Court Approves NRG Energy As Stalking Horse Bidder For Assets Of Bankrupt Retail Supplier

August 26, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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A bankruptcy court has approved a motion from Liberty Power Holdings, LLC, Liberty Power District of Columbia, LLC, LPT, LLC, and Liberty Power Maryland, LLC (collectively, Liberty or Debtors) to designate NRG Retail, LLC as a stalking horse bidder for certain assets of Liberty

Liberty will still welcome alternative bids for the assets through a bid deadline (noted below) and an auction will still be conducted if needed, but the Stalking Horse Agreement includes a break-up fee if an alternative transaction is consummated, as noted below

As exclusively first reported by EnergyChoiceMatters.com, a Stalking Horse Agreement between Liberty and NRG provides for the sale of a substantial portion of the Debtors' "book of business," namely all of the Debtors' residential customer contracts and a portion of the Debtors' commercial customer contracts.

The total purchase price (subject to adjustment and reconciliation as set forth in the Stalking Horse Agreement) for the assets is based on the ultimate number of "residential customer equivalents" (or RCEs) included in the Debtors' Customer Contracts that are transferred to the Stalking Horse Buyer or Successful Bidder.

Based on the Debtors' estimate of the total number of RCEs that will be transferred to the Stalking Horse Bidder, the total purchase price for the Debtors' Customer Contracts under the Stalking Horse Agreement will equal approximately $36,386,951

The purchase price reflects the following:

(i) Texas Residential Contracts - All of the Debtors' residential customer contracts for customers located in Texas (the 'Texas Residential Contracts') for a purchase price equal to $340 per RCE, which based on the Debtors' estimated number of RCEs for such Texas Residential Contracts as of August 16, 2021, equals an estimated purchase price (subject to adjustment and reconciliation as set forth in the Stalking Horse Agreement) of $11,934,499;

(ii) East Residential Contracts - All of the Debtors' residential customer contracts for customers located outside of Texas (the 'East Residential Contracts') for a purchase price equal to $290 per RCE, which based on the Debtors' estimated number of RCEs for such East Residential Contracts as of August 16, 2021, equals an estimated purchase price (subject to adjustment and reconciliation as set forth in the Stalking Horse Agreement) of $17,109,836; and

(iii) East Commercial Contracts – Certain of the Debtors' customer contracts with small/medium sized commercial businesses located outside of Texas (defined as those customers with less than 17.5 RCEs or 175,000 kwh of annual consumption), which are as set forth in the Stalking Horse Agreement (the 'East Commercial Contracts') for a purchase price equal to $165 per RCE, which based on the Debtors' estimated number of RCEs for such East Commercial Contracts as of August 16, 2021, equals an estimated purchase price (subject to adjustment and reconciliation as set forth in the Stalking Horse Agreement) of $7,342,616.

If the Debtors consummate an Alternative Transaction, the Stalking Horse Agreement requires the Debtors to pay a 'break-up' fee in the amount of $1,000,000

In addition, if the Debtors consummate an Alternative Transaction, the Stalking Horse Agreement also requires the Debtors to reimburse the Stalking Horse Bidder its reasonable and documented out-of-pocket costs, fees and expenses in an amount not to exceed $100,000 (a reduction from $300,000 as originally filed) incurred by the Stalking Horse Bidder in connection with its evaluation, consideration, analysis, negotiation, or documentation of the transactions contemplated in the Stalking Horse Agreement (the 'Expense Reimbursement').

Under the sale process, the bid deadline provides that qualified bids must be submitted no later than August 30, 2021 at 2:00 p.m. (prevailing Eastern Time).

The date of an auction for the assets, if necessary, is September 1, 2021 at 9:00 a.m. (prevailing Eastern Time)

Liberty has said that, "The Debtors believe that the Stalking Horse Agreement will set the stage for competitive bids and allow for a more streamlined process related to Qualified Bids and an Auction. To that end and notwithstanding entering into the Stalking Horse Agreement, the Debtors anticipate that they will receive Qualified Bids from various of the other prospective bidders, which the Debtors believe will lead to an Auction. The Debtors are continuing to work with other interested bidders and will do so through the extended Bid Deadline."

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