Hunt Consolidated group withdraws bid for Oncor Electric

Dallas-based Hunt Consolidated and a group of creditors in the Energy Future Holdings bankruptcy withdrew their bid to buy Oncor Electric Delivery, the biggest transmission operator in Texas.

In a filing Wednesday with the state’s Public Utility Commission, the group said that it can’t complete the deal as approved by regulators in March, which included conditions that tax savings from a corporate restructuring be shared with ratepayers. The group said it may file a new application to buy Oncor if it can muster the necessary support.

The sale of Oncor is seen as key to Energy Future’s emergence from bankruptcy after two years in court. Investors balked at some of the conditions set by the state, leading Hunt to warn previously that the deal wouldn’t close without modifications. On May 1, Energy Future, Oncor’s parent, terminated its reorganization plan and filed a new one.

“Given all of the obstacles they encountered, I don’t think it was that surprising,” said Paul Patterson, a New York-based analyst at Glenrock Associates. “They have indicated they might come back with something else.”

The withdrawal opens a door for NextEra Energy, which recently expressed renewed interest in buying Oncor, people familiar with the matter said last week. The surprise move came a day before Texas regulators were scheduled to discuss the Hunt group’s request for a rehearing of its approval of the transaction.

“While we wanted to have a rehearing on the order, it is obvious now that, as written, the transaction will not close, so we believe that it is best to clean the decks and start over,” Jeanne Phillips, a spokeswoman for Hunt, said in an e-mailed statement. “Hunt is working to develop a model that can work for all parties involved.”

NextEra, based in Juno Beach, Fla., owns Florida Power & Light and is a leading generator of wind and solar power in North America. It was the front-runner to buy Oncor last year, before Energy Future settled on the Hunt-led takeover group, people with knowledge of the matter said at the time.

Energy Future spokesman Allan Koenig declined to comment.

Consumer advocates, the commission’s staff and Oncor itself raised concerns over Hunt’s proposed takeover. Critics said tax benefits the buyers would realize from running the utility through a real estate investment trust, known as a REIT, should be shared with customers.

Energy Future filed for bankruptcy reorganization in April 2014, with nearly $50 billion in debt, mostly from its record leveraged buyout seven years earlier by KKR, TPG Capital and Goldman Sachs. That bet went bad when natural gas prices plunged.

This story was originally published May 18, 2016 at 2:44 PM with the headline "Hunt Consolidated group withdraws bid for Oncor Electric."