Mobile Energy Services Company: Ownership And Contractual Structures

FIE445 – Take-home Exam
Esty, Case n°18: “Mobile Energy Services Company”
Candidate numbers: 8 and 17

Question 1: Ownership and contractual structures Following the restructuration of Scott Paper and the subsequent acquisition of the energy complex by the Southern Company, a heavy contractual framework was displayed in order to try to secure the relationships between the parties.
The diagram below encompasses the most notable elements of this framework, with respect to the ownership of the Mobile Energy Services Company (MESC) and its agreements with other parties.

* MESC LLD was acquired by the Southern Company after a bidding process, through two of its (fully owned) subsidies: MESC Holding Incorporated and Southern Electric International. The acquisition was financed with a bridge loan of $350 million, which is now to be repaid with the issuance of mortgage and tax-exempt bonds.
The newly bought energy complex was legally established as a Limited Liability Company, meaning the MESC would be a separated entity (though being fiscally integrated) and that its upcoming bonds will hence be nonrecourse to the Southern Company (through its subsidies). The MESC is thus a

This kind of risk is often called environmental and social risk in project finance. The U.S Environmental Protection Agency proposed new regulations on the air pollution and wastewater that produced by paper and pulp manufacturers. The three mills would shut down if they were not forced to comply with the new regulations. Jaakko Pöyry estimated that the pulp mill would need from $150 million to $200 million to update its devices. However, the expenses incurred to adapt to the new regulation for the paper and tissue mill were unknown. There was not enough information to calculate capital expenditures that associated with the implement of new