(Adds detail about restructuring talks)
By Nick Brown and Tom Hals
March 31 Energy Future Holdings said on Monday
it has extended a deadline to file its annual report, giving the
company more time to negotiate with creditors as it seeks an
agreement to reduce its crushing debt.
The former TXU Corp was expected to report on Monday that
its auditor had determined it could not survive as a going
concern, a finding that would have triggered a default on its
loans and a likely bankruptcy filing.
In a statement on Monday, the company said it has extended
that deadline, but did not say for how long. It added that it
will miss an interest payment due on Tuesday, but has a grace
period in which to make the payments before a default.
The company is carrying more than $40 billion in debt, much
of it a result of its record leveraged buyout in 2007 that was
led by private equity firms TPG Capital Management, KKR & Co
and a unit of Goldman Sach Group Inc.
The company said it expects to file for bankruptcy, but
would like to do so with the parameters of a restructuring in
place, which would save time and money.
"While no agreement has been reached, and there is no
guarantee that an agreement will be reached, negotiations are
ongoing," the company said in the statement.
It is not the first time Energy Future has delayed a
bankruptcy filing. Last October, many investors believed the
company would miss an interest payment and file for bankruptcy,
but the company made the $270 million payment and extended the
timeframe until this spring.
The largest chunk of Energy Future's debt - more than $20
billion worth - is loan debt held by private equity firms that
specialize in profiting from bankruptcy work-outs, like Apollo
Global Management and Oaktree Capital. Those firms, which play a
key role in directing the restructuring talks, have been
struggling to find common ground with lower-ranking creditors
including traditional money managers like Fidelity Investments,
who could be stuck with big losses on their holdings of the
Sources close to the debt restructuring talks have told
Reuters the company is likely to be broken up in bankruptcy.
Energy Future's generation business, Luminant, and regulated
distribution unit, Oncor, both rank among the largest in the
Energy Future owns 14 power plants, including five
coal-fired plants. Many coal-fired power producers in the United
States have struggled in recent years as the price of natural
gas has plunged thanks to a boom in hydraulic fracturing, or
fracking, which tapped new sources of energy.
(Reporting by Nick Brown in New York and Tom Hals in
Wilmington, Delaware; Editing by Andre Grenon, Bernard Orr)