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.