Energy Future Holdings given conditional OK to take Oncor bids
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 [TXEFHO.UL]. 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 inbankruptcy," 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.
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 (KKR.N), TPG Capital Management [TPG.UL} and the private equity arm of Goldman Sachs Group Inc (GS.N).
The case is Energy Future Holdings Corp, U.S. Bankruptcy Court, District of Delaware, No. 14-10979.