Private equity-backed utility group Energy Future Holdings, which currently has debts of $40bn, has filed for Chapter 11 bankruptcy.
The company also said that it has secured loans of $4.475bn and $7.3bn for its subsidiaries Texas Competitive Electric Holdings (TCEH) and Energy Future Intermediate Holding (EFIH), respectively.
Energy Future was taken private KKR, TPG Capital and Goldman Sachs Capital Partners in the world’s biggest LBO deal in 2007.
Under the agreement, TCEH will separate from EFH and its first lien lenders would receive all of the equity in the reorganized TCEH and the cash proceeds from the issuance of new debt in exchange for eliminating $23bn of its debts.
The deal will also eliminate $2.5bn of EFIH’s debt through a $1.9bn capital injection from some of its noteholders.
Last year the company’s lenders turned down a proposed $32bn debt restructuring plan for being too lenient on Energy Future’s owners.
Energy Future president and CEO John Young said, “With this restructuring plan, we now have a path to a sustainable capital structure that would put EFH and its family of companies in an even stronger position over the long term to deliver for all of our stakeholders, including our customers, our employees and our business partners.
“This restructuring is focused on our balance sheet, not our operations. We fully expect to continue normal business operations during the reorganization.”
Copyright © 2014 AltAssets