August 17, 2017 / 1:26 AM / 2 years ago

Buffett's Berkshire Hathaway will not increase its Oncor offer

(Reuters) - The energy unit of Warren Buffett’s Berkshire Hathaway Inc said on Wednesday it will “stand firm” on its $9 billion offer to acquire 80 percent of Oncor Electric Delivery Company LLC and will not increase its offer.

FILE PHOTO: Berkshire Hathaway CEO Warren Buffett visits the BNSF booth before the Berkshire Hathaway annual meeting in Omaha, Nebraska, U.S.v in this file photo dated May 6, 2017. REUTERS/Rick Wilking/File Photo

Elliott Management Corp, the largest creditor of Oncor’s bankrupt parent Energy Future Holdings Corp, has tried to best Berkshire’s offer for the Texas utility with a $9.3 billion proposal.

Including debt, Elliott’s offer values Oncor at $18.5 billion, above Berkshire’s $18.1 billion valuation.

Elliott, which already owned a major position in the biggest block of debt of Energy Future, has now purchased a slice of a different class of debt that would ensure the hedge fund's ability to block Buffett's deal, the Wall Street Journal reported on Wednesday.

The fund’s new purchase is in an impaired class of notes, meaning it won’t be paid fully in the restructuring, and its approval is likely needed to get a deal done, the WSJ reported, citing people familiar with the matter.

A U.S. bankruptcy judge in July gave Elliott until Aug. 21 to formalize its plans to bid on Oncor before the court approves the offer for the utility from Berkshire.

“We’re committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state,” Berkshire Hathaway Energy Chief Executive Greg Abel said in a statement.

Oncor was not immediately available for comment on the Berkshire statement or the Journal report. Elliott also could not be reached for comment outside regular U.S. business hours.

Berkshire’s bid for Oncor includes 47 regulatory commitments that have the support of 12 key stakeholder groups across Texas, the company said.

“Oncor is a strong company with values, management and employees that will fit well with Berkshire Hathaway,” said Warren Buffett, chairman and chief executive of Berkshire Hathaway Inc.

Berkshire’s merger agreement with Oncor carries a $270 million termination fee should the deal fall through.

Reporting by Subrat Patnaik and additional reporting by Ismail Shakil in Bengaluru; Editing Lisa Shumaker and Amrutha Gayathri

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