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02/21/2014

Report: EFH bankruptcy near after creditor talks fail

The Wall Street Journal reports that Dallas-based Energy Future Holdings is preparing for a bankruptcy filing after months of talks with creditors have failed to produce an agreement on restructuring nearly $40 billion in loans. Citing unnamed sources, the newspaper said a last-minute deal is possible, but EFH is lining up debtor-in-possession (DIP) loans to keep its operations running during bankruptcy proceedings. The filing has long been expected, as the economics of the 2007 leveraged buyout of the former TXU Energy by big investors was torpedoed by the collapse in natural gas prices. The wholesale electricity market in Texas' deregulated markets is largely driven by the price of natural gas, the fuel behind about 40 percent of the state's power last year.

The Journal says a bankruptcy filing would also mean a split-up of EFH's operations. The company now includes: Luminant Generation, the state's largest electricity producer; TXU Energy, the largest electricity retailer; and 80 percent of Oncor Electric Delivery, the regulated utility that owns the poles and wires distributing power to most of North Texas.

-- Jim Fuquay

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