Seeking Alpha

Energy Future set to file for Chapter 11 with $40B+ in debt

  • Energy Future Holdings is preparing to file for bankruptcy protection after creditors failed to agree on how to restructure the Texas power utility's $40B+ of debt following months of talks, the WSJ reports.
  • The filing would probably lead to a break-up of Energy Future's two largest operating units, with the company trying to organize bankruptcy loans of over $4B for its main regulated and unregulated subsidiaries.
  • Energy Future's owners, KKR (KKR), Goldman Sachs Capital Partners (GS) and TPG Capital, are hoping to retain some sort of stake in the company.
  • One group of debtees includes Apollo Global (APO) and Oaktree Capital, while another involves Blackstone Group's (BX) GSO Capital Partners.
Comments (7)
  • $40B in debt? Should I repeat that or did it sink in the first time?

     

    My response to KKR and GS is "Didn't you find that level of debt a tad high? You are, after all, experts in this stuff..."
    21 Feb, 03:59 AM Reply Like
  • The biggest liability here isn't the $40 Billions debt, no.

     

    It's KKR,along with TPG and GS capital Partners,which behaved like parasites sucking out management fees instead of responsible owners.

     

    The biggest LBO in history, how could they let it fail? TXU was among the most profitable utilities back then and now they end up paying more than $4 billions in yearly interests naturally drying up cash flows.

     

    I definitely have more respect for BX, which stepped in, bought back some debt & renegotiating terms.Hope Energy Future Holdings comes out stronger off bankruptcy,like LyonDellBasell
    21 Feb, 02:55 PM Reply Like
  • 40 bill in debt? talk about pushing it to the limit. guess these grubbing trough feeding owners could not dump it off on naive investors.
    21 Feb, 08:30 AM Reply Like
  • Can someone tell me how this might affect APO?
    21 Feb, 11:18 AM Reply Like
  • So who is going to take the biggest hit?
    21 Feb, 01:40 PM Reply Like
  • This reminds me of an old-time mafia play.. They take ownership of a joint and laden it with debt while running all types of goods through the joint and then burn it out.. Criminals -- plain and simple.....
    21 Feb, 07:14 PM Reply Like
  • What happened to the vaunted hedges that the PE firms boasted about when the company was on the roadshow issuing the debt that paid for the LBO? Wasn't it KKR who said the returns on TXU would dwarf the returns on Texas Genco because of the hedges on the TXU deal? Oops.
    23 Feb, 01:56 PM Reply Like
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