By Katy Stech
Of DOW JONES DAILY BANKRUPTCY REVIEW
At the demand of the U.S. Department of Energy, financially struggling Beacon
Power Corp. (BCONQ) agreed to sell its flagship grid-electricity storage plant
outside Albany, N.Y. in an effort to pay off a $43 million loan that was
guaranteed by the DOE.
In documents filed with the U.S. Bankruptcy Court in Wilmington, Del., Beacon
Power laid out a sale timeline designed around a Jan. 25 auction. The sale of
its Stephentown, N.Y., plant, which absorbs extra grid electricity that can be
put back into the power system later, would provide a pool of money that would
pay some of the roughly $39 million that the Massachusetts energy-storage
company has spent of the DOE-backed loan.
The sale process is expected to recover a fraction of that loan amount.
Beacon Power spokesman Gene Hunt pointed out that the company valued the plant
at about $12 million in its most recent quarterly filing.
"The DOE has made it clear they want to recover as much as they can on the
loan," Hunt said. "They're unmoving on this point."
Executives at the Tyngsborough, Mass., company originally planned to use the
company's Chapter 11 bankruptcy case to reorganize their business, perhaps by
selling valuable patents and moving forward on building a second storage plant
outside Wilkes-Barre, Pa. But Energy Department attorneys argued the DOE would
have to pay for those expensive reorganization efforts--a pledge they shouldn't
have to make while the company's only operating plant continues to incur losses
of nearly $1 million each month, they said in earlier court documents.
Beacon Power sought protection just days after officials in the DOE's loan
department--under sharp criticism in the wake of solar-panel maker Solyndra
LLC's bankruptcy--said they would stop funding Beacon Power's loan. The
company's finances had become strained after it spent more than $200 million to
develop technology that could recycle unused power left over from conventional
utility power grids.
"I wouldn't say that's true of all of DOE, but the loan office in particular,
it's been harder to work with them given the political climate," Hunt said.
By the time Solyndra filed for Chapter 11 bankruptcy protection in September,
it had also spend most of the $535 million loan that was guaranteed by the same
agency program, which used money from the 2009 economic-stimulus bill to
encourage renewable energy projects. Solyndra's loan guarantee created a
political firestorm because the department agreed to move behind other
creditors when Solyndra's debt was restructured in February.
Unlike that loan, the Energy Department sits first in line to recover money
from Beacon Power's New York project.
Beacon Power's sale plans, which require court approval, are expected to go
before a bankruptcy judge on Dec. 15. The company, which employed about 65
workers when it filed for protection, will also try to sell the business itself
at the same auction. That company holds dozens of patents on its technology.
Beacon Power was spun off from Massachusetts power company SatCon in 1997. It
listed assets of $72 million and debt of $47 million in its bankruptcy
petition.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and
those under bankruptcy protection.)
-Katy Stech, Dow Jones Daily Bankruptcy Review; 202-862-1344;
katherine.stech@dowjones.com
(END) Dow Jones Newswires
11-28-11 1440ET
Copyright (c) 2011 Dow Jones & Company, Inc.
14:40 112811
