New Bid From NextEra in Energy Future Bankruptcy
NextEra Energy in competition with Hunt Consolidated for Oncor transmissions business
NextEra Energy Inc. on Wednesday offered to buy Energy Future Holdings Corp.’s Oncor transmissions business, which is slated to be sold to an investment group led by Hunt Consolidated.
NextEra, a Florida power company, flung down the gauntlet in a filing with the U.S. Bankruptcy Court in Wilmington, Del., which is reviewing Energy Future’s chapter 11 exit plan. The sale of Oncor is at the heart of Energy Future’s $42 billion reorganization strategy, but the company has chosen the Hunt-led group as the buyer.
NextEra said it stands ready to purchase Oncor in a deal that would fully repay creditors of the division that owns the business. The deal would “provide Oncor with a new parent (NextEra) that has a strong balance sheet and credit rating,” court papers say.
Representatives of Hunt and the Energy Future creditors that are involved in the buyout group couldn’t immediately be reached for comment Wednesday. Energy Future spokesman Allan Koenig said the company is reviewing NextEra’s court filing.
A spokesman for NextEra couldn’t immediately be reached to discuss terms of the new overture, such as price.
Energy Future decided to sell Oncor to Hunt and allied creditors after an auction was called off that would have allowed NextEra to bid against Hunt and others for the rights to the regulated business, a stable, cash-producing piece of the Texas power infrastructure.
NextEra made its move during a lull in a court fight over Energy Future’s chapter 11 plan, which is up for approval by the bankruptcy court. Energy Future’s plan has backing from major creditor groups, including creditors that are participating in the Hunt buyout group.
Critics of Energy Future’s chapter 11 plan have taken aim at the risk built into the Hunt takeover proposal, which depends on winning regulatory approval to convert Oncor into a real-estate investment trust. That could be a chancy proposition, lawyers have said, because it’s a novel structure that might make it difficult to win approval from the Public Utility Commission of Texas.
The Texas PUC has already started proceedings to review the Hunt-backed REIT conversion, looking for assurances that the takeover won’t leave the transmissions business that carries power to millions of Texans prey to profiteering hedge funds.
NextEra, which has been trying to buy Oncor since last year, hasn’t conditioned past offers on a REIT conversion.
In court papers, NextEra also tackled another touchy question that has emerged during hearings on Energy Future’s plan: the lack of standard deal protections in the Hunt buyout proposal. Energy Future has stressed the Hunts have been trying to buy Oncor for a decade and have put their reputations on the line to assure regulators and the court they will go through with the takeover.
Critics of Energy Future’s choice of the Hunt-backed takeover of Oncor, however, have said they want big breakup fees or other safeguards to make sure the buyers will feel pain if they walk away from the acquisition.
NextEra Wednesday said it is prepared to “execute definitive documentation” that would give Energy Future strong remedies to use against it if it didn’t follow through on an Oncor buyout.
Energy Future filed for chapter 11 bankruptcy protection in April 2014 after falling energy prices took a toll on its electricity generating and retailing business, which is housed in the company’s Texas Competitive division. NextEra upset the company’s already-troubled restructuring efforts in the summer of 2014 by making a play for Oncor.
Energy Future said it would auction the business, touching off a competition that drew in the Hunts, and various camps of existing creditors, as well as NextEra. Earlier this year, NextEra was leading the pack of contenders when, according to testimony in bankruptcy court, it suddenly dropped its bid by $900 million.
Article from:- http://www.wsj.com