Beacon Power settles with DOE Loan Programs Office
Since filing for bankruptcy protection on October 30, 2011, Beacon Power and its advisors had engaged in ongoing discussions with LPO advisors as to the company's use of cash collateral and resolution of its loan obligation
Tyngsboro, Mass., November 21, 2011 — Beacon Power Corp. reached an agreement with the U.S. Department of Energy's Loan Programs Office at a second Delaware court hearing on November 18, 2011, in the company's Chapter 11 bankruptcy proceeding.
Since filing for bankruptcy protection on October 30, 2011, Beacon Power and its advisors had engaged in ongoing discussions with LPO advisors as to the company's use of cash collateral and resolution of its loan obligation.
Beacon requested that LPO support its restructuring efforts to preserve Beacon as an organization, maintain the value of the company's 20 MW flywheel plant in Stephentown, New York, and enable Beacon to complete its reorganization as quickly and efficiently as possible.
However, LPO's highest priority was to recover as much of the $39.1 million loan balance as soon as possible. This led to an agreement to conduct the sale of the Stephentown facility by January 30, 2012.
The court also approved Beacon's request that it be allowed to list its other assets for sale, although the company may choose not to do so, or only sell some individual assets, if it is able to raise sufficient new capital by the end of January. Beacon is in preliminary discussions with several strategic investors and private equity firms that have expressed an interest in making a significant investment in the restructured company.
Beacon Power is confident that the recent Federal Energy Regulatory Commission Order No. 755 on pay-for-performance for energy storage resources (like the Stephentown plant) will have a revenue-enhancing impact and increase the value of the flywheel facility when it takes effect in New York later in 2012. Further, Beacon believes that its singular expertise in developing, operating and maintaining grid-scale flywheel systems also adds unique value to the plant.
Also at the hearing, LPO's objections to Beacon's use of about $3 million in cash collateral to fund the company's business operations were resolved. Beacon will have full access to that cash to fund its weekly operations at an agreed-upon reduced budget. In addition, Beacon's bankruptcy counsel and financial advisors have agreed to defer their fees, enabling the company to allocate more of the cash collateral toward operations.