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Energy Future Holdings Receives Court OK of First Day Motions, Access to $2.3B DIP

May 05, 2014, 07:34 AM
Filed Under: Bankruptcy

Energy Future Holdings (EFH) announced that the U.S. Bankruptcy Court for the District of Delaware has granted the relief requested by the company in key first day motions it filed in conjunction with its voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

"We are very pleased to have made a smooth transition into the Chapter 11 process with the approval of first day motions, including our TCEH debtor-in-possession financing, which supports the continuation of our normal day-to-day operations during the reorganization process," said John Young, president and chief executive officer of EFH. "This helps to ensure that we will continue serving our customers and providing safe, reliable energy as we restructure our balance sheet and put the company on a sustainable path for a stronger future. Operational excellence has always been the hallmark of our company, and our customers, employees and business partners can continue to count on us during this process."

As part of its filing under Chapter 11 of the U.S. Bankruptcy Code, the company presented first day motions intended to support the continuation of its normal course business operations for customers, employees and retirees, vendors and suppliers, and other business partners during the reorganization.

The court also granted interim approval for the company to access $2.33 billion of its new $4.475 billion in debtor-in-possession (or "DIP") financing for Texas Competitive Electric Holdings Company LLC (TCEH). The new financing, combined with cash flow generated by ongoing operations, will be available to TCEH to help support, among other things, normal business operations during the Chapter 11 process. The TCEH financing will also permit TCEH subsidiary Luminant Mining Company LLC to grant the Railroad Commission of Texas a collateral bond in an amount equal to or in excess of Luminant Mining's current reclamation bond obligations. The company intends to continue to comply with all regulatory and tax obligations.

As previously announced, EFH has entered into an agreement with certain of its key financial stakeholders to reduce its approximately $40 billion of debt, lower its annual cash interest costs and access significant additional capital. The agreement is supported by holders of approximately 41% of the value of the TCEH first lien debt, 76% of the EFIH unsecured debt, 32