Optim Energy CEO says depressed economic environment of electric power industry partly behind company's losses
A Texas energy company owned by a Bill Gates investment fund has filed for bankruptcy protection after piling up losses in a depressed power market.
Optim Energy, which owns three power plants in eastern Texas, said in court documents it has been unable to reduce costs far enough to stem financial losses.
In court papers Optim Energy's chief executive officer, Nick Rahn, said: "The current depressed economic environment of the electric power industry – particularly with respect to coal-fired plants – and the debtors' liquidity constraints have resulted in continuing losses that, simply put, have left the debtors without alternatives."
Two of Optim's plants are natural-gas fired. The company may seek to sell its coal-fired Twin Oaks plant during the course of its bankruptcy, according to the papers filed with the US bankruptcy court in Delaware.
Optim said it had $713m (£430m) outstanding under a credit agreement with Wells Fargo. It estimated its assets were worth less than $500m.
The Wells Fargo agreement dates from 2007, when Optim was created by an affiliate of Gates' investment vehicle Cascade Investments and energy holding company PNM Resources Inc.
PNM's initial 50% stake in Optim was later cut to 1% through a restructuring and eventually written off, leaving Optim solely under the control of Cascade.
Power companies such as Optim have been hit by plummeting natural gas prices. Dynegy Inc and Edison Mission Energy both filed for bankruptcy in recent years, and Energy Future Holdings, formerly TXU, is negotiating with creditors to restructure $40bn of debt.
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