19 November 2018

Big Texas Utility Files for Bankruptcy

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The troubled Texas utility Energy Future Holdings – which, as TXU, was private equity’s biggest-ever buyout – has filed for bankruptcy.

After months of on-again, off-again talks between the company, its owners and a dizzying hierarchy of creditors, the company went into Chapter 11 protection with a plan intended to stave off months of potentially rancorous fighting in court over pieces of the power company.

Energy Future will probably be split between its regulated electricity arm, Oncor, and its unregulated power-generation business. The talks had long been stymied by an array of issues, including whether such a split would create a tax bill of more than $7 billion.

Energy Future will become one of the biggest Chapter 11 filings in corporate history.

This is not the ending that the Wall Street private equity firms, including Kohlberg Kravis Roberts, TPG Capital and the private equity arm of Goldman Sachs, envisioned in 2007, when they acquired the TXU Corporation in a colossal $45 billion deal.

Their investments are expected to be all but be wiped out in the bankruptcy.

Click here for the full article in the New York Times Dealbook.

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