Southern Montana Electric amended Chapter 11 plan effective June 27

By Caroline Salls

Pittsburgh, June 30 – Southern Montana Electric Generation and Transmission Cooperative, Inc.’s amended plan of reorganization took effect on Friday, according to a June 30 filing with the U.S. Bankruptcy Court for the District of Montana.

The plan was confirmed on June 20.

As previously reported, the company reached an agreement with its member co-ops and a group of noteholders in March that allowed Southern Montana Electric to file its own plan of reorganization.

The noteholders are Prudential Insurance Co. of America, Universal Prudential Arizona Reinsurance Co., Prudential Investment Management, Inc. and Modern Woodmen of America.

Under the plan,

• The noteholders' claims will be satisfied through the retention of adequate protection payments and professional fees paid from the bankruptcy filing date through April, delivery of a payment held by Northwestern Energy, $21 million in four-year 4 1/8% promissory notes and the granting of trust interests and the company's agreement to assign all HGS proceeds to the noteholders;

• Holders of general unsecured claims will receive a share of $300,000 in cash;

• Construction lien claims will be satisfied by payment of $825,000 on the plan effective date and a total of $2.5 million in annual installments over four years;

• Member reserve account claims may be restored in whole or in part by the members at their discretion to ensure payment of their obligations to Southern Montana Electric;

• Holders of member capital claims will retain their claims but not receive any payment until restructured notes are satisfied; and

• Member interests will be retained.

Southern Montana filed for bankruptcy on Oct. 21, 2011. The Billings, Mont.-based cooperative's Chapter 11 case number is 11-62031.

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