Energy Future Holdings proposes spinning off power plants, retail electricity business to senior creditors
By Tom Hals
WILMINGTON, Del, May 1 (Reuters) – Energy Future Holdings Corp, the largest power company in Texas, marked the two-year anniversary of its $42 billion bankruptcy by essentially hitting the reset button and unveiling on Sunday a new Chapter 11 exit plan.
The plan comes after investors withdrew their support last week for acquiring Energy Future’s crown jewel, its Oncor power distribution business. That deal, valued at up to $20 billion, was led by Energy Future’s creditors and Hunt Consolidated Inc of Dallas, and was meant to fund the prior bankruptcy exit plan.
Energy Future’s bankruptcy has been among the largest ever in the U.S. and has been marked by complex legal battles. The company filed for bankruptcy on April 29, 2014 and said at the time it anticipated exiting bankruptcy in 11 months.
This time, the company is seeking an even quicker schedule to exit Chapter 11 and asked for a hearing to confirm its new plan on Aug. 1.
Like the original plan, Energy Future proposes spinning off its power plants and retail electricity business to senior creditors. Unlike the prior plan, the new plan allows those creditors to take control of those assets without waiting for a deal for the Oncor side of Energy Future’s business.
Under the new plan, creditors of the Oncor side of Energy Future could take control of the distribution business, or it could be sold.
Hunt Consolidated and the investors could still pursue their plan to acquire Oncor, according to a statement from the privately held business.
The Hunt-led deal for Oncor was approved by the Public Utility Commission of Texas, but with conditions that made the potential returns less attractive. Hunt and the investors have asked the commission to reconsider its ruling.
Oncor owns the largest network of power lines in Texas, reaching 3.3 million homes and businesses. NextEra Energy Inc of Juno Beach, Florida, briefly pursued a deal for Oncor in 2015.
Energy Future was forced into bankruptcy by weak electricity prices that left it unable to service its debt, much of it taken on to finance a leveraged buyout of what was then known as TXU Corp by KKR & Co, TPG Capital and an affiliate of Goldman Sachs.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Alan Crosby)