Press Release

Milbank Closes Landmark Sale of a Power Generating Asset Owned by a Creditor Group

Milbank Represents Sellers in $580 Million Sale of La Paloma to Complete Energy Holdings

NEW YORK, NY, August 19, 2005 – In a groundbreaking acquisition, Complete Energy Holdings, LLC (“Complete Energy”) has purchased La Paloma Generating Company, LLC (“La Paloma”) from a creditor group that included financial institutions and hedge funds, one of the largest cash sales of a power generating asset owned by a creditor group. The international law firm Milbank, Tweed, Hadley & McCloy LLP, led by partners L. Douglas Harris and David Wolfson, together with partners Luc Despins and Bruce Kayle, have represented creditors to La Paloma for over three years during which time the debt of La Paloma was restructured, the construction of the La Paloma generating facility was completed, affiliates of the creditors to La Paloma took ownership of the company and the sale of La Paloma was consummated.

L. Douglas Harris, partner in Milbank’s global project finance group, noted, “Building upon our expertise in financial restructuring transactions, project financing of energy assets and mergers and acquisitions in the power and energy sector, the Milbank team, working closely with the creditors and their advisors, has, over the past three years, negotiated a series of complex transactions that have culminated in the sale of La Paloma to Complete Energy and a substantial recovery for creditors. The sale to Complete Energy, and oversubscription of both of the senior secured acquisition credit facilities by a broad range of investors, including institutional investors, hedge funds, CLOs, commercial banks and investment banking firms, evidences strong investor interest in capitalizing on the opportunities presented by the dynamic power industry.”

About the transaction:
La Paloma’s primary asset, a 1,022 MW gas-fired, four-unit combined-cycle generating facility, has been purchased by Complete Energy Holdings, LLC. Complete Energy owns and operates merchant and contracted electric generating facilities. The La Paloma facility is located in Kern County, California, approximately 110 miles northwest of Los Angeles and 40 miles west of Bakersfield. Approximately half of La Paloma’s capacity is currently sold to Southern California Edison Company under two tolling agreements, with additional tolling agreements with other parties being contemplated. The remaining output is sold in the California merchant power market. Going forward La Paloma will be operated by Complete Energy’s wholly owned subsidiary CEP La Paloma Operating Company. Certain aspects of the commercial operations will be subcontracted to Fulcrum Power Services, LP, a commercial energy services company headquartered in Houston.

The $580 million sale and related transactions were funded by debt and equity:

• $525 million first and second lien Senior Secured Credit Facilities were arranged by joint lead arrangers West LB AG, New York Branch, and Morgan Stanley, who acted as joint lead arrangers, bookrunners and co-syndication agents. The financing was primarily syndicated in the institutional floating rate loan market (known as the “Term Loan B” market), thereby providing a diverse base of investors.
  

• $200 million in equity was provided by Complete Energy and former members of the creditor group. Complete Energy’s investment was arranged and funded by Trust Company of the West and CIT Group, Inc.
  

West LB acted as sole buy-side M&A and financial advisor for Complete Energy. Lehman Brothers acted as sell-side M&A and financial advisor for the creditors. The Milbank team in the Complete Energy transaction was led by partners L. Douglas Harris and David Wolfson, and associates William Bice, Hilary Kao, Annette Haugland Andreassen and Holly Vu Nguyen, all in the firm’s New York office. That team, together with Milbank lawyers headed by financial restructuring partner Luc Despins, tax partner Bruce Kayle and utility regulatory of counsel Steven Kramer, has been integrally involved in the restructuring transactions that culminated in the sale to Complete Energy.

About Milbank:
Milbank’s Power & Energy Group combines the expertise in corporate transactions with specialized regulatory skills required for developing and implementing successful strategies essential to compete in today’s complex and dynamic infrastructure industry. The Group’s ability to structure around regulatory impediments has allowed private equity investors to participate in the sector. In 2004 the group was involved in more than $21 billion of deals closed, eight of which were recognized as deals of the year by various publications. Milbank’s Power & Energy lawyers were involved in some of the major industry consolidations of the 1990s, including most of the cross-border transactions, all of the utility bankruptcy reorganizations, as well as diversifications into other industries and reorganizations of generating transmission and distribution assets. The firm is widely recognized as a leader in global project financings, including foreign power projects and infrastructure financings as well as both inbound and outbound cross-border acquisitions.

At the forefront of the utility industry, Milbank’s Power & Energy group has been involved in a number of “first of its kind” transactions, advising on the full range of issues that occur in strategic combinations from “takeover know-how” and regulatory expertise to tax, financing and bankruptcy and litigation matters.

Notable representations include:

• The institutional investors and bank lenders in the $602 million financing of the Neptune RTSTM Project Project to construct a 65 mile undersea transmission line connecting New Jersey interconnection site with LIPA’s grid in Long Island.
  

• The private equity group in the $1 billion acquisition of TNP Enterprises, Inc. by PNM Resources, Inc.
  

• Scottish Power PLC in its $9.4 billion sale of PacifiCorp to MidAmerican Energy Holdings, a unit of Berkshire Hathaway.
  

• The lenders in a non-recourse $500 million bridge financing for Brascan Corporation of Canada to fund its $874 million purchase of power generating stations from Reliant Energy, Inc. The deal, which came to market without a single contract or parent guarantee, was named by Euromoney’s Project Finance magazine as the “NORTH AMERICA MERCHANT POWER DEAL OF THE YEAR” for 2004.
  

• The official creditors committees in the Enron and Pacific Gas & Electric bankruptcies. 

Milbank, Tweed, Hadley & McCloy LLP is a global law firm headquartered in New York, with offices in Washington, D.C., Los Angeles, Palo Alto, London, Frankfurt, Munich, Tokyo, Hong Kong and Singapore. Milbank is a recognized leader in mergers and acquisitions, capital markets and corporate finance, project finance, acquisition finance and other major fields of legal practice. Milbank has English, German and U.S. law capabilities, and provides a full range of services to many of the world’s leading financial, industrial and commercial enterprises, as well as governments, institutions and individuals.