Energy Future lenders reject PE firms’ $32bn debt restructuring plan


news_gaspipeline_lrgLenders which backed the world’s biggest leveraged buyout have rejected a proposed $32bn debt restructuring plan for being too lenient on the company’s private equity owners.

KKR, Goldman Sachs Capital Partners and TPG Capital offered to creditors the chance to swap their existing debt in Energy Future Holdings for a combination of debt and equity according to a filing with the US Securities and Exchange Commission (SEC).

But lenders have since broken off talks according to a statement released by Energy Future yesterday.

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.

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.

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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