Liberty Power Holdings Takes Action To Ensure Continuing Operations and Strengthen Capital Structure Following Impact Of Texas Extreme Weather Event in February

FORT LAUDERDALE, Fla., April 21, 2021 /PRNewswire/ -- Liberty Power Holdings LLC ("Liberty" or the "Company"), a national retail electric supply company, today announced that it filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Florida.

The impact of the February extreme weather event in Texas was sudden and dramatic, causing an abrupt spike in wholesale costs of serving Electric Reliability Council of Texas (ERCOT) customers due to unprecedented market prices for energy and ancillary services, as widely reported in the press and discussed in state legislature hearings throughout February and March.  Liberty was able to provide service to its customers during this period. Liberty took immediate actions to prioritize services to customers, reduce non-essential spending and preserve liquidity. Liberty's business outside of ERCOT in northeastern and Midwest U.S. markets was not impacted and remains robust. However, Liberty was forced to pay for the full costs of energy provided to Texas customers in order to maintain ongoing operations, and this large payment necessitated today's action. The financial reorganization will provide Liberty a path toward a more robust financial structure that best positions the Company for the future as it navigates what could be a prolonged process of cost recovery.

Liberty Remains Open and Serving Customers

Liberty operates in over fourteen states and the District of Columbia and serves over 330,000 retail customer equivalents. All sales contracts and customer programs are expected to continue as usual. Customers can count on the same high level of service and reliability. "We thank all of our customers and employees for their continued dedication to our company and their passion for meeting and exceeding our customers' expectations.", said Bob Butler, Chief Restructuring Officer of Liberty. "We look forward to emerging from Chapter 11 as a stronger company."

Dramatic Impacts from Weather Event on ERCOT Market

Every day, Liberty seeks to educate customers about their ability to choose an energy supplier by offering service in over 14 states encompassing over 50 utility territories. Liberty Power is here to help its customers navigate volatile energy markets. However the events of February 10th to 20th in which approximately 40% of available power generation failed to perform, the power grid nearly collapsed, and ERCOT set wholesale energy and ancillary services prices at stratospheric and unprecedented levels  created a 'perfect storm' of conditions that were impossible for Liberty and other market participants to anticipate or prepare for. Many other retail electric providers, municipalities and cooperatives have suffered similarly to Liberty and are facing similar financial challenges as a result of this situation.

"Today's action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through the fallout of the Texas weather event and to better position us for the future." said Bob Butler. "Our loyal customers have made us one of the industry's well-known brands, and we look forward to serving them now and in the future."

First Day Motions

As part of the reorganization process, the Company is in the process of filing customary "First Day" motions, which we expect will be approved and will allow it to maintain operations in the ordinary course. Liberty intends to continue to provide the same products & services and competitive pricing and intends to continue to pay vendors and suppliers under customary terms for goods and services received on or after the filing date.

Sufficient Cash to Support Operations

As of the filing date, the Company had adequate cash on hand and has received a commitment for debtor-in-possession ("DIP") financing. Following Court approval, this financing, combined with cash flow generated by the Company's ongoing operations, is expected to be sufficient to meet Liberty's operational and restructuring needs. As part of the DIP commitment, Liberty will explore additional opportunities to maximize value, including a third-party sale process.

Strong Upward Trajectory

Liberty was on a strong upward financial trajectory prior to the Texas extreme weather event, including consecutive quarters of EBITDA improvement. The financial impact of the Texas weather event, however, necessitated restructuring actions.

Taking Actions in Response to Texas Extreme Weather Event and ERCOT market failure

When the effects of the ERCOT crisis began to manifest in February, the Company moved quickly to adjust. Liberty took action to closely manage overhead and operating costs. Liberty filed a petition with the Public Utility Commission of Texas ("PUCT") requesting emergency relief and joined the Coalition of Competitive Retail Electric Providers petition to the PUCT requesting emergency action.  These petitions remain pending at the PUCT. Liberty will continue to pursue these remedies but are uncertain of any relief that may be forthcoming.

ABOUT LIBERTY POWER

Established in 2001 and headquartered in Fort Lauderdale, Florida, Liberty Power is one of the largest and longest tenured owner-operated retail electricity provider in the United States. Liberty Power provides large and small businesses, government agencies and residential customers with competitively-priced electricity, sustainability solutions and exceptional customer service. 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of federal securities laws. Words such as "expect" and "intend" and similar expressions identify forward-looking statements, which include but are not limited to statements related to our liquidity, the expected effects on our business, financial condition and results of operations due to the spread of the COVID-19 virus, the bankruptcy process, the Company's ability to obtain approval from the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court throughout the course of the Chapter 11 case, the effects of the Chapter 11 case, including increased professional costs, on the Company's liquidity, results of operations and business, the effects of Chapter 11 on the interests of various constituents and the ability to negotiate, develop, confirm and consummate a plan of reorganization. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess. We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this filing, and we undertake no obligation to update this information.

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SOURCE Liberty Power Holdings