Receiver Seeks OK to Sell Youngstown Thermal for $250K
YOUNGSTOWN, Ohio – The receiver overseeing the operations of Youngstown Thermal Cooling LLC has filed a motion in the Mahoning County Court of Common Pleas to sell the company’s assets for $250,000 to SOBE Thermal Energy Systems LLC.
The motion was filed electronically Friday afternoon.
Court documents say that the receiver for Youngstown Thermal, Reg Martin, entered into a purchase agreement April 19. The $250,000 price tag is “believed to be the highest and best price to be had in the foreseeable future,” the motion states.
The Mahoning County Common Pleas Court must approve the sale agreement, and the transaction is also contingent on approval by the Public Utilities Commission of Ohio.
A spokesman for PUCO confirms the agency was informed recently that a sale of Youngstown Thermal is pending.
“We were made aware this week,” said Matt Schilling, spokesman. As of Friday, Youngstown Thermal had not filed any documents with the PUCO.
Youngstown Thermal supplies steam heat and some cooling services to more than 35 customers in the city’s central business district.
The court appointed a receiver in August 2017 after Youngstown Thermal failed to make payments on critical utility bills. The utilities threatened to terminate service, which would have forced Youngstown Thermal to shut down, leaving customers without basic heating or chilling services.
Since then, the district heating utility has restructured its business under receiver Reg Martin, who has worked for nearly two years to find a buyer for the operation.
According to the receiver’s fifth report filed with the court in January, Youngstown Thermal submitted a draft purchase agreement to SOBE Energy Solutions LLC, a private “non-traditional” company based in Dublin, Ohio.
Meanwhile, Martin continued to pursue other opportunities, including advocating that the city assume ownership of the plant. However, Mayor Jamael Tito Brown declined to pursue any idea of the city managing the steam-heat plant.
Efforts to contact Martin for this story were unsuccessful.
Martin told The Business Journal in late March that he was optimistic a sale agreement with SOBE could be reached within several weeks. The agreement, he said, would mean better rates for customers now in Youngstown Thermal’s system, who have had to bear drastic rate hikes throughout Thermal’s receivership.
Under SOBE’s business model, customers would experience better rates than from another for-profit utility, Martin said at the time.
According to its website, SOBE Energy uses waste-to-fuel energy conversion technology that produces a clean, synthetic fuel gas that can be used directly in burners for heating, or in gas turbines for electrical generation. Youngstown Thermal uses fuel oil that is derived from wood waste, which has reduced fuel costs at the plant by about $1 million a year.
In September 2018, SOBE sent a non-binding letter of intent to Youngstown Thermal proposing to purchase of the steam plant, according to a previous receiver’s report.
Youngstown Thermal began to experience financial troubles in 2017 after its largest customer, Youngstown State University, opted to build its own boiler units and left the system. The company was forced into receivership when it was unable to pay its bills.
Under receivership, Youngstown Thermal was able to erase a deficit of $1.8 million and realize a small profit of $2,500 during 2018, according to reports filed with the court. This was accomplished through cutting costs, reducing the workforce, instituting an emergency surcharge on customers, and establishing a new rate structure.
Copyright 2019 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our print edition and sign up to our free daily headlines.