Energy Future Holdings says unsecured creditors not participating in restructuring talks

Posted Wednesday, Oct. 16, 2013  comments  Print Reprints

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Dallas-based Energy Future Holdings, the state’s largest electricity company, says in a regulatory filing that it is “currently not engaged” with a group of its unsecured creditors as it pursues a restructuring of its massive debt.

However, those unsecured creditors “have directed their advisors to continue … to explore further whether the parties can reach an agreement on the terms of a consensual restructuring,” according to the filing Tuesday with the Securities and Exchange Commission. And EFH remains in talks, the filing says, with its secured creditors as well as an unnamed “significant creditor,” reportedly Fidelity Investments.

EFH has been working with its lenders on a pre-packaged Chapter 11 bankrutpcy petition to lighten more than $40 billion in debt, taken on in a 2007 buyout of the former TXU Corp. EFH said it made the SEC filing because it shared confidential business information with the creditors, whose confidentiality agreements expired Tuesday.

The unsecured creditors who quit the talks hold less than two-thirds the $1.5 billion in bonds issued by Energy Future Intermediate Holding Co., the corporate parent of regulated utility Oncor Electric Delivery. Oncor is not expected to be included in a bankruptcy petition.

The SEC filing outlines three rival proposals. Lenders are divided over how much of Energy Future’s $43.6 billion in debt will be extinguished, and how lenders will carve up ownership of the Texas power company.

The company faces a possible bankruptcy by Nov. 1, the filing shows. Energy Future is due to make about $270 million in interest payments Nov. 1 — cash that senior creditors want the company to retain by filing for bankruptcy. Energy Future’s board is scheduled to meet the week of Oct. 28.

The restructuring of Energy Future’s debt won’t change any operations, customer service or involve cutting jobs or employee benefits, according to a letter sent to staff obtained by Bloomberg News and confirmed by Allan Koenig, a company spokesman.

Energy Future is close to obtaining a loan of more than $3 billion in preparation for bankruptcy, Bloomberg News reported last week, citing people with knowledge of the situation.

The filing also discloses business outlooks that EFH has shared with creditors.

EFH said it expects its deregulated power generation and electricity retailing subsidiaries — Luminant and TXU Energy — to see lower revenues and higher costs related to its natural gas price hedges and operational costs at its Comanche Peak nuclear power plant in Glen Rose.

In all, it forecasts that earnings before interest, taxes, depreciation and amortization (EBITDA) at Texas Competitive Electric Holdings will decline from $2.75 billion in 2013 to $1.8 billion in 2017. Texas Competitive Electric Holdings is the corporate parent of Luminant Generation, the state’s largest electricity producer, and TXU Energy, a big electricity retailer.

Earnings at Oncor Electric Delivery are expected to be mostly higher through 2017.

This report contains material from Bloomberg News.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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