VERNON L. HOPKINSON (3656)
COHNE, RAPPAPORT & SEGAL, P.C.
525 East 100 South, Suite 500
P. O. Box 11008
Salt Lake City, Utah 84147-0008
Telephone: (801) 532-2666
General Counsel for the Trustee, Roger G. Segal
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
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In re: )
)
BONNEVILLE PACIFIC CORPORATION, ) Bankruptcy No. 91A-27701
)
Debtor. ) (Chapter 11)
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NOTICE OF TRUSTEE'S CONDITIONAL LETTER AGREEMENT TO
COMPROMISE POST-PETITION INTEREST RATE DISPUTE
AND OTHER ISSUES
Roger G. Segal, the duly appointed, qualified and acting
Chapter 11 trustee for the above-captioned Debtor, by and through
his counsel of record, hereby files with the Court the attached
copy of the Trustee's "Conditional Letter Agreement to Compromise
Interest Rate Dispute and Other Chapter 11 Plan Issues" dated
December 31, 1997. Also attached hereto is a copy of the "Press
Release" issued by the Trustee in connection with the conditional
letter agreement. Any party-in-interest having questions
<PAGE>
concerning the attached conditional letter agreement should contact
the undersigned counsel for the Trustee.
DATED this 31st day of December, 1997.
COHNE, RAPPAPORT & SEGAL, P.C.
VERNON L. HOPKINSON, General Counsel
for the Trustee, Roger G. Segal
<PAGE>
CERTIFICATE OF SERVICE
I hereby certify that I am a member of and/or employed by the
law firm of COHNE, RAPPAPORT & SEGAL, P.C. 525 East 100 South,
Suite 500, P.O. Box 11008, Salt Lake City, Utah 84147-0008, and
that in said capacity a true and correct copy of the foregoing was
caused to be served upon all those listed on the limited mailing
matrix by depositing a properly addressed envelope containing the
same in the United States mail, first class, postage prepaid
thereon, this 31st day of December, 1997.
<PAGE>
PRESS RELEASE
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Roger G. Segal, Chapter 11 Trustee * P.O. Box 11008 *
Salt Lake City, Utah 84147-0008 * (801) 532-2666 * (801) 355-1813
For Immediate Release
Date: December 31, 1997
Contact: Roger G. Segal, Trustee
Phone: (801) 532-2666
Fax: (801) 355-1813
CHAPTER 11 TRUSTEE FOR BONNEVILLE PACIFIC
CORPORATION ANNOUNCES CONDITIONAL SETTLEMENT
REGARDING POST-PETITION INTEREST AND OTHER ISSUES
SALT LAKE CITY, UTAH, DECEMBER 31, 1997:
Roger G. Segal, as the Chapter 11 Bankruptcy Trustee for
Bonneville Pacific Corporation (BPCO), announced today that he has
reached conditional settlements with the holders of certain senior
claims with respect to the calculation and payment of post-petition
interest and with holders of certain subordinated claims and equity
interests who will not oppose a Chapter 11 plan to be filed in the
future by the Trustee. The settlements and some of the general
terms of a Chapter 11 plan to be proposed in the future by the
Trustee are detailed in an eight (8) page letter agreement, a copy
of which is on file with the United States Bankruptcy Court for the
District of Utah and can also be obtained by contacting the
Trustee. THE LETTER AGREEMENT MUST BE READ IN ITS ENTIRETY FOR ALL
THE PROVISIONS OF THE CONDITIONAL SETTLEMENTS.
