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Energy business at heart of world’s biggest buyout outlines $32bn debt plan

16 Apr 2013

HThe debt-crippled power company which was subject to the biggest leveraged buyout in history has proposed to restructure $32bn of borrowing as part of a pre-packaged bankruptcy.

Energy Future Holdings was known as TXU Corp when KKRTPG Capital and Goldman Sachs Capital Partners bought it in a $43.2bn deal at the peak of the buyout boom, loading it with about $35bn of debt in the process.

That debt pile has risen to more than $42bn since the 2007 transaction, all but wiping out the firms’ initial equity stake amid a continued slump in natural gas prices and placing the entire future of the company at risk.

The firm now plans to restructure by offering creditors the chance to swap their existing debt for a combination of debt and equity according to a filing with the US Securities and Exchange Commission (SEC).

About 95 per cent of the consortium’s investment in TXU has been written off since the deal, while a separate SEC filing last June showed the company’s debt to EBITDA ratio was 9.5 times.

The company had previously extended the maturity date on a $16.5bn term loan from 2014 to 2017, and has enough liquidity to survive until a $3.85bn bank loan matures in October.

EFH’s debt is held by scores of lenders including Aurelius Capital Management, Centerbridge Partners and Angelo Gordon & Co.

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