Energy Future begins bankruptcy exit hearing with key deal

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By Tom Hals | WILMINGTON, Del.

WILMINGTON, Del. Energy Future Holdings Corp
outlined on Tuesday a deal that resolved the biggest disputes
hanging over the company as it opened a trial to confirm its
plan to exit bankruptcy and be acquired by NextEra Energy Inc
for about $18 billion.

Dallas-based Energy Future indirectly owns Oncor, the
largest distributor of power in Texas, and is using the sale to
NextEra to finance its plan to repay creditors.

A lawyer for Energy Future told the court at the start of
Tuesday’s hearing that its noteholders had agreed to a discount
of what they were owed to settle a dispute that erupted in the
wake of a November ruling by a U.S. Appeals Court.

The U.S. Third Circuit Court of Appeals in Philadelphia had
ruled that the company owed noteholders hundreds of millions of
dollars in unanticipated payments for the early redemption of
their securities, upsetting a prior exit plan.

Energy Future’s lawyer told the court the first-lien
noteholders agreed to accept a 5 percent discount of the early
redemption payment and second-lien noteholders agreed to a 12.5
percent discount. That freed up cash for junior creditors.

“That drops away 90 percent of what we planned to address
over next four days,” said Energy Future’s lawyer Chad Husnick,
of Kirkland & Ellis, during opening arguments.

Energy Future still faces objections relating to asbestos
personal injury lawsuits, and from the U.S. Trustee, a
government bankruptcy watchdog, regarding the payment of fees.

Energy Future will begin presenting evidence to confirm its
plan on Wednesday.

The company filed for bankruptcy in 2014 to cut its $42
billion in debt. It has already spun off its power generation
business, known as Luminant, and its TXU retail utility to
senior lenders who were owed $24 billion.

Energy Future was created from the record $45 billion
leveraged buyout of TXU Corp in 2007, a deal led by KKR & Co and
TPG Capital.



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