Entergy Unit Seeks Bankruptcy Protection

Friday September 23, 3:39 pm ET 

Entergy's New Orleans-Based Unit Files for Bankruptcy Protection After Losing 130,000 Customers


BATON ROUGE, La. (AP) -- Facing huge rebuilding costs and a loss of revenue following Hurricane Katrina, the New Orleans-based subsidiary of the electric and gas utility Entergy Corp. has filed for bankruptcy protection.

Entergy New Orleans Inc., which has lost up to an estimated 130,000 customers because of the hurricane, announced the filing Friday.

"We took this action after careful review of the various options available to preserve Entergy New Orleans' business over the near- and long-term" Dan Packer, Entergy New Orleans' chairman and chief executive officer, said in a news release. "Due to our parent company's financial support, we can focus on the city's reconstruction and rebirth, as those restoration efforts continue today."

Entergy New Orleans plans to borrow up to $200 million from its parent company, pending court approval, to pay wages and benefits, make payments under existing power purchase and gas supply agreements and continue repairing and restoration of facilities wrecked by Katrina.

A hearing was set for Monday on the bankruptcy petition, the company said.

Earlier in the week, Entergy estimated preliminary restoration costs for New Orleans at $325 million to $475 million. News of the filing was released as the city was again beginning to flood due Hurricane Rita making its way through the Gulf of Mexico.

Entergy said the New Orleans unit is the smallest of its five utility companies, and accounted for about 7 percent of its 2004 revenue of $2.4 billion, and 3 percent of its earnings of $161 million.