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Energy Future Holdings bankruptcy could come before Nov. 1, analyst says

CreditSights, a debt researcher, said it expects Dallas-based Energy Future Holdings' biggest unit to file for bankruptcy by Nov. 1, citing a debt payment due that day, Bloomberg News reported. CreditSights also said it expects that unit, Texas Competitive Electric Holdings Co., to see its 2014 earnings to dip to $1.74 billion, down 13 percent from the analyst's previous estimate. Texas Competitive Electric Holdings includes EFH's deregulated subsidiaries -- Luminant Generation, Texas' largest power generator, and TXU Energy, one of the state's biggest electricity retailers.

CreditSights analysts Andy DeVries and Charles Johnston wrote Tuesday that weak prices this summer in the Texas wholesale power market and growing wind power generation are eroding the unit's value and profitability.  Bloomberg said EFH spokesman Allan Koenig declined to comment on the report.

The report comes just a day after Moody's Investors Service said "there is a high probability" EFH could file for bankruptcy by Dec. 31. EFH was created out of the 2007 buyout of the former TXU Corp., which saddled the utility with more than $40 billion in debt shortly before Texas wholesale power prices began to tumble. EFH said in August it has continued talks with creditors to discuss restructuring options. Moody's said the most troubled unit, TCEH, has about $30 billion indebt and is worth roughly half that, suggesting creditors face losses of about 50 percent on the face value of their EFH debt. Still, Moody's analyst James Hempstead predicted that "the restructuring will be relatively amenable and organized." He said Oncor Electric Delivery, the regulated unit that operates most of the power distribution network in North Texas, will remain insulated from EFH's woes thanks to effective "ring-fencing" of its debt that was put in place at the time of the buyout.

-- Jim Fuquay


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