(Corrects fourth paragraph to reflect Energy Future is based in
Dallas, not Houston)
By Michelle Sierra and Nick Brown
April 28 Energy Future Holdings is close to
signing up at least $9.7 billion of bankruptcy loans from a
consortium led by Citigroup and Deutsche Bank,
according to two sources involved in the matter, allowing it to
finance its operations during a bankruptcy expected to be filed
While the loan amounts remain subject to change, the Texas
power company plans to seek Chapter 11 protection by Tuesday
with the so-called debtor-in-possession (DIP) loan in place,
whether or not it reaches a consensual restructuring deal with
its creditors before then, said the people, who declined to be
named because talks are private.
Citi is leading an approximately $4.5 billion DIP loan at
the company's unregulated merchant generation unit, while
Deutsche Bank is taking the lead on a $5.2 billion DIP at Energy
Future Intermediate Holdings, which owns most of the company's
regulated business, said the people familiar with the matter.
A spokesman for the Dallas-based company declined to
comment. A Citi spokesperson could not be reached for comment
and Deutsche Bank also declined to comment.
Other banks arranging loans include Morgan Stanley,
Bank of America Merrill Lynch, Barclays, Royal
Bank of Canada and Sumitomo Mitsui.
Unsecured bondholders at EFIH are expected to advance $2
billion of bankruptcy financing on top of the bank commitments,
a third person close to the matter told Reuters on Monday.
Energy Future, formerly TXU Corp, was created in 2007 in the
largest-ever leveraged buyout, led by KKR, TPG
and Goldman Sachs' private equity arm. The deal
loaded the company with debt just before a domestic energy boom
that reduced natural gas prices and eroded coal's cost
Several sources told Reuters on Friday that Energy Future
planned to file for bankruptcy as soon as Monday evening or
early on Tuesday.
The company would like to do so with the framework of a
restructuring already in place, which would save time and money
in Chapter 11. It remains to be seen whether it will accomplish
that goal, with restructuring talks with creditors carrying on
into the eleventh hour.
The company's largest creditor faction, a group of secured
lenders at its unregulated unit, is willing to accept a deal
that does not include a major tax savings mechanism it was
initially seeking, another person close to the matter told
Reuters on Monday.
The group, which includes private equity giants like Apollo
Global Management and Oaktree Capital Group, would agree to a
deal that would allow it to take ownership of Energy Future's
unregulated unit through a tax-free spinoff, but the deal would
be subject to the blessing of the Internal Revenue Service and
contingent on other milestones, said the person.
It would also depend on securing some other form of
compensation for the lenders in exchange for their agreement to
forgo the tax savings, which is still a point of discussion,
the person said.
(Reporting by Michelle Sierra and Nick Brown; Additional
reporting by Soyoung Kim and Billy Cheung; Editing by Tom Brown)