Philip Morris sued for $364 mln, two Calpine plants
NEW YORK (Reuters) - A trustee in Calpine Corp.'s bankruptcy case has sued a financing arm of Philip Morris parent Altria Group Inc. to recover $363.5 million and control of two idled power plants, court papers show.
In a complaint filed late Monday with the U.S. District Court in Manhattan, trustee U.S. Bank N.A. said Philip Morris Capital Corp. agreed to the appointment of a receiver to control the plants following a payment default, which took place in January.
U.S. Bank, a unit of U.S. Bancorp , the No. 6 U.S. bank, said a receiver "is urgently needed to restore operations at the power plants and, thereby, to preserve their value."
The plants are located in Rumford, Maine, and Tiverton, Rhode Island. Each has 265 megawatts of generating capacity.
Altria spokeswoman Lisa Gonzalez and Calpine spokeswoman Katherine Potter declined to comment, saying their companies had not reviewed the complaint. Philip Morris was not immediately available for comment.
U.S. Bancorp is based in Minneapolis, Altria in New York, Philip Morris USA in Richmond, Virginia, and Calpine in San Jose, California.
Calpine filed for Chapter 11 protection from creditors last December 20, weighed down by more than $22 billion of debt. Its aggressive expansion came undone amid power markets weakened by California's 2000-2001 energy crisis and Enron Corp.'s collapse.
According to Monday's complaint, a special-purpose entity formed by Philip Morris issued $366 million of secured notes to buy the two plants.
Thereafter, it leased the plants to Calpine affiliates, and pledged the plants and rent payments to U.S. Bank as collateral.
U.S. Bank said a default has existed since January, when the Calpine affiliates missed $16.6 million of rent payments. It also said no payment has been made on the notes since July 2005, and nearly all of the original principal remains due.
Seeking to cut costs, Calpine sought in February to get out of its leases, and give control of the plants to Philip Morris.
According to the complaint, however, Philip Morris has refused to take possession of the plants. The Maine plant has been idle since November 2005, and the Rhode Island plant since February 2006, it said.
"With each additional day the plants remain idle, the trustee suffers mounting economic harm and the power plants are exposed to an ever-increasing risk of physical deterioration and possible damage," U.S. Bank said.
