Beleaguered energy provider

El Paso


got some good news Friday, closing a deal with

Bear Stearns


that will trim El Paso's hefty debt load.

Houston-based El Paso said it closed the sale of its Utility Contract Funding vehicle to Bear Stearns' Houston energy group. In the deal, Bear paid $21 million and assumed $815 million of nonrecourse debt. The companies agreed to the deal, under which El Paso will take a $100 million pretax charge, in March.

UCF is a special purpose entity that controls a power contract that has been restructured. Under this so-called pass-through vehicle, Morgan Stanley buys power in the market and sells it to UCF, which then sells it to PSE&G at a markup,

Megawatt Daily

reported. The supply contract with PSEG calls for 1.6 million MWh per year. El Paso acted as administrative agent running the SPE.

Utility Contract Funding raised $829 million with two senior secured, 15-year debt issuances in 2001,

Megawatt Daily


UCF is among a handful of special purpose entities El Paso created when it launched its Project Electron contract-monetization effort in late 1999. El Paso refers to the SPEs as "restructured contract assets."

The deal comes during another tumultuous stretch for El Paso. The company, whose management

only last year fought off a bitter proxy contest, recently got an

extension from its bankers on filing its annual papers. That news came on the heels of a series of reserve and financial restatements that pounded the company's stock.

On Friday, El Paso slipped 4 cents to $7.19.