NEW YORK, April 3 Energy Future Holdings, the
struggling power company formerly known as TXU Corp, said on
Wednesday it had received a ruling from U.S. tax authorities
that could potentially save the company billions of dollars if
The Internal Revenue Service ruled that the company can
eliminate a $19 billion excess loss account and $4 billion
deferred intercompany gain, without accounting for them as
taxable income, according to a filing with regulators.
Those items were generated when Energy Future Holdings (EFH)
was taken private in 2007 in the largest ever leveraged buyout.
EFH, which revealed the tax ruling in a filing with the U.S.
Securities and Exchange Commission, previously said that the two
items might be counted as taxable income in some situations.
Those included the company's separation from the unit that holds
its unregulated power businesses, called Energy Future
Competitive Holding Co.
EFH has said it has no plans to separate Energy Future
Competitive Holding from the parent company. But restructuring
experts and people close to the case expect Energy Future will
eventually try to put the struggling unregulated power
businesses into bankruptcy, while attempting to keep the parent
company and regulated utility Oncor out of bankruptcy.
The $45 billion TXU buyout, which loaded the company with
debt, is viewed as one of the most spectacular failures of the
last decade's buyout boom. KKR & Co, one of the private
equity firms that led the TXU deal, has written off 95 percent
of the value of its investment in the company. TPG Capital
Management and Goldman Sachs Group Inc's private
equity arm were also part of the consortium that bought TXU.