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Alternative Earth Resources Inc. Message Board

  • rjjones11 rjjones11 Jun 2, 2012 6:47 AM Flag

    Declaring Chapter 11 Bankruptcy.

    Ok, let us say that walking away, or just giving it to EIG, it not your cup of tea.
    Well maybe you are right.
    Yes, there are better options.
    Actually the United States is set to favor our welfare.
    They will give us our chance. Is this still in someways a great country, or what?
    Who is going to declare Chapter 11?
    Is it Nevada Geothermal Power, Inc. [NGP.TSX]?
    No, NGP.TSX is not involved, and things will go on, business as usual.
    Is it Nevada Geothermal Power Company [NGP-USA]?
    No, NGP-USA is not involved, and things will go on, business as usual.
    It is NGP Blue Mountain Holdco LLC [BM Holdco] that needs to declare Chapter 11.
    The rest of the NGP ‘Empire’ would operate as is nothing happened.
    Could one say that NGP is in bankruptcy?
    No, one could be sued for libel if they said that.
    One could say that a subsidiary of NGP is operating under bankruptcy.
    Or more precisely, it is operating under Chapter 11 debit restructuring.
    When should BM Holdco declare Chapter 11?
    IMHO the sooner the better.
    EIG is taking advantage of us, they are bleeding us by string this out.
    EIG can declare BM Holdco in default.
    EIG will have to go to court. That will take a little time.
    [Much more about this never-never land in a later post.]
    In that window of time before the court date would actually be best for Chapter 11.
    However, the judgement giving BM Holdco over to EIG does not happen until the gavel hits the block.
    If somehow we can say “Chapter 11" up to one tenth of a second before the “whap” noise, we are protected.
    Please scan this short summary of Chapter 11 on Wickipedia.
    Knowing something about this stuff may save your life someday.
    Let’s look forward to further exploring this fun topic further.

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    • I guess I'm thick about such matters, but.....What I'm saying below could indicate a predator is lurking.
      According to the Unaudited 3 Month Report of March 31, 2012, page 26, the Balance owing to EIG is $88,351,483. With that in mind couldn't EIG find someone -a predator to buy what is owed them on the loan which includes increases from all the perks in it's conditions- then take the money and exit?

      In other words can't EIG get their $88,351,343 and call it quits?

      In such a case, wouldn't the New buyer own BM 1 in its entirety and get potentially from 36MW net to 41MW net production? (Present production is about 30 MW net, but is based on the present testing). When testing is complete, 36 MW net seems to be the case.

      I expect that by now the PPA with its annual 1% increases would be $80 per MWh and sales for 36 MW net would be $25.23 Million annually and for 41MW net they would be $28.73M annually.

      With that in mind, the New Buyer would have to pay about $7.27 Million annually on the JH loan, and be able to claim depreciation based on the value of its $88.4 million payment, plus about $88.6 million that is still owed on JH loan.

      Production at 36 MW net and payments on the JH loan at $7,27million annually, leaves about $17.96 million for the predator to pay for operating, administration and improvement expenses etc. Depreciation would be money in the bank along with that left over after the above expenses are deducted from sales and together with depreciation be earnings.
      Hopefully the situation ends in favor of the shareholders, as putting another BM 1 in place would be time consuming and costly and may never come about if NGP were to lose BM 1.

      • 2 Replies to riverrock
      • To help NGP, EIG has to reset their loan to a reasonable rate, say 6%, to expire on the same day as the JH loan (12/31/2029), without early payment fees. Then work with NGP and JH to convince the Utility to renegotiate the PPA to a minimum of $90 on a steady annaul basis until the end of 2019, when the present PPA is to expire. (My figure is an average of ~$87 over the 20 year PPA). If the utility doesn't cooperate, find one who will give a better PPA, I believe they have that option.

        The above would add to EIG's creditability as a Lender and as the Partner they advertise to be.

        Quarterly P & I on the original JH $98.5M Loan at 4.14% over 20 years maturing12/31/2029,comes to $1.81655M quarterly, or $7.27M annually
        Quarterly P & I on a renegotiated ~$88.5M EIG Loan at 6.0% beginning July 1, 2012 over a period of 17.5 years maturing on 12/31/2029.comes to $2.05075 million quarterly, or $8.29 million annually

        NGP's annual financing costs will be $15.6 million until 12/31/2029, unless she did a share float during better times and paid down some or all of the loans.

