A Starwood Energy Group Global affiliate, Vermillion Power, has emerged as the stalking horse bidder for FirstEnergy Generation’s 545 MW West Lorain dual-fuel gas turbine facility.
If the stalking horse bid prevails, FirstEnergy expects to realize about $144 million in cash from the sale of the facility and its related assets.
The plant, which burns fuel oil but is also capable of operating on natural gas, is located in Lorain, Ohio, near Lake Erie.
Because FirstEnergy's competitive generation subsidiary filed for Chapter 11 bankruptcy protection earlier this year (PFR, 4/2), Starwood will first have to win a bankruptcy auction as well as approval from the U.S. Bankruptcy Court to close the West Lorain deal.
Investment bank Lazard Frères & Co. and law firm Akin Gump are advising FirstEnergy on the sale of West Lorain as well as its broader restructuring. King & Spalding is representing Starwood.
FirstEnergy has filed a motion with the Bankruptcy Court overseeing its Chapter 11 cases for approval of an auction that would allow other interested parties to submit competing bids.
The sale is also subject to other approvals, including from the U.S. Federal Energy Regulatory Commission.
Assuming Starwood is not outbid for the project, the deal is expected to close in the first half of next year.
Spokespeople for Starwood based in New York and FirstEnergy did not immediately respond to inquiries by press time.
West Lorain was built in 1973 as a combined-cycle plant with two combustion turbines, two heat recovery steam generators and a steam turbine generator. In 2001, five additional 85 MW combustion turbines were installed, increasing the plant’s output by 425 MW.
All power generated from West Lorain in 2008 was generated with natural gas.