(New throughout, adds court approval for $5.4 billion
borrowing, details of plan)
By Tom Hals
WILMINGTON, Del, June 6 Bankrupt Energy Future
Holdings, Texas's largest power company, received
court approval on Friday for one of its main businesses to
borrow $5.4 billion to carry out a refinancing that is key to
its huge restructuring.
Approval of the loan to Energy Future's EFIH unit, which
controls the Oncor power lines business, was tied to a
settlement offer that was also approved on Friday by U.S.
Bankruptcy Judge Christopher Sontchi in Wilmington, Delaware.
In April, Energy Future filed one of the largest U.S.
bankruptcies after a year of negotiations with creditors. The
company is working on a restructuring plan to slash its $42
billion in debt.
Under that plan, the EFIH unit would use the $5.4 billion to
refinance some senior debt to lower its interest payments.
Some senior creditors opposed the refinancing, saying it
favored some parties such as investment funds in order to buy
their support. But Sontchi rejected that contention.
"I'm not going to hold something against Pimco and Fidelity
for reaching a deal sooner than others," said Sontchi. He said
the investment management firms were treated better because they
also provided some of the $5.4 billion loan.
The ruling did not resolve a dispute over whether senior
creditors must be paid an early redemption payment, known as a
make-whole. A trial on that dispute is scheduled for September.
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
Some creditors have argued Energy Future's restructuring is
two separate bankruptcies because the company is being split.
Energy Future anticipates bringing its EFIH unit out of
bankruptcy under the control of that unit's unsecured creditors.
The company also anticipates spinning off its TCEH business
to senior creditors, which are owed $24.4 billion. The TCEH unit
owns Luminant power plants and the utility TXU Energy.
TCEH's junior creditors oppose the spin-off plan because it
will leave them with only about $200 million of the $7.7 billion
they are owed, or less than 3 cents on the dollar.
Earlier on Friday, the company said it will postpone until
July 18 a hearing to seek permission to enter into a
restructuring support agreement. The RSA allows the company to
pay professionals and helps to hold its creditors to the
restructuring process and timeline.
The company will still need to seek a traditional vote of
(Reporting by Tom Hals in Wilmington, Delaware; Editing by
Jeffrey Benkoe and David Gregorio)