Dive Brief:
- Energy Future Holdings (EFH) will auction its shares in Oncor Electric Delivery Co. within weeks as the final part of its post-bankruptcy restructuring, with the proceeds going to EFH creditors, and NextEra Energy and oil and gas company Hunt Consolidated have expressed interest in bidding for the Oncor shares.
- EFH will continue its reorganization with the tax-free spinoff of unprofitable subsidiaries Luminant, Texas’s biggest power generator, and TXU Energy, Texas's biggest electricity retailer, a restructuring that has, according to a U.S. Securities and Exchange Commission filing, allowed EFH to obtain billions of dollars in new financing.
- A key remaining obstacle in the restructuring is the $7 billion tax liability EFH faces on the TXU Corp. acquisition that it was able to defer until the reorganization was set in motion and stakeholders still hope to find a way to sell off assets without having to pay it.
Dive Insight:
Because its cash flows for electricity distribution and production are protected from creditors, the EFH bankruptcy has not yet impacted consumers. EFH filed for Chapter 11 bankruptcy reorganization earlier this year in hope of cutting in half the $40 billion debt it took on to buy TXU Corp in 2007 that EFH could not meet because of losses in U.S. shale gas after a supply glut drove prices to record lows.
A Moody's analyst says Oncor's growth prospects are better than the industry average because its territory in Northwest Texas is projected to see significant population growth. In a major sign of interest in the acquisition of Oncor, Hunt hired former EFH executive David Campbell as CEO for its power utility investment unit.
