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Energy Future’s unit sued by noteholders

18 Jun 2014

bucksHolders of $2.2bn worth of notes of bankrupt utilities group Energy Future have sued one of its units, saying they should receive early redemption payments of more than $700m if their securities are refinanced.

The unit, EFIH, is looking to drop the prepayment requirement to make the notes more attractive to investors, Computershare Trust, the trustee for the notes, said in a court filing, according to Reuters.

“EFIH seeks to accomplish in bankruptcy what it could not accomplish outside of bankruptcy – refinancing the second-lien notes at lower interest rates without paying the redemption premium,” said Computershare.

The noteholders are also seeking additional interest payments as well as their costs and legal expenses, according to the filing.

Energy Future was taken private by KKR, TPG Capital and Goldman Sachs Capital Partners in the world’s biggest LBO deal in 2007.

The company filed for Chapter 11 bankruptcy in April this year and secured approval for a $5.4bn bankruptcy loan earlier this month.

Judge Christopher Sontchi has approved the loan and a settlement, which he said was fair. The holders of less than half the nearly $4bn in senior bonds agreed to the settlement, , according to a Wall Street Journal report.

Last year the company’s lenders turned down a proposed $32bn debt restructuring plan for being too lenient on Energy Future’s owners.

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