August 31, 2013
Bankruptcy judge approves Danskammer sale
POUGHKEEPSIE - Dynegy is one step closer to exiting the Hudson Valley, after a bankruptcy judge on Friday approved the Houston energy giant’s sale of the shuttered Danskammer power plant to another Texas company.
Helios Power Capital is buying Danskammer for $3.5 million. The company plans to recover whatever value it can by scrapping the plant, and then redevelop the site, potentially building another power plant, said President Trey Helle.
As part of the deal, the Town of Newburgh will lower Danskammer’s assessment to $15 million for 2013, 2014 and 2015. The town had assessed the plant, which Dynegy said was rendered inoperable by Hurricane Sandy, at $75 million for 2013, implying a full value of about $190 million.
The $15 million assessment equates to a full value of about $38 million.
Dynegy and Orange County reached an agreement on back taxes owed on the plant before Judge Cecelia Morris approved the sale Friday. Dynegy will pay Orange County about $6.65 million, and Helios will pay $2.65 million, for a total of $9.3 million. Orange County had argued previously that back taxes owed on the site were closer to $12 million.
The sum does not include this year’s Marlboro School District taxes.
Marlboro still has to work out what effect the assessment reduction will have on funding for the 2013-2014 school year, said attorney Thomas Genova, who represented the district in the bankrtupcy case. The district based its budget on a $75 million assessment for Danskammer, but will face a tax shortfall since the assessment was lowered. Genova said the district may bond the difference.
The dollar amount of the shortfall was not available by Friday.
Dynegy expects the official closing of the sale to happen following approval by the Federal Energy Regulatory Commission. That may take between 40 and 60 days.
An earlier potential buyer of Danskammer, ICS NY Holdings of Arizona, balked at the plant’s $75 million assessment, and the deal died a few weeks ago.
As negotiations over that deal dragged on, Dynegy’s creditors became impatient and costs increased, said attorney Brian Lohan in Bankruptcy Court Friday.
“Things were not good,” he said.
After Dynegy officially ended its deal with ICS NY Holdings, it went back to the companies that had bid on Danskammer last year, Lohan said.
Dynegy received two offers on the plant. Both had unacceptable conditions at first, but Dynegy selected Helios as the new buyer after it tweaked its offer.
Helios bid on Danskammer and its sister power plant, Roseton in the initial auction last year, Helle said.
Newburgh Town Supervisor Wayne Booth said he agreed to the $15 million assessment on the advice of his attorneys.
“Going to $15 million was never part of the discussion” with ICS, Booth said.