in debt serviced by cash flow from AES Eastern, saying that it was likely to default on a lease payment due Jan. 3.

Two of the unit's power plants, Somerset and Cayuga, have run at lower than projected capacity this year because of "eroded energy margins," Fitch said.

The parent company had indicated it wouldn't make loans or provide equity to help AES Eastern to make payments, Fitch said in the December 20 report.

Rich Bulger, a spokesman for Arlington, Virginia-based AES, didn't immediately return a call to his office seeking comment on the filings after regular business hours.

AES had announced on December 20 that its 50/50 joint venture with KoAs. Holding in Turkey, AES Entek, has entered into an agreement to develop Ayas, a 625 MW greenfield coal project to be developed in South East Turkey.

The project is a joint venture between AES Entek and Oyak, Turkey s largest pension fund, and is expected to be completed in the second half of 2016 with construction set to begin in late 2012.

"Since AES entered the country in 2007, we have been evaluating additional investment opportunities in Turkey s rapidly growing power sector," said AndrA[c]s Gluski, AES President and Chief Executive Officer. "The Ayas plant complements our existing footprint in hydro and gas and strengthens our strategic relationships in country."

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Publication:Times of Oman (Muscat, Oman)
Date:Jan 1, 2012
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