| WILMINGTON, Del, June 5
WILMINGTON, Del, June 5 A lawyer for Texas's
largest power provider, the bankrupt Energy Future Holdings
, told a judge on Thursday the company had resolved
most objections to financing arrangements that were important to
maintaining its business.
Edward Sassower of Kirkland & Ellis, told Judge Christopher
Sontchi of the U.S. Bankruptcy Court in Wilmington, Delaware,
that the company would reached agreements with creditors to
modify language in its requests to borrow up to $4.75 billion.
The money will be used to satisfy regulators, allow
continued hedging of commodities and to pay the cost of the
bankruptcy, which Chief Financial Officer Paul Keglevic told the
court was estimated to be $900 million.
Energy Future filed one of the largest U.S. bankruptcies in
April with a plan to slash its $42 billion in debt.
Much of the debt was taken on in 2007 when the company was
formed with the record buyout of TXU Corp. The deal was led by
KKR & Co, TPG Capital Management and the private equity arm of
Goldman Sachs, but turned out to be an ill-timed bet on natural
gas prices, which soon began to plummet.
Sontchi approved consolidating 71 separate bankruptcy cases
relating to Energy Future into one, a routine request which was
opposed by junior creditors of TCEH, Energy Future's generating
and retail utility.
The junior creditors viewed the bankruptcy as two separate
cases because of the way Energy Future has proposed
restructuring its debt.
It plans to spin off its TCEH business to that unit's senior
creditors, who are owed $24.4 billion. Junior creditors owed
$7.7 billion will have to share around $200 million, or less
than 3 cents on the dollar.
Energy Future's other main business, known as EFIH, is the
majority owner of Oncor, the biggest operator of power lines in
Texas. It has proposed emerging from bankruptcy under the
control of its junior unsecured creditors.
On Friday, Sontchi will consider a request for final
approval for EFIH to borrow $5.4 billion. That money will be
used to refinance senior EFIH creditors.
While Thursday's hearing, which will continue into the
afternoon, was largely consensual, Sontchi warned the parties to
tone down the rhetoric in court filings.
"I found in the pleadings a lot of unhelpful comments
disparaging others' motivations and positions," he said. "There
were a couple pleadings where it was particularly bad ... You're
not going to score points with me."
The real fight will come months down the road when Energy
Future has to prove its TCEH business, which owns Luminant power
plants and TXU Energy, lacks the value to repay junior
Chris Shore, a White & Case attorney who represents holders
of $2.7 billion of unsecured junior debt, ticked off a list of
factors that could boost TCEH's value, from coal regulations to
forward energy prices.
"We're all going to be pulling our hair out trying to figure
out how we come to a value," he told Sontchi.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by