The Trustee's conditional agreement with certain senior
creditors provides, among other things, as follows: Generally,
holders of Senior Claims (bank, debenture and trade claims) would
receive in full satisfaction of their approximately $100 million of
senior unsecured debt, approximately $145.25 million as of December
5, 1997, plus interest after that date. Specifically, the banks
would receive post-petition interest on their allowed claims of
approximately $31.5 million at an effective rate of 8.03% through
December 5, 1997, and at 8.1% thereafter; the debentures would
receive post-petition interest on their allowed claim of
approximately $64.75 million at a rate of 7.32%; and allowed
general unsecured trade claims of approximately $3.75 million would
receive post-petition interest at 5.5%. No interest would be
compounded. All payments to the Senior Claims would be in cash at
the distribution date of a confirmed plan of reorganization; at the
Trustee's discretion, certain senior creditors have agreed that up
to $3.25 million of the payment on the Senior Claims can be in the
form of a one-year 10% unsecured note payable to those certain
<PAGE>
senior creditors; one of the senior creditors would also receive an
additional $400,000.00 for partial reimbursement of its post-
petition attorneys' fee expense provided for under its loan
documents.
The Trustee's conditional agreement with certain holders of
subordinated claims and existing equity interests provides, among
other things, that the Trustee will file a proposed Chapter 11 plan
which will propose to pay the Pre-petition Section 510(b) Selling
Debenture Claims, the Post-petition Section 510(b) Selling
Debenture Claims, the Deeply Subordinated Claims and Limited
Partner Claims in New Common Stock of the reorganized debtor. Part
of the New Common Stock would be distributed as follows:
(a) For Pre-petition Section 510(b) Selling Debenture Claims,
100% of the allowed (compromised and without post-
petition interest) claim in New Common Stock;
(b) For Post-petition Section 510(b) Selling Debenture
Claims, 70% of the allowed (compromised and without post-
petition interest) claim in New Common Stock;
(c) For Deeply Subordinated Claims, 10% of the allowed claim
(without post-petition interest) in New Common Stock; and
(d) For Limited Partner Claims, 25% of the allowed claim
(compromised and without post-petition interest) in New
Common Stock.
After distribution of the New Common Stock as set forth above, the
remaining New Common Stock will be divided one-half (50%) to
Section 510(b) Equity Claims (which would also include the Cigna
Claim, which will be separately classified and treated as an
allowed Section 510(b) Equity Claim plus ten percent) and one-half
(50%) to then existing shareholders. The Trustee's proposed
Chapter 11 plan will not be prepared and filed with the Bankruptcy
Court for at least thirty (30) days; the proposed plan will set
forth in detail all the numerous terms and conditions relating to
payment of claims in the Debtor's Chapter 11 case.
THE ABOVE-REFERENCED SETTLEMENTS ARE CONDITIONED UPON APPROVAL
BY THE BANKRUPTCY COURT IN THE CONTEXT OF A CHAPTER 11 PLAN
CONFIRMATION PROCESS; such process includes the approval by the
Bankruptcy Court of a disclosure statement; until a disclosure
statement has been approved by the Bankruptcy Court, no party-in-
interest may solicit the acceptance or rejection of any plan. If
the Bankruptcy Court does not confirm the proposed Chapter 11 plan
to be submitted by the Trustee, then the settlements and the letter
agreement will be void. ANY CHAPTER 11 PLAN MUST FIRST BE APPROVED
(AND CONFIRMED) BY THE BANKRUPTCY COURT AFTER FULL NOTICE AND
HEARING (WITH AN OPPORTUNITY FOR ANY PARTY-IN-INTEREST TO OBJECT)
BEFORE ANY PLAN CAN BECOME EFFECTIVE.
<PAGE>
CONFIDENTIAL AND PRIVILEGED SETTLEMENT COMMUNICATION
SUBJECT TO FEDERAL RULES OF EVIDENCE RULE 408
December 31, 1997
SENT VIA FACSIMILE TRANSMISSION
Jeremy Richards Fax No. (310) 201-0760
Pachulski, Stang, Ziehl & Young
Center City North Building
10100 Santa Monica Blvd., #1100
Los Angeles, CA 90067
James Ricciardi Fax No. (212) 351-4035
Gibson, Dunn & Crutcher, LLP
200 Park Ave., 48th Flr.
New York, NY 10166-0193
Re: Bonneville Pacific Corporation, Debtor; Conditional
Letter Agreement to Compromise Interest Rate Dispute and
Other Chapter 11 Plan Issues
Dear Jeremy and Jim:
Regarding the above-referenced Debtor, the purpose of this
letter is to enter into a conditional agreement(1) between the
Trustee, the Senior Claim holders,(2) and the Wellhead Interests(3)
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(1) The Trustee shall be bound by this letter agreement if it is
timely signed and delivered only to the extent he can be bound
without approval after due notice by the United States Bankruptcy
Court for the District of Utah (hereafter the "Bankruptcy Court").
