NextEra Energy will try to revive its $18 billion plan to buy Oncor Electric Delivery either by challenging Texas regulators’ rejection of the deal or negotiating with some of the state’s biggest power users, lawyers involved in the dispute said Monday.
Last week, the Public Utility Commission of Texas ruled that NextEra’s bid for Oncor, which maintain power transmission lines in North Texas, wasn’t in the public interest. The finding killed the sale and put the regulatory body in conflict with U.S. Bankruptcy Judge Christopher Sontchi, who’s overseeing the Chapter 11 case of Oncor’s owner, Energy Future Holdings.
At a bankruptcy court hearing in Wilmington, Del., on Monday, Sontchi said that the PUC’s decision could be “value destructive” and that the state’s demands may drive away potential Oncor buyers.
The sale of Oncor, a linchpin of the Energy Future Holdings reorganization plan, has been shot down twice by the PUC. A group led by Dallas-based Hunt Consolidated earlier withdrew its bid after the commission attached conditions that caused the deal to fall apart.
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Texas is demanding that NextEra have no control over who would be on Oncor’s board or how much money, if any, NextEra could extract from the company. NextEra has told regulators it won’t buy Oncor unless it can control the board and set fiscal policies.
Sontchi and lawyers for Energy Future agreed that it would be difficult to find a buyer willing to pay $12 billion for Oncor without getting control. The NextEra deal is worth about $18 billion, including the assumption of debt and other considerations. That money would be split among Energy Future’s creditors, who reached a settlement last year, ending a court fight that began when the holding company filed for bankruptcy in April 2014.
“The PUC seems unconcerned with the resolution of the bankruptcy estate as a factor in making its determination,” Sontchi said Monday. “I find that concerning.”
Figuring out what to do with Oncor is the single biggest hurdle in ending the bankruptcy of Energy Future. Formed by KKR & Co., TPG Capital and Goldman Sachs Capital Partners as part of the leveraged buyout of TXU Corp., Energy Future has been working to restructure almost $50 billion in debt for the past three years.
NextEra is “exploring every option,” Howard Seife, a lawyer for the company, told Sontchi. After the hearing, he said his client will try to come to terms with the electricity users that helped turn regulators against the deal.
One group that fought the proposal is Texas Industrial Energy Consumers. In a March 17 utility commission filing, it demanded that NextEra “commit to sharing any savings from the transaction with Oncor’s customers.” The same condition helped kill the Hunt proposal.