DALLAS (AP) - Energy Future Holdings is filing for a Chapter 11 bankruptcy reorganization after reaching a deal with some key financial stakeholders to keep its businesses operating while reducing its roughly $40 billion in debt.
DALLAS (AP) — Energy Future Holdings is filing for a Chapter 11 bankruptcy reorganization after reaching a deal with some key financial stakeholders to keep its businesses operating while reducing its roughly $40 billion in debt.
The company owns TXU Energy, a retail electricity provider, and Luminant, the largest power generator in Texas. Its main stakeholders had been discussing a restructuring, and Energy Future had recently skipped a deadline to pay $109 million in in interest payments.
The Dallas company said Tuesday that it will separate its Texas Competitive Electric Holdings Co. subsidiary, which includes TXU Energy, and give preferred lenders all the ownership in that reorganized business. It also will give lenders cash proceeds from new debt in exchange for eliminating about $23 billion of Texas Competitive Holdings' funded debt.
Energy Future will still own Energy Future Intermediate Holding Co. and keep its interest in Oncor Electric Delivery Co., which is not part of the reorganization.
The company had bet that natural gas prices would rise, giving its coal-fired plants a competitive edge. Instead, natural gas prices have plummeted amid a glut of production from U.S. shale deposits.
It said Tuesday that it expects normal, day-to-day operations to continue during its reorganization. That includes provision of power to customers, the payment of wages and benefits, and payments to vendors.
Energy Future expects to leave its restructuring in about 11 months.
The holding company was acquired in 2007 by private-equity firms KKR & Co., TPG Capital and Goldman Sachs Capital Partners.