Dallas-based Energy Future Holdings won approval on Friday for its main unit to borrow more than $2 billion to keep operating in bankruptcy after the company and junior creditors negotiated details about how the cash would be used.
U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Del., signed the order this morning after the company made a handful of changes to the wording with the consent of creditors that objected to the loan. Sontchi had agreed on Thursday to approve the order and asked the two sides to work out final wording he could consider today.
In return, the company agreed not to use $150 million in cash as collateral after creditors complained that might threaten Energy Future’s ability to repay them.
The company originally asked Sontchi to allow Texas Competitive Electric Holding, which includes Luminant Generation and TXU Energy, to borrow $2.7 billion now and more later. Sontchi said Thursday that the company needed to cut more than $300 million from the first loan. The loan would be used by TCEH to keep operating.
The company’s other unit, Energy Future Intermediate Holding, is seeking permission to borrow $5.4 billion which it will use to fully repay some creditors.
EFH, the state’s largest electricity provider, was taken private seven years ago in a record leveraged buyout led by KKR and TPG Capital. EFH filed for bankruptcy on Tuesday after negotiating a restructuring deal among creditors, owners and management.
Some junior creditors still oppose the pre-bankruptcy deal, saying they were locked out of negotiations.