| March 7
March 7 U.S. utility holding company Exelon Corp
has hired a debt restructuring adviser to help it
evaluate options for its merchant power plant subsidiary ExGen
Texas Power LLC, people familiar with the matter said on
The move comes as merchant power plants such as ExGen Texas
Power, which burn fuels such as natural gas to generate
electricity and then sell it onto the grid, struggle to cope
with massive swings in energy prices.
Investment bank PJT Partners Inc will help Exelon
address ExGen Texas Power's cash liquidity concerns and its
approximately $650 million in debt, the people said.
ExGen Texas Power's lenders have also organized for a
potential debt restructuring by tapping legal and financial
counsel, the people added.
The sources asked not to be identified because they were not
authorized to speak publicly on the matter. Exelon and PJT
declined to comment.
Peers of Exelon have recently unveiled similar moves. NRG
Energy Inc has announced that it is in talks with the
bondholders of its GenOn Energy Inc subsidiary on a debt
restructuring, while FirstEnergy Corp has said it plans
to exit its merchant business by mid-2018.
Natural gas prices have been under pressure due to
oversupply and warm weather in the northeastern United States,
which have driven down electricity prices, in turn hurting power
plants' profits. Increased use of renewable energy has also
negatively affected power plants that run on fossil fuels.
ExGen Texas Power operates five natural-gas-fired power
plants in Texas. Its $675 million term loan that matures in 2021
is trading well below face value, an indication that investors
do not expect full repayment.
The term loan, used in part to pay a dividend to Exelon, was
trading at about 71 cents on the dollar on Monday, the most
recent data available, according to Thomson Reuters LPC.
ExGen Texas Power also has a $20 million revolving credit
line due in 2019, of which $4 million was drawn in January,
according to credit ratings agency Moody's Investors Service.
ExGen Texas Power faces a cash crunch in May, Moody's said
in a February report. The credit ratings agency said it does not
believe the market value of the power plants would cover the
company's debt in an asset sale.
(Reporting by Jessica DiNapoli; Editing by Dan Grebler)