Texas-based Energy Future Holdings considering bankruptcy

Energy Future Holdings, a Dallas-based power company, is considering a prepackaged Chapter 11 bankruptcy filing to restructure $32 billion in debt, according to a report from the Fort Worth Star-Telegram.

The bankruptcy would affect EFH’s unregulated subsidiaries, including Luminant Generation and TXU Energy, the report states. Luminant Generation is Texas’s largest electricity generator, and TXU Energy is that state’s largest electricity regulator.

The Star-Telegram said Oncor Electric Delivery, the regulated subsidiary that operates most of the electricity distribution grid in North Texas, would not be part of the restructuring.

EFH spokesman Allan Koenig told the Star-Telegram a filing with the Securities and Exchange Commission stating the company has had discussions with its most senior creditors the prospect of greatly reducing the debt is not an indication that bankruptcy is imminent. The Financial Times reported April 16 that three creditors – the private equity arm of Goldman Sachs, KKR and TPG – rejected the proposal, which would have required them to cancel debt in exchange for an undetermined amount of equity in the parent company and $5 billion in cash or new debt at other units. The creditors reportedly offered to contribute new equity capital under certain conditions.

The Star-Telegram also reported that a spokesman for the Public Utility Commission of Texas said the electricity market in Texas would not be affected by a bankruptcy filing by EFH, and the company’s power plants would continue to generate revenue and its retailing companies would continue to serve customers.

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