| June 17
June 17 A unit of Energy Future Holdings Corp,
the bankrupt Texas power company, was sued by holders of $2.2
billion of notes who said the company cannot refinance their
securities without making hundreds of millions of dollars in
early redemption payments.
Energy Future's power lines unit, known as EFIH, is trying
to skirt the prepayment premium obligation that made the notes
attractive to investors, according to complaint by Computershare
Trust Co, the indenture trustee for the notes.
"EFIH seeks to accomplish in bankruptcy what it could not
accomplish outside of bankruptcy - refinancing the second-lien
notes at lower interest rates without paying the redemption
premium," said Computershare in a court filing on Monday.
The early redemption payment is worth more than $700
million, according to earlier court filings by Computershare.
Energy Future filed for Chapter 11 bankruptcy in April in
the U.S. Bankruptcy Court in Wilmington, Delaware, with a plan
to restructure about $42 billion in debt through two separate
It has proposed that Energy Future Intermediate Holding Co
or EFIH, which owns the majority of the Oncor power lines
business, will emerge from bankruptcy under the control of
EFIH's unsecured creditors.
As part of the deal, EFIH plans to refinance $6.2 billion of
high-yielding secured debt, including the two issues of notes at
the center of Monday's lawsuit.
EFIH launched a tender offer for the notes on May 9 that
included a partial early redemption payment. The company has
said it expected to litigate the early redemption payment, known
as a make-whole payment, with those noteholders that do not
participate in the tender.
EFIH's notes carry interest rates of 11 percent and 11.75
percent, and Computershare said the rates would have been even
higher if it weren't for the commitment to the make-whole
Computershare is also seeking added interest payments and
its costs and legal expenses, according to its complaint.
Under the other leg of Energy Future's restructuring, it
plans to spin off the unit that owns the TXU Energy retail
utility and the power generating business known as Luminant to
holders of $24.4 billion in secured debt.
Energy Future took on much of its debt in 2007, when it was
formed with the record buyout of TXU Corp, led by KKR & Co
, TPG Capital Management and the private equity
arm of Goldman Sachs. The deal turned out to be an
ill-timed bet on natural gas prices, which soon began to
The private equity sponsors of the buyout are likely to lose
almost their entire investment in the bankruptcy.
The case is In Re: Energy Future Holdings Corp, U.S.
Bankruptcy Court, District of Delaware, No. 14-10979
(Reporting by Tom Hals in Wilmington, Delaware; Editing by