Citing Atlantic City's troubles, utility slashes value of a power plant
In a sign of the ongoing devaluation of assets in Atlantic City, the utility company Pepco Holdings Inc. wrote down the value of its combined heat and power plant there by $53 million, or 64 percent, the Washington company announced Friday.
In a sign of the ongoing devaluation of assets in Atlantic City, the utility company Pepco Holdings Inc. wrote down the value of its combined heat and power plant there by $53 million, or 64 percent, the Washington company announced Friday.
Pepco slashed the value the plant and related operations to $30 million from $83 million because of "significant adverse changes in the financial condition of its customers and the business climate in Atlantic City," the company said in its quarterly report to the Securities and Exchange Commission.
Specifically, Pepco cited the September bankruptcy of two significant customers without naming them.
Trump Entertainment Resorts Inc., which owned two boardwalk casinos, the now-closed Trump Plaza and the Trump Taj Mahal, filed for bankruptcy protection Sept. 9.
In a letter to employees Monday, Trump Taj Mahal Associates L.L.C. said it expected to close on Dec. 1 or shortly thereafter, unless it gets significant financial aid from state and local governments.
Another power plant, ACR Energy L.L.C., partly owned by South Jersey Industries Inc., is the subject of a key court fight in the bankruptcy of the shuttered Revel Casino Hotel.
Revel's supply agreement with ACR, which borrowed $118.6 million in the municipal bond market to build the plant, includes specific payments not just for energy, but also equity payments for South Jersey Industries and its partner, as well as pass-through payments for the bonds.
Revel's attorneys claimed in court filings that the bankrupt company should only be required to pay the variable energy costs, not the debt.
When ACR went to the bond market in 2011, it's official statement to bondholders warned that a bankruptcy court could decide its agreement with Revel was a "financing agreement," which supports the position now taken by Revel's attorneys.
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