Reliant Energy lenders start foreclosing Liberty Electric

By Jeff Pines

Washington, Aug. 27 - Lenders for Reliant Energy Inc.'s non-recourse project-financing subsidiary Liberty Electric PA LLC have started foreclosing on the 530-megawatt natural gas fired plant in Pennsylvania, Reliant said.

Reliant, based in Houston, acquired the plant in February 2002 when it acquired Orion Power Holdings Inc.

The Liberty plant started operating in May 2002 with its output dedicated to PG&E Corp., but the San Francisco-based company filed for bankruptcy in July 2003. Liberty has been in default of its $262 million in project financing.

"The foreclosure proceedings will have no effect on any other agreement of Reliant Energy or its affiliates," said Mark Jacobs, executive vice president and chief financial officer, in a news release. "We expect these proceedings to result in the transfer of ownership of the Liberty power plant to the lenders in the near future."

Reliant plans to write off the net book value of $75 million and any goodwill attributable to the plant.

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