Numerous other terms of a Chapter 11 plan will also be subsequently
proposed by the Trustee.
(2) "Senior Claim Holders" consist of entities managed by
Halcyon/Alan B. Slifka Management Company LLC and Halcyon Offshore
Management Company LLC (collectively "Halcyon"); Argo Partners;
Merrill Lynch; Baker, Nye; and CoMac Partners, L.P. Halcyon is
executing this letter agreement only as to all of Sections I and
III.
(3) The "Wellhead Interests" consist of 1) joint venture
comprised of Wellhead Electric Company Inc., and Frank A. Klepetko;
2) BP Investment Recovery Partners LP; and 3)Fresno Power
Investors, LP. Collectively the Wellhead Interests currently own
the $10 million CIGNA claim, approximately $1 million in Section
510(b) pre and post-petition selling debenture claims; more than $1
million in Section 510(b) equity claims, and approximately 100,000
shares of the Debtor's existing common stock. The Wellhead
Interests also own a right to direct the vote of approximately one-
half of the total Deeply Subordinated debt.
<PAGE>
concerning certain issues involved in the Debtor's Chapter 11 case.
SECTION I
The parties hereto agree to compromise the dispute regarding
any post-petition interest payable on the unsecured bank, debenture
and trade claims(4) (hereafter the "Interest Rate Dispute"),
subject to Bankruptcy Court approval in the context of a plan
confirmation, as follows:
a. Bank debt not to exceed in amount the claims as filed and
not subject to amendment (approximately $31,500,000.00) would
receive simple interest without compounding on their Allowed Senior
Claim at the rate of 8.03% per annum from December 5, 1991 (or such
later date as the particular bank claimant actually advanced money
to or for the benefit of the Debtor or its estate) to December 5,
1997 and at the simple interest rate of 8.10% per annum from and
after December 6, 1997 until the debt is paid in full. All holders
of bank debt would release and waive all claims of any kind against
the past or present debenture holders relating to any of the bank
debt. The Trustee reserves his right to object to the claim of
Caisse Nationale de Credit Agricole.
b. The debenture claim of $64,750,168.95 would receive simple
interest without compounding on such claim at the rate of 7.32% per
annum from and after December 5, 1991 until the debt is paid in
full.
c. The trade debt (currently approximately $3,750,000.00)
would receive simple interest without compounding on such claims at
the rate of 5.50% per annum from December 5, 1991 until the debt is
paid in full.
d. All payment to the aforesaid Allowed Senior Claims (see
paragraphs a., b., and c. above) will be in cash at the
distribution date set forth in the plan except that at the
Trustee's sole and absolute discretion up to $3,250,000.00 of the
payment to Halcyon (and its related entities), Baker, Nye and CoMac
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(4) Such prepetition unsecured bank, debenture and trade claims,
as calculated by the Trustee, total approximately one hundred
million dollars ($100,000,000.00) (hereafter collectively the
"Allowed Senior Claims").
<PAGE>
Partners can be in the form of an unsecured note payable to such
claimants. The note would be payable to each of the aforesaid
claimants in a pro rata percentage based upon the particular
claimant's total Allowed Senior Claim or in such other percentage
as the aforesaid claimants may agree among themselves in writing.
