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Energy Future close to securing $3.5bn bankruptcy loan

11 Oct 2013

oil_170sqPower generation company Energy Future Holdings, which was taken private in the world’s biggest LBO deal in 2007, is reportedly close to securing a loan of over $3bn ahead of a bankruptcy filing.

Citigroup, JP Morgan Chase, Bank of America and Morgan Stanley will provide part of the debtor-in-possession funding, said Bloomberg, citing four people with knowledge of the matter.

The banks have invited Energy Future’s first-lien creditors to participate in the deal, according to the sources.

The final terms and lenders are expected to be decided next week and the size of the loan is likely to be around $3.5bn, said two of the people.

Earlier this month it was reported that one of the company’s creditors hired advisers to explore restructuring options before a $250m bond payment deadline on 1 November.

The company was known as TXU Corp when the trio of firms bought it in a $43.2bn deal at the peak of the buyout boom, loading it with about $35bn of debt in the process.

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

Earlier this year lenders rejected a proposed $32bn debt restructuring plan for being too lenient on the company’s private equity owners.

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