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So far Melinda Mallari has created 21 blog entries.

Applied Business Strategies Named Burgess Biopower Restructuring Advisor

Burgess Biopower and co-debtor Berlin Station entered Chapter 11 February 9, 2024 armed with a dual-track plan process that would either sell the biopower company’s assets or hand them to its lenders.

The company says it was driven into bankruptcy amid multiple disputes with the sole buyer of its energy. Those disputes are complicated further by arguments over credits and offsets, as well as defaults and the purchase agreement’s termination. The New Hampshire-based company filed in the US Bankruptcy Court for the District of Delaware, where its case will be overseen by Judge Laurie Silverstein.

The company

According to the first day declaration of CRO Dean Vomero, the debtors are renewable energy companies that own a 75-megawatt biomass-fueled power plant in Berlin, New Hampshire. The site spans roughly 62 acres. Berlin Station owns the facility and site, while Burgess leases it and holds the necessary regulatory licenses for operations.

Vomero says the facility “consistently ranks among the most efficient and well-run biomass plants in the country.” Its “capacity factor,” a measure of efficiency, averages over 90% against an industry average of 58.1%. The debtors deliver over 500,000 megawatt hours (MWH) of baseload power to the New England grid annually, and the plant is the fourth largest power generator in the state. That energy output, the declaration says, is enough to power 10% of the total homes in New Hampshire. The facility employs around 28 individuals, provides over 240 jobs “directly or indirectly,” generates USD 70m in economic activity in the state each year, and is the largest buyer of biomass in the state.

Berlin Station’s predecessor acquired the facility’s site in 2008 for roughly USD 100m, at which point it housed a pulp and paper mill that was shuttered in 2006. The debtor converted it between 2011 and 2013. It has done business for a decade with the Public Service Company of New Hampshire, operating under the name Eversource Energy, pursuant to a power purchase agreement (PPA).

Vomero’s declaration paints the PPA as one-sided in Eversource’s favor in multiple ways. One of those is a “cumulative reduction factor,” which generally caused an adjustment to the purchase price of energy that the debtors say went in the buyer’s way every time. Prior to termination, he adds that the PPA contained a right of first refusal and purchase option for Eversource, putting virtually all power in their hands.

The debt

Burgess’ secured debt arises under two primary tranches – senior secured notes and subordinated secured debt. The former has USD 115m outstanding, and the latter USD 30m, approximately. Eversource is the only unsecured creditor listed in Burgess’ initial documents.

The descent

The debtors point first to a dispute with Eversource for its strain, accusing the counterparty of breaching the PPA by improperly withholding USD 3.6m from the debtors, “essentially cutting off nearly all” revenue while continuing to consume power.

Burgess also says it faced other headwinds, such as a legislative moratorium on the PPA’s adjustment provisions expiring at the end of 2023, allowing Eversource to credit over USD 100m against payments for energy delivered this operating year. Given that, the declaration says that without terminating the PPA it would have been essentially giving power away. That moratorium was put in place in December 2018 by the New Hampshire Public Utility Commission to address the building potential adjustment around the time it was reaching a massive offset. While the moratorium prevented Eversource from asserting the credit, it allowed the credit to accumulate, and it hit USD 100m in September 2019. Eversource told Burgess the total as of 8 December 2023 was USD 171.5m, which under the PPA’s calculations allows the buyer to credit USD 5.96m against each monthly invoice.

The disputed USD 3.6m arises from an argument over what fees Eversource can credit against. By refusing to pay that USD 3.6m, Burgess claims Eversource breached the PPA, granting the debtors the right to terminate the agreement.

The Chapter 11

Vomero’s declaration says that the debtors have terminated the PPA, and now seek to sell power via other channels while using Chapter 11 to achieve a restructuring.

Burgess enters Chapter 11 with a restructuring support agreement (RSA) in hand, aiming to provide for ongoing operations and the payment in full of trade creditors, along with preserving jobs. The RSA contemplates a toggle plan which would hand the company over to its secured noteholders if a sale cannot be achieved. Under that plan, unsecured creditors would be paid in full up to a cap of USD 250,000.

The company will fund its Chapter 11 with USD 54m in debtor-in-possession (DIP) financing from its prepetition lenders. That comprises USD 18m in new money, plus a rollup of existing debt, amounting to a 2:1 rollup ratio. USD 4.4m would be unlocked upon interim approval.

2024-02-14T11:50:22-05:00February 14th, 2024|
  • tom pratt interim president toledo solar

Tom Pratt Named to Toledo Solar Inc. Board of Directors

Tom Pratt has been named to the Board of Directors for Toledo Solar, Inc. (“TSI”).   Mr. Pratt, in his capacity as Interim President, Treasurer and Secretary has been leading TSI through a restructuring since early July, 2023.  TSI is an early-stage manufacturer of state-of-the-art American Made Cadmium Telluride solar modules for the residential, commercial, and industrial markets.

