Excerpts: Texas Utility Giant EFH Poised To Exit Bankruptcy After Three Years
- Energy Future Holdings (EFH), the parent company of Texas utility giants Luminant and Oncor Electric, is winding down what has become one of the longest and most unpredictable corporate bankruptcies in recent memory. Its success now rests in the hands of Texas regulators.
- EFH was known as TXU Corp until a historic $45 billion leveraged buyout by KKR, Goldman Sachs and TPG Capital in 2007.
- Falling energy prices quickly crippled the company – Berkshire Hathaway sold its investment in the company in 2013, at a loss of $873 million – and the company filed its bankruptcy in April 2014, laden with $40 billion in debt.
- In late 2015, the company thought it found the solution: the tax-free spinoff of its Texas Competitive Electric Holdings (TCEH) subsidiary, which included Luminant, and the sale of Oncor to Texas oil group Hunt Consolidated and a team of unsecured creditors. Oncor would be converted into a real estate investment trust (REIT) through the transaction.
- By this time, EFH had lined up a deal to sell Oncor to Florida-based NextEra Energy, which had been angling for the acquisition since the outset of the bankruptcy. The sale values Oncor at about $19 billion.
- The company drummed up another plan based on this sale, but in November received an unwelcome surprise from an appeals court finding it liable for those make-whole premiums – extra fees for early loan repayment – which added up to around $660 million.
- This week’s settlement deals were with two of those make-whole creditor groups, offering them 95 percent or 87.5 percent of their claim amounts, depending on their priority in the debt structure.