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| Entergy's New Orleans unit has filed for bankruptcy, saying that any real solution to its woes requires government intervention. |
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| CNN's Kitty Pilgrim examines the indirect costs hurricanes inflict nationwide. (September 23) |
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NEW YORK (CNN) -
Entergy Corporation announced Friday that its New Orleans subsidiary -- Entergy New Orleans, Inc. -- has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code and said any long-term solution would require federal intervention.
"At the same time, Entergy New Orleans filed a motion with the court for 'debtor-in-possession' financing that contemplates Entergy Corporation making loans up to $200 million to Entergy New Orleans to address Entergy New Orleans' current liquidity crisis," the company said in a written statement.
The petition also asks that as much as $150 million of the loans be approved on an interim basis.
"These funds will enable Entergy New Orleans to meet its near-term obligations, including employee wages and benefits, payments under power purchase and gas supply agreements, and its current efforts to repair and restore the facilities needed to serve its electric and gas customers," the statement said.
Entergy New Orleans provides electric and natural gas service to customers within the city of New Orleans. It is the smallest of Entergy's (up $0.97 to $72.00, Research) five utility companies and, prior to Hurricane Katrina, represented about 7 percent of the consolidated revenues and 3 percent of its consolidated earnings in 2004, the statement added.
Neither Entergy Corporation nor any of its other utility and non-utility subsidiaries were included in the filing.
Focus on rebuilding
"We took this action after careful review of the various options available to preserve Entergy New Orleans' business over the near- and
long-term," said Dan Packer, Entergy New Orleans' chairman and chief executive officer.
"Due to our parent company's financial support, we can focus on the city's reconstruction and rebirth, as those restoration efforts continue today."
This filing was also intended to address "the very legitimate concern" expressed by Senators Mary Landrieu and David Vitter from Louisiana to President Bush that the potential bankruptcy "would stall or cease restoration efforts in the city as a result of creditor disputes that could arise in such a filing," the statement said.
The company said it hoped to continue its restoration efforts "for the immediate future." The court has scheduled a hearing on the matter for Sept. 26.
A long-term solution "must involve a substantial federal financial commitment," the statement said.
"Federal resources, in addition to reimbursement of certain costs covered by insurance, are critical to restoring the system and restoring Entergy New Orleans' financial health."
Entergy New Orleans has served the city for more than 80 years, delivering electricity to 190,000 customers and gas to 147,000 customers in Orleans Parish.
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