Reuters: Bankruptcy News: UPDATE 1-Energy Future Holdings creditors remain at odds on bankruptcy talks -sources

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UPDATE 1-Energy Future Holdings creditors remain at odds on bankruptcy talks -sources Oct 14th 2013, 21:31 Share this Email Print Reprints Mon Oct 14, 2013 5:31pm EDT By Michael Erman and Billy Cheung NEW YORK Oct 14 (Reuters) - The creditors of Energy Future Holdings remain at odds over how to split the company's equity in an expected bankruptcy as their confidentiality agreements lapse, several sources familiar with the matter said on Monday. Secured lenders at Texas Competitive Electric Holdings, which represents Energy Future's unregulated subsidiary, and unsecured bondholders at Energy Future Intermediate Holdings (EFIH), Energy's Future's regulated subsidiary, had previously been in direct negotiations. But the EFIH unsecured bondholders have so far been reluctant to re-sign confidentiality agreements, according to one of the sources. If they do not re-sign confidentiality agreements, the creditors will make public details of their talks in a filing with the Securities and Exchange Commision as early as Tuesday, said the sources, who asked not to be named because the talks are still private. EFH, saddled with $40 billion of debt, wants to finalize a restructuring plan before Nov. 1, when $250 million in bond payments are due. Filing for bankruptcy before Nov. 1 would suspend the bond payments; but filing without a restructuring plan could entail years of battles and competing restructuring plans in bankruptcy court. EFH, formerly TXU Corp, was taken private in 2007 in a $45 billion buyout, the largest-ever leveraged buyout. The deal saddled the company with debt just before a sharp decline in natural gas prices and energy markets. The buyout consortium included private equity firms KKR & Co LP, TPG Capital Management LP and Goldman Sachs Group Inc's private equity arm. EFH's capital structure includes more than $32 billion of debt split up into various categories at the holding company of its unregulated retail and merchant power units, and another $7.7 billion in senior and junior debt at Energy Future Intermediate Holding Company LLC (EFIH), the parent of its regulated power distribution business, Oncor Electric Delivery Company. Energy Future Holdings has not yet given any signal about whether the November interest payments to unsecured bondholders would be made. The sources said that company has suggested that a payment could be made to buy additional time to avoid a free-fall, prolonged bankruptcy. But the sources also said that secured creditors would view payment of the November interest as an obstacle to negotiation. Secured creditors view those payments as part of their underlying collateral and would be displeased with that money leaking into the hands of unsecured bondholders, they said. The secured creditors are considering whether to withhold legal releases for Energy Future's board and sponsors, if such payments are made, another source said. Failure to obtain such releases could expose affected parties to lawsuits down the road. Link this Share this Digg this Email Reprints

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