Creditors of Energy Future Holdings, the bankrupt Dallas-based power provider, agreed to drop objections to $4.5 billion in loans needed to keep its main unit running while under court protection.
U.S. Bankruptcy Judge Christopher Sontchi said Thursday that he will approve the loans once he sees final wording of the terms. The company may still face opposition to a separate proposed package of $5.4 billion in loans that would be used to pay off bondholders of the company’s regulated unit.
The judge said he will consider approving those loans at a hearing Friday.
The company — which operates TXU Energy, Luminant and Oncor Electric Delivery — resolved disputes with creditors over the smaller set of loans by agreeing to clarify what collateral will be used to guarantee repayment, Energy Future bankruptcy attorney Chad Husnick told Sontchi in U.S. Bankruptcy Court in Wilmington, Del.
Energy Future is seeking court approval for up to $9.9 billion in loans to fund its two main units, Texas Competitive Electric Holdings, which generates and sells power in Texas, and Energy Future Intermediate Holding, which owns a controlling stake in the state’s biggest electric transmission system.
Creditors have opposed the $5.4 billion loan partly because Energy Future has proposed paying a $57 million fee to lenders should Sontchi approve a rival loan.
The judge also allowed payments of about $100 million a month to the company’s senior lenders to compensate them for any potential loss in the value of the collateral that secures more than $22 billion they are owed.
EFH filed for bankruptcy April 29, listing $49.7 billion in liabilities. The company is seeking approval of a plan that would hand control of Texas Competitive to senior lenders and give the regulated unit to a different group of creditors. Some lower-ranking creditors oppose the proposal.