        At 36 MW and a PPA of $90, sales would be $28.4 million, leaving $12.8 million to run BM 1 after loan payments. After removing about $6 million for Depreciation, NGP should have just about enough to pay for operation and administration etc and not eat deeply into the Depreciation. In addition, without using a TAF, they will retain existing tax benefits. Later share floats will help move BM 1 and the other projects forward.

        AT 41 MW and a PPA of $90, sales would be $32.3 million, leaving $16.7 million to run BM 1 after loan payments and be still better and ...

        AT 46 MW and a PPA of $90, sales would be $36.3 million, leaving $20.7 million to run BM 1 after loan payments and …

        I think that its do-able, but then there are the politics.

      • It makes sense that this would go to court in Reno, rather than Las Vegas.
        U.S. Bankruptcy Court
        District of Nevada
        C. Clifton Young Federal Building
        300 Booth Street
        Reno, NV
        Judge Beesley, Courtroom 2
        Judge Zive, Courtroom 1
        We do not know at this time if will be Judge Beesley, or Judge Zive,
        that will be assigned our case.
        So for now let’s just refer to that person as the Judge.
        Now our lawyers will fill out all the forms in great detail,
        describing BM Holdco’s assets in liabilities in great detail and in sworn statements.
        Perhaps they may suggest a recovery plan in great detail to be implemented.
        When I observed this process being done in California, it was all done online.
        The magic moment is the second that the ‘Submit’ button on the web-site is selected.
        At that moment, at that second, Chapter 11 protection is in place.
        This is why I say that it is better to get this done a few days before it goes to court,
        preferably in enough time to get the case removed from the docket.
        Otherwise the Judge may proceed with the case unaware that we are under Chapter 11 protection.
        The Judge may go ‘Whap’ at the gavel transferring control of BM Holdco to the Predator or EIG.
        We would then have to go to court to declare the transaction invalid,
        as we were actually under Chapter 11 protection at the time.
        There is absolutely no question that we would prevail,
        but it would be one little mess that would be nice to avoid.
        Since EIG is in the energy finance business, they may already have a Predator lined up.
        On mortgage foreclosure’s, the banks typically have a buyer lined up so that the property goes directly to the new owner.
        All over the US people are losing their homes, it is a great tragedy.
        It is a greater tragedy, because in many cases, people got behind for on reason or another but the just can’t catch back up.
        If only they could get their loan restructured, they could make it.
        They could force this to be accomplished simply be declaring Chapter 11 (or 13).
        Why are all of these unnecessary foreclosures occurring?
        One) People in general do not know much about bankruptcy
        and they attach a terribles stigma to it.
        They think that their reputations will turn to mud.
        Ironically, people in bankruptcy are considered better credit risks than those who are not.
        Why? Any creditor has the potential of declaring bankruptcy.
        A creditor who has declared bankruptcy must pay his bills,
        and there is no way for him weasel out.
        Actually bankruptcy is almost too good of a deal.
        How do you keep people from just doing it just willy-nilly?
        Well they put a cap on it. You can do it only once every seven years.
        Two) The banks typically lie, yes lie, to these people. They deliberately string them along.
        “Don’t worry, we can restructure this and work this out.”
        “ Go home and fill out all of these long forms.”
        “Oh you said that you filled these out last month, I guess we must have misplaced them.”
        “I guess we have to do that again.”
        The banks know that the vast majority of mortgage holders know nothing about bankruptcy.
        The banks are liars, or as my lawyer says ‘criminals’, they are not acting in your behalf.
        They are trying to string you along until your run out of time.
        The truth will be typically nailed to the front on the weekend,
        when it most difficult or impossible to do something or get help.
        “Vacate within 24 hours. Your house is being sold on Monday.”
        First) Substitute EIG for the bank in the above.
        We must be very wary of them. I already suspect they are dragging this out.
        We can get this to stop. By dragging this out, they get to keep bleeding us.
        Second) Please, I implore you, be an angel, tell your friends how to save their houses.
        Force them to at least consult with a bankruptcy attorney.

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