Independent electric power producer Bonneville Pacific Corp. has filed a bankruptcy petition in federal court seeking protection from creditors.
Headquartered at 257 E. 200 South, Bonneville filed the voluntary petition, seeking to reorganize the company under Chapter 11 of the Federal Bankruptcy Code, in U.S. Bankruptcy Court for Utah.Bonneville Chairman Robert L. Wood said the filing was necessary because of the "liquidity problem" created when Portland General Corp., Bonneville's major stockholder, withdrew its financial support last month "in a manner that did not afford the company a sufficient opportunity to find replacement financing."
Under a Chapter 11 filing, companies are given protection from creditor actions while it evaluates its position and attempts to formulate a reorganization plan.
Wood, whom the company said will remain chairman, president and chief executive officer during the reorganization, stressed that the bankruptcy petition involved only Bonneville Pacific Corp. and did not affect any of its subsidiaries or affiliates, Bonneville Foods, Bonneville Fuels and Recomp, a trash recycling company.
Bonneville announced in October that its short-term cash problems had been alleviated when Portland General Corp., which owns 46 percent of Bonneville's stock, had apparently agreed to increase its credit to Bonneville from $12 million to $15.6 million and to as much as $20 million if regulatory and board approvals were gained.
But on Nov. 12, Portland General, a power company based in Portland, Ore., cited Bonneville's "under performance" and announced that it would write off its existing investment in the company and discontinue any additional financial support. Portland General also said it would attempt to recover $28 million in prior loans to Bonneville.
That led to a downgrading of Bonneville's debt rating by S&P and triggered cross defaults by other lenders. S&P estimates Bonneville's total debt at $360 million. Wood said at the time the company was surprised by by Portland General's action and that it left Bonneville with only three alternatives: "a significant restructuring, a filing under Chapter 11 of the Bankruptcy Code or a substantial investment from another investor."
On Thursday it chose the second option.
Bonneville has hired Buccino and Associates Inc. to act as advisers during the formulation of a reorganization plan. Richard L. Cattau is a Buccino consultant and is in Salt Lake City representing the Chicago-based company he describes as "a crisis management consulting firm for many industries." He said Buccino has helped in the turnarounds of some 500 companies.
Earlier this week Cattau was named president and chief operating officer of Bonneville. He said it is premature to speculate on the nature of the reorganization plan "but the company and everyone in it feels there is an obviously good opportunity to reorganize and that it's in the best interests of creditors and shareholders. That's what we'll devote our energies to."
Cattau said that there is no legal time limit to filing the reorganization plan but, as a practical matter, all involved want to move quickly. Asked if it would be ready by next year, he replied, "Every effort would be made to do it as soon as possible and certainly within the time frame of 1992."