P-E firms battle as Energy Future heads towards bankruptcy

An almighty fight has been brewing between private-equity firms over who will get paid what in the expected bankruptcy filing of Texas power company Energy Future Holdings, which owes over $40B to creditors.

One group of debtees includes Apollo Global (APO) and Oaktree Capital, and another involves Blackstone Group's (BX) GSO Capital Partners.

Meanwhile, Energy Future's owners, KKR (KKR), TPG and Goldman Sachs (GS), which bought the utility in 2007 for $32B plus about $13B in assumed debt, are hoping to keep some equity in any Chapter 11. They've already written their investment down to almost zero.

Complicating matters is that if Energy Futures were to break up, a massive tax bill would need to be paid.

The sides are due to meet on Friday to try to resolve the dispute.

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