Ohio-based FirstEnergy Corp’s (FE) debt-ridden subsidiaries have filed for Chapter 11 bankruptcy. The power generator made this announcement just days after it revealed the company’s plans to discontinue operations in Ohio and Pennsylvania based nuclear power plants. This process is said to take place over the next three years.
Nearly two years back, FirstEnergy had informed its investors that it was expecting bankruptcy for its loss-making units. And now the company revealed that the units burdened with debt – FirstEnergy Solutions (FES) along with FirstEnergy Nuclear Operating (FNO) -have filed for bankruptcy protection. However, the parent company ‘FirstEnergy Corp’ -that supplies electricity to nearly 6 million Americans- has not declared bankrupt.
This hints towards the company’s plan of shifting its focus completely on supplying electricity while winding up its power producing units. This will help FirstEnergy fasten its strategy to become a fully regulated utility. The Ohio-based power generator looks to reorganize and restructure its operations rather than shutting them down.
Struggling to generate profit for its coal and nuclear divisions, the power company had, in fact, begged the Trump administration to intervene and help the ailing units cope with competitors that use natural gas at much lower cost. Things fell out of control over the recent years as the number of natural gas power plants increased in the East and Midwest. But this move was widely criticized and referred to it as a petition for a corporate bailout.
Struggling to generate profit for its coal and nuclear divisions, the power company had, in fact, begged the Trump administration to intervene and help the ailing units
Both, FirstEnergy Solutions and FirstEnergy Nuclear Operating, together are said to have over $550 million in cash in order to continue its operations normally, during the restructuring process and to fulfill its obligations towards the employees. However, the companies have a huge amount of debt– close to $4 billion—that they owe to creditors as well as the parent company.
During 2017, FirstEnergy Solutions reported a loss of $1.7 billion, or $3.88 per share on revenue of $14 billion.