Energy Future Holdings Corp.’s most senior lenders, who just lost their claim to $270 million that the struggling Texas power provider paid out in interest Nov. 1, are poised to cede more cash as it prepares to make about $390 million in additional payments to other debtors.
Energy Future Holdings Corp. may violate a debt covenant by the end of this year, potentially allowing for secured creditors to force a default and take over its power generation and retail units, according to debt researcher CreditSights Inc.
Energy Future Holdings Corp.’s loan due next year rose to the highest level in three months as the target of the largest leveraged buyout in history struggles for a path to reorganize its $43.6 billion debt load.
KKR & Co., Goldman Sachs Capital Partners and TPG Capital, the firms that led the $48 billion buyout of Energy Future Holdings Corp. in 2007, are fighting to receive barely 3 percent of their initial investment when the power generator files for bankruptcy as soon as this month.
Energy Future Holdings Corp.’s first- lien term loan fell to the lowest level in eight months, three weeks before the electricity provider heading for bankruptcy is scheduled to make coupon payments to junior bondholders.
Energy Future Holdings Corp.’s second-lien notes have rallied by the most in four months during the past three days, signaling that traders expect the electricity provider headed toward a pre-negotiated bankruptcy will make a $46 million payment due tomorrow.
Bonds of a unit of Energy Future Holdings Corp. jumped by the most in more than two months on the same day the electricity provider was required to begin making cash coupon payments on another one of its securities.
As Texas warns of potential power shortages and blackouts this summer, the state’s biggest electricity producer is teetering toward bankruptcy. That may turn out to be a boon to the $34 billion Texas power market.