The note would bear simple interest at the rate of ten percent
(10%) per annum from the Chapter 11 plan distribution date and
would be paid in full in one lump sum one year after the
distribution date and would not be subject to any prepayment
penalty. The reorganized debtor (excluding Bonneville Fuels and
the other subsidiaries) could not incur debt (other than trade debt
in the ordinary course of business) without paying the note in
full.
e. Halcyon's claim under its loan documents for its post-
petition attorneys' fees it has paid to its legal counsel shall be
limited to $400,000.00 and shall be paid that amount (without
interest) at the distribution date.
f. The aforesaid payments to Senior Claim holders shall be in
full and complete satisfaction of all liabilities the Debtor or its
estate owes to the holders of Allowed Senior Claims including,
without limitation, actual or potential liabilities for pre and
post-petition interest, late fees, penalties, legal fees and other
professional fees and any Section 503(b) "substantial
contribution" claim. Any and all claims of the Senior Claim
holders shall be discharged upon confirmation of the Chapter 11
plan contemplated herein.
SECTION II
The Trustee will file a proposed Chapter 11 plan (conditioned
on confirmation by the Bankruptcy Court) which would provide, among
other things, as follows:(5)
1. All Allowed Administrative Claims and Allowed
Priority Claims shall be paid in cash (unless otherwise agreed
by each such claim holder) on the later of the Effective Date
or the date each such Claim first becomes an allowed Claim.
2. The allowed claims (as calculated as a compromise by
the Trustee in the Chapter 11 plan) of the Prepetition Selling
Section 510(b) Debenture Claims, the Post-petition Selling
Section 510(b) Debenture Claims, the Deeply Subordinated
Claims and the Limited Partner Claims would be paid in new
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(5) No allowed claims would receive an post-petition interest or
attorneys' fees of any kind whatsoever except for the Allowed
Senior Claims and then only as set forth in this letter in order to
settle the Interest Rate Dispute. Numerous other terms of a
Chapter 11 plan will also be subsequently proposed by the Trustee.
<PAGE>
common stock of the reorganized debtor ("New Common
Stock")(6) as follows:
a. For Prepetition Selling Section 510(b) Debenture
Claims, 100% of the allowed claim in New Common Stock;
b. For Post-petition Selling Section 510(b)
Debenture Claims, 70% of the allowed claims in New Common
Stock;
c. For Deeply Subordinated Claims, 10% of the
allowed claims in New Common Stock (i.e., stock with a
value of $894,500.00); and
d. For Limited Partner Claims, 25% of the allowed
claims in New Common Stock (i.e., stock with a value of
approximately one million dollars).
3. After distribution of the New Common Stock as set
forth in paragraph 2 above, the remaining New Common Stock
will be divided one-half (50%) to Section 510(b) Equity
Claims(7) (which would also include the CIGNA claim(8)) and
one-half (50%) to then current existing shareholders.
4. The Wellhead Interests shall be entitled to select
one member of the seven member board for Reorganized
Bonneville. The Trustee will negotiate with the Wellhead
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(6) The value of the New Common Stock for Chapter 11 plan
purposes will vary depending upon, among other things, a) the value
of the existing businesses and b) the allowed amount of all
administrative claims.
(7) Such Section 510(b) Equity Claims, as proposed to be
compromised in the proposed plan to be filed by the Trustee, are
currently estimated to total (with the CIGNA claim) approximately
$40 million dollars ($40,000,000.00).
(8) Concerning the ten million dollar allowed CIGNA claim, in
the plan such claim would be separately classified and treated as
an allowed Section 510(b) Equity Claim plus ten percent (10%). The
CIGNA claim would be so classified and treated as a compromise of
the Interest Rate Dispute and any claim by the Wellhead Interests
(or their predecessors) for prepetition or post-petition interest,
late fees, penalties and other professional fees and any Section
503(b) "substantial contribution" claim. Any and all claims of
the Wellhead Interests shall be discharged upon confirmation of the
Chapter 11 plan contemplated herein.
<PAGE>
Interests in good faith issues of corporate governance,
including the selection of a highly qualified board of
directors whose members have the experience and background to
maximize shareholder value.
