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EFH hires Kirkland & Ellis, Blackstone for potential restructuring

8 Feb 2013

gas2_lrgEnergy Future Holdings (EFH), the Dallas-based utility whose $45bn takeover at the height of the buyout boom stands as the world’s largest private equity takeover, has reportedly hired advisors to lay the foundations for a potential restructuring.

Debtwire reported that EFH has hired corporate law firm Kirkland & Ellis for the job, while the Wall Street Journal reported that Blackstone has also been mandated to help EFH deal with its debt load.

A KKR and TPG Capital-led consortium bought EFH in February 2007, while GS Capital Partners, Lehman Brothers, Citigroup and Morgan Stanley subsequently became equity investors at closing.

The company has come under increasing financial pressure as contracts used to calculate electricity costs in its home state of Texas that are protecting it are set to lapse in 2014.

Since 2007, new drilling techniques have also exposed large deposits of natural gas in shales across the US, causing gas prices to fall sharply.

Although EFH managed to extend its loan covenants in 2011 following a restructuring of its $35bn debt load, the group will face large loan maturities once those hedges have expired.

That debt pile has risen to more than $42bn, all but wiping out the firms’ initial equity stake.

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