| WILMINGTON, Del.
WILMINGTON, Del. May 16 Texas' largest power
company, the bankrupt Energy Future Holdings Corp, was
sued by a representative for noteholders who said they are owed
$665 million in return for refinancing their securities, a key
part of the company's bankruptcy plan.
Energy Future filed for bankruptcy in April with a complex
plan to restructure its $42 billion in debt.
Part of that plan involves offering a new loan in return for
$3.5 billion of secured 10 percent notes issued by a subsidiary
known as Energy Future Intermediate Holding.
A majority of holders of the secured notes oppose the plan,
according to the lawsuit filed late on Thursday in the U.S.
Bankruptcy Court in Wilmington by CSC Trust Co of Delaware, the
secured notes trustee.
The dispute turns on whether the holders of those secured
notes are owed an added payment to compensate for early
redemption of their securities through the bankruptcy
refinancing. Energy Future has said they are not, and had warned
when it filed for bankruptcy it was prepared to litigate with
noteholders who demand the early redemption payment, known as a
Energy Future has said it entered bankruptcy with the
support of 30 percent of the holders of the secured notes.
The EFIH subsidiary owns the Oncor power transmission
business, which is not bankrupt. The restructuring plan
anticipates EFIH will emerge from bankruptcy owned by
lower-ranking unsecured creditors.
The company has commenced a tender offer for the notes in
two stages. Investors who tender in the first stage receive
better terms, according to Energy Future. The first stage
expires at 5 p.m. EDT (2100 GMT) on Monday.
The notes trustee also asked the court to hold a hearing by
the end of Monday to determine if Energy Future needed court
approval for its tender offer. The trustee said the tender offer
does not comply with the Bankruptcy Code or securities laws and
is based on misleading information.
As of mid-Friday, the U.S. Bankruptcy Court had not
scheduled a hearing for Monday.
Energy Future was created in the 2007 record leveraged
buyout of TXU Corp, led by KKR & Co, TPG and the private
equity arm of Goldman Sachs. The buyout firms are likely
to recover next to nothing in the bankruptcy.
A company spokesman and an attorney for the trustee did not
immediately respond to requests for comment.
The case is In Re Energy Future Holding, U.S. Bankruptcy
Court, District of Delaware, No. 14-10979
(Editing by Matthew Lewis)