FE FirstEnergy Corp

By Andrew Scurria 

The judge presiding over FirstEnergy Solutions Corp.'s bankruptcy said he would approve the power producer's restructuring terms, helping to clear the way for the Ohio company to wrap up the chapter 11 by year-end.

Judge Alan M. Koschik of the U.S. Bankruptcy Court in Akron, Ohio, indicated he would confirm the company's chapter 11 plan, which enjoyed the support of 93% of voting creditors, FES said Tuesday.

"This is a landmark day in the history of our company," FES Chief Executive John W. Judge said in a statement. "We are now in a position to successfully conclude the chapter 11 process and will emerge from the restructuring as a fully independent energy company well-positioned to continue serving the needs of our 800,000 customers."

FES won the judge's approval after making concessions to union workers who had objected to how their contracts would be treated by the restructured company.

A subsidiary of publicly traded FirstEnergy Corp., FES filed for bankruptcy after competition from natural gas and renewable energy sources undercut the economics of its nuclear and coal plants.

FES tried and failed to obtain a bailout from the Trump administration, which declined to make an unprecedented intervention into wholesale power markets to save the company from bankruptcy. But lawmakers in Ohio, where the company has two nuclear plants, intervened on its behalf.

Under the restructuring plan, FirstEnergy will relinquish ownership of FES and provide the unit with roughly $1.1 billion in cash and debt while waiving roughly $2 billion in claims, according to court papers.

Upon leaving chapter 11, the reorganized FES will be owned by creditors including major bondholders Avenue Capital Group and Nuveen Asset Management LLC. The restructuring also must be approved by government regulators including the Federal Energy Regulatory Commission.

The new owners of FES are getting a boost from a $150 million annual subsidy package enacted over the summer by Ohio's Republican-controlled legislature. The subsidies, directed at two FES nuclear plants and two coal plants owned by other companies, have been controversial in Ohio.

Opponents are now backing efforts to overturn the subsidy law via referendum. They are up against a Monday deadline to submit more than 265,000 signatures from registered voters to trigger a referendum.

Meanwhile, FES has asked Ohio's Supreme Court to safeguard the subsidies, arguing they are taxes that can't be overturned at the ballot box.

Write to Andrew Scurria at andrew.scurria@wsj.com

(END) Dow Jones Newswires

October 15, 2019 18:35 ET (22:35 GMT)

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