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EFH Bankruptcy Filing Would Split TXU Energy, Luminant from Oncor
Energy Future Holdings this morning filed for Chapter 11 in the United States Bankruptcy Court for the District of Delaware.
EFH and various subsidiaries, "will operate their businesses as 'debtors-in-possession' under the jurisdiction of the bankruptcy court and in accordance with the applicable provisions of the Bankruptcy Code. The Companies intend to conduct business operations in the normal course and maintain their focus on achieving excellence in customer service and meeting the needs of electricity consumers in Texas," EFH said in an 8-K.
EFH said that the Chapter 11 petition reflects a pre-arranged restructuring plan with certain of its key financial stakeholders, "to reduce its approximately $40 billion of debt, lower its annual cash interest costs, access significant additional capital and create a sustainable capital structure for the future."
Under the terms of the proposed restructuring agreement, upon emergence, transactions would be implemented to eliminate certain debt at EFH and certain of its subsidiaries.
Under the proposal, Texas Competitive Electric Holdings Company LLC (TCEH), the holding company for EFH's competitive businesses including TXU Energy and Luminant, and its subsidiaries would separate from EFH without triggering any material tax liability, and TCEH's first lien lenders would receive all of the equity in the reorganized TCEH and the cash proceeds from the issuance of new debt at the reorganized TCEH in exchange for eliminating approximately $23 billion of TCEH's funded debt.
At Energy Future Intermediate Holding Company LLC (EFIH), the proposed transaction would eliminate approximately $2.5 billion of EFIH's funded debt through, among other things, a capital infusion of up to $1.9 billion from certain EFIH unsecured noteholders. This capital would convert, along with all EFH and EFIH unsecured notes, into equity in the reorganized EFH upon the completion of the company's reorganization. In addition, certain EFIH unsecured noteholders will receive cash consideration as a part of the reorganization.
At EFH, the proposed transactions would eliminate approximately $600 million of EFH's funded debt. The reorganized EFH would continue to own Energy Future Intermediate Holding Company LLC (EFIH), and EFIH would continue to retain its interest in Oncor.
The agreement contemplates the confirmation of the proposed plan of reorganization within approximately nine months and exit from the restructuring within approximately eleven months, in each case, from the petition date. In addition, EFH said that the agreement has "substantial" support from the TCEH first lien lenders, the EFIH unsecured creditors, the EFIH first and second lien lenders, EFH unsecured creditors, and the three private-equity holders of EFH. The company said that it will work to obtain additional support for the agreement during the reorganization process
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April 29, 2014
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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