2024-01-25T11:33:05-05:00November 9th, 2023|
  • valuation projects - applied business strategy

Two Valuations for Assignments for the Benefit of Creditors

Applied Business Strategy has recently completed two more valuation projects for bonding purposes in connection with General Assignments for the Benefit of Creditors (“ABCs”) that have been filed in the Court of Chancery of the State of Delaware. The companies consisted of an early-stage research and development company in the biotechnology sector and a company specializing in transfusable blood services. ABS determined the value of various assets, including accounts receivable, deposits, prepaid expenses, supplies inventory, and fixed assets for these ABCs.

2023-09-12T15:31:05-04:00September 12th, 2023|
  • tom pratt interim president toledo solar

Tom Pratt Appointed Toledo Solar Inc. Interim President

Tom Pratt, Managing Director of Applied Business Strategy LLC, has been appointed interim President, Treasurer, and Secretary by Toldeo Solar Inc.’s Board of Directors.

Along with lead investor, Sean Fontenot, the Board’s new Chairman, Tom Pratt will oversee daily operations.

Toledo Solar manufactures state-of-the-art Cadmium Telluride solar modules for the residential, commercial, and industrial markets.

2023-07-19T13:29:04-04:00July 19th, 2023|
  • Applied Business Strategy acting as interim Chief Financial Officer

Applied Business Strategy Engaged as Interim Chief Financial Officer

An Applied Business Strategy professional has been engaged by a private equity backed international tier one and aftermarket producer of components for the heavy truck and trailer markets as interim Chief Financial Officer.  ABS’s engagement was the result of an untimely departure of the prior Chief Financial Officer.

2023-07-14T14:32:05-04:00July 14th, 2023|
  • Where do recessions come from

Where Do Recessions Come From?

The Federal Reserve Bank of St. Louis recently published two articles which happened to catch our interest. The first is with respect to the labor market. In one graph, the inflationary pressure we are experiencing is well displayed. The graph in essence shows the disparity, over time, between labor supply and demand at: “Are labor supply and labor demand out of balance? | FRED Blog (stlouisfed.org)”. The imbalance (workers required) stands at 4.7 million. It will be interesting to see how the interest rates are impacted as the Fed balances the recent banking crises and labor driven inflation. Also, we thought the overview of the business cycle was of interest as well All About the Business Cycle: Where Do Recessions Come From? | St. Louis Fed (stlouisfed.org).

2023-03-29T12:32:48-04:00March 31st, 2023|
  • Valuations

Valuations for Assignments for the Benefit of Creditors

Applied Business Strategy of Cleveland (ABS) provides valuations in distressed situations. Recently, ABS completed valuation projects in connection with General Assignments for the Benefit of Creditors (ABCs) filed in the Court of Chancery of the State of Delaware. ABS determined the value of various assets, including accounts receivable, deposits, inventory, fixed assets, and software (for bonding purposes) in three separate matters involving a biotechnology start-up, video-conferencing company, and medical device manufacturer.

2023-03-06T15:07:11-05:00March 30th, 2023|
  • Tom Pratt Named Agent for Tradefull

Tom Pratt Named Agent and Collateral Agent for Tradefull

Tom Pratt has recently been named Agent and Collateral Agent for Kasper Holdings LLC, dba Tradefull, involving two separate debt based capital raises. In his role, Mr. Pratt helped negotiate an inter-creditor agreement and acts as collateral agent for the Secured Creditors pursuant to the security documents.

Tradefull provides outsourced e-commerce solutions using proprietary technology and services to help e-commerce companies drive revenue, save money, and make logistics more streamlined and efficient.

2023-03-29T12:20:28-04:00March 29th, 2023|
  • expert witness testimony

Winning Expert Witness Testimony

Defendants in a commercial litigation matter enlisted Applied Business Strategy of Cleveland (ABS) and John Stark to assist in a response to Plaintiff allegations of breach of contract, fraud, unjust enrichment and other allegations, which resulted in alleged damages. ABS prepared a rebuttal report to assist counsel in providing questions and exhibits for deposition and cross-examination of the Plaintiff’s expert. The case went to trial. With John Stark’s testimony and presented evidence, ABS’s client prevailed, winning a defense verdict from the jury.

2023-03-06T15:08:09-05:00March 15th, 2023|
  • forensic accounting analysis

Forensic Analysis

A medical device and service company engaged John Stark and Applied Business Strategy of Cleveland (ABS) in connection with a shareholder dispute. ABS performed a forensic analysis, examining certain disbursements during periods before and after the sale of the company, and tracing receipts and distributions of the sale proceeds.

2023-03-29T12:38:04-04:00March 1st, 2023|