A day after filing for bankruptcy, Dallas-based Energy Future Holdings disclosed the depth of its financial problems, reporting that it lost $2.3 billion in 2013.
Also in the Securities and Exchange Commission filing made Wednesday, EFH said that its chief executive officer, John Young, received a pay package worth $7.35 million last year, 9 percent more than he was awarded in 2012. And the company detailed an arrangement by which he would receive a $9.1 million cash severance if he’s terminated without cause following a change in control at the company.
EFH’s plan for a rapid bankruptcy proceeding in Delaware is already coming under fire from a group of junior bondholders. In a court filing, the creditors, who hold $1.6 billion in notes from an EFH subsidiary, complained that they were left out of negotiations and have asked that the case be moved to Dallas.
The trustee for those creditors, Wilmington Savings Fund Society FSB, also asked U.S. Bankruptcy Judge Christopher Sontchi for permission to obtain documents from the company and question managers under oath.
Under a plan hashed out with senior creditors, EFH said it would give its largest unit, Texas Competitive Electric Holdings, to those creditors in exchange for eliminating $23 billion in debt. TCEH owns Luminant Generation, Texas’ largest power producer, and TXU Energy, the state’s largest electricity retailer with 1.7 million customers.
“We are pleased to have the support of our key financial stakeholders for a consensual restructuring,” Young said in a statement issued Tuesday. EFH’s bankruptcy petition listed assets of $36.4 billion and liabilities of $49.7 billion.
But the junior bondholder’s trustee, in its court filing, said EFH’s proposed reorganization is based on management’s projections “purposefully designed to curry favor with the senior lenders and line their own pockets.”
In suggesting that the case be moved to Dallas, the trustee held up the bankruptcy proceeding of Atlanta-based Mirant Corp., which chose to file its Chapter 11 case in Fort Worth bankruptcy court in 2003, as a model for how the EFH case should be handled.
Mirant, also a power producer, went through Chapter 11 under the supervision of U.S. Bankruptcy Judge Michael Lynn, who slowed down the case, didn’t allow an originally proposed plan to slide through and ultimately approved a plan that paid creditors in full and under which Mirant’s shares retained value.
EFH, which hopes to get through the bankruptcy process in 11 months, may have to strike a deal with the junior creditors, according to Andy DeVries, an analyst at debt-researcher CreditSights Inc.
Allan Koenig, a spokesman for EFH, had no immediate comment on the motion.
The investors who led the $45 billion buyout of the former TXU Corp. in 2007, which created EFH, also will take a severe loss in the bankruptcy. In its SEC filing Wednesday, EFH said that TPG Capital, KKR, Goldman Sachs and other investors who put $8.3 billion into the deal will end up with just 1 percent ownership in the new company.
That stake could be diluted further by future issues of ownership shares, the filing said.
EFH’s filing showed that for the first time since the buyout, the company saw its revenues increase from the prior year, rising to $5.9 billion last year from $5.6 billion in 2012. But a $1 billion charge-off, along with higher fuel and purchased power costs and $2.7 billion in interest and related charges, produced the net loss. In 2012, the company lost even more, $3.4 billion.
EFH’s earnings included $335 million from its 80 percent ownership stake in Oncor Electric Delivery, a regulated utility that operates most of the power lines in North Texas. In a separate filing in March, Oncor reported $432 million in net income on revenues of $3.6 billion in 2013.