Redbank Power Station placed in receivership facing $192 million debt

The Redbank Power Station in the New South Wales’ Hunter Valley has been placed in receivership, following years of negotiations regarding the facility’s $192 million debt.

The plant’s owner, Redbank Energy, released a statement to the ASX in which it requested a trading halt due to the receivership. Trading is expected to resume tomorrow. The company itself is not in receivership.

The Redbank Power Station, or “Redbank Project”, is facing a significant amount of debt. In a statement, KordaMentha confirmed partners Martin Madden and Janna Robertson had been appointed as receivers.

“The appointment will not affect the operating activities of the power station,” it said. “The operation of the power station will continue as normal. Employees and other stakeholders will not see an impact to the operations as a result of these appointments.”

Madden also said management will continue to manage the operating activities “on a day-to-day basis”, while secured creditors have said they will “work constructively” with the receivership team.

The receivership follows several weeks, months and even years of debt negotiations.

Last week, Redbank said in a statement it would withhold the principal component of its schedule quarterly payment, and only pay it when an agreement regarding long-term debt restricting is finalised.

This would mean the company’s lenders could take “enforcement action”, it said.

“Redbank Project believes that a long-term debt restructuring is necessary to strengthen its financial condition,” it said.

In June of this year, Merrill Lynch purchased 4% of the debt from Bankwest, and the Bank of Scotland.

In 2011, the Redbank Project entered into a bank support agreement in 2011, which expired in 2012. While the support agreement had been extended between then and the release of the company’s annual report in May of this year, Redbank said continued extensions would be necessary to meet financial obligations.

In the annual report, released in May, Redbank also said Redbank Power Station contributed $12.1 million in EBITDA for the half year to December 2011, down from $15.4 million in the previous corresponding period due to “operating issues”.