Energy Future Holdings given conditional OK to take Oncor bids (11/03/14)
Nov 3 (Reuters) - Bankrupt power company Energy Future Holdings Corp received conditional court approval to accept bids for its majority stake in Oncor, a power transmission company in Texas worth billions of dollars.
Delaware Bankruptcy Judge Christopher Sontchi said on Monday Energy Future could begin accepting bids once it had changed the way affiliates approved of the plan to sell Oncor. He also said the bidding process must involve the two official creditors committees and the time frame for the sale should be extended.
"We are not reinventing the wheel here," said Sontchi as he read Monday's ruling following four days of testimony and argument that ended last week.
"The immense size of this case and $18 billion asset is certainly unusual and the involvement of public companies as bidders is a complicating factor. But there is no reason to depart from established practices that have developed for selling an asset in bankruptcy," the judge said.
Creditors had objected to the proposed process because it involved sealed bids to choose an initial bidder, known as a stalking horse. Once the stalking horse was chosen, Energy Future planned to have an open auction when all bids could be reviewed by participants.
Sontchi said Energy Future would have to allow the participation of the two official creditors committees in the selection of a stalking horse bidder. The company originally set a deadline for final bids for the role of stalking horse on Nov. 21, which Sontchi said would have to be extended.
Sources have told Reuters that potential bidders include NextEra Energy Inc of Juno Beach, Florida; Hunt Consolidated Inc of Dallas; and Houston-based CenterPoint Energy Inc.
Oncor, which is not bankrupt, distributes power to 3 million homes in Texas and operates 120,000 miles of power lines. Energy Future owns 80 percent of Oncor, but it is not selling the stake directly. Instead, the auction will determine the right to own Energy Future's equity when it exits bankruptcy.
As a result, the sale is dependent on Energy Future's confirmation of a plan of reorganization, which it expects to do by the end of 2015. Creditors complained that the Oncor sale, and spin-off of other valuable assets, locked Energy Future into a plan without negotiating with many of its creditors.
Energy Future plans to spin off its Luminant power generating business and its TXU Energy retail electricity supplier to the senior creditors of those units, which are owed $24 billion.
Energy Future took on much of its debt in 2007 in the record buyout of TXU Corp, was led by KKR & Co, TPG Capital Management [TPG.UL} and the private equity arm of Goldman Sachs Group Inc.
The case is Energy Future Holdings Corp, U.S. Bankruptcy Court, District of Delaware, No. 14-10979. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Meredith Mazzilli and Steve Orlofsky)
Bankruptcy judge OKs Energy Future Holdings to move ahead on Oncor auction (1/14/15)
A U.S. bankruptcy judge told Texas power giant Energy Future Holdings on Wednesday that it can move ahead on auctioning off its transmission arm, Oncor.
Judge Christopher Sontchi set the deadline for opening bids for March 2. The process is expected to stretch through the summer and attract some of the largest players in the Texas power industry.
Companies that have expressed interest in Oncor, which maintains Texas’ largest power line network, include Hunt Consolidated, the Dallas energy company led by billionaire Ray L. Hunt, Florida-based power giant NextEra Energy and Houston utility CenterPoint Energy.
EFH filed for bankruptcy in April, seeking protection from $40 billion in debt largely amassed during a 2007 leveraged buyout by private equity firms KKR & Co. and TPG. EFH announced it was putting Oncor up for auction in August after Hunt and NextEra offered competing bids for the company. EFH CFO Paul Keglevic put the value of NextEra’s bid at $18 billion.
In November, Sontchi put a halt to the process, telling EFH it was moving too quickly and had failed to work with creditors. Tuesday the power company filed a motion arguing it had carried out the judge’s orders and requested that the auction process resume.
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