SECTION III
The parties hereto further agree as follows:
A. None of the parties hereto will oppose any proposed
Chapter 11 plan for the Debtor's estate proposed by the Trustee
that is consistent with (but not limited to) the terms of this
letter except Halcyon may oppose the Trustee's plan if, and only
if, a) NRG Energy Inc. ("NRG") is proposing a plan and b) Halcyon
must by reason of its previous written and then enforceable
agreements with NRG oppose the Trustee's plan. None of the parties
hereto will propose or support any other proposed plan unless such
other plan also has the written support of the Trustee, except
Halcyon may propose or support a plan proposed by NRG if, and only
if, Halcyon must do so by reason of its previous written and then
enforceable agreements with NRG. If Halcyon does oppose the
Trustee's proposed plan or supports or accepts a plan proposed by
NRG without the written support of the Trustee, then the Trustee
shall have no duty to propose the Interest Rate Dispute settlement
set forth in this letter.
B. The Senior Claim holders and the Wellhead Interests may
not in any way sell, assign, encumber or otherwise transfer any of
their claims without their successor-in-interest agreeing in a
writing satisfactory to the Trustee to be bound by the terms of
this letter agreement.
C. This is the entire agreement among the parties hereto in
respect to the subject matter set forth in this letter. All oral
statements or previous writings are merged herein.
D. Except as may be necessary to enforce the terms of this
letter agreement, no party hereto or any other person or entity may
use this letter agreement or any statement made or act taken in
respect hereto in any litigation or for any other purpose of any
kind. This letter agreement is the product of months of settlement
negotiation between the parties. This letter agreement shall not
bind the Trustee to do or refrain from doing any act if the Trustee
believes such action or inaction is required by his fiduciary
duties. No party hereto or other creditor shall have any rights to
the distributions described herein unless and until the Bankruptcy
Court confirms the Trustee's proposed Chapter 11 plan.(9) The
parties hereto acknowledge that while the Trustee's Chapter 11 plan
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(9) This letter agreement shall be considered by the
Bankruptcy Court only as part of a detailed Chapter 11 plan filed
by the Trustee which plan will be consistent with (but not limited
to) the terms of this letter agreement. This letter agreement will
be immediately filed by the Trustee with the Bankruptcy Court.
<PAGE>
will be consistent with the terms of this letter, the plan will
also contain additional material terms and conditions. If the
Trustee, in the justifiable exercise of his fiduciary duty, files
any plan or plan amendment which is materially inconsistent with
the terms of this letter agreement, and which materially and
adversely impairs the parties hereto, then this letter agreement
shall be void without further notice and the parties hereto shall
no longer be bound by the terms of this letter agreement.
E. If the Bankruptcy Court does not confirm the proposed
Chapter 11 plan to be filed by the Trustee which is consistent with
(but not limited to) this letter by August 31, 1998, then this
letter agreement shall be void without further notice and the
parties hereto shall no longer be bound by the terms of this letter
agreement.
If this letter is satisfactory, please have each of the
parties sign below and return faxed signatures to me by no later
than December 31, 1997 and original signatures to me by no later
than January 6, 1998. If all parties hereto have not sent to me
such faxed and original signatures by the times set forth above,
then this letter shall automatically be null and void without
further notice.
Sincerely,
COHNE, RAPPAPORT & SEGAL, P.C.
Vernon L. Hopkinson
General Counsel for the Trustee
<PAGE>
The parties below have read and agree to be bound (as provided
in the letter) by the terms of the foregoing letter agreement.
Chapter 11 Trustee for Bonneville Pacific Corp.
Roger G. Segal, Trustee
"WELLHEAD INTERESTS"
By
Its
HALCYON/ALAN B. SLIFKA MANAGEMENT CO.,
LLC(agreeing to Sections I and III only)
By
Its
HALCYON OFFSHORE MANAGEMENT
CO., LLC. (agreeing to Sections I and III only)
By
Its
ARGO PARTNERS
By
Its
<PAGE>
MERRILL LYNCH
By
Its
BAKER, NYE
By
Its
COMAC PARTNERS LP
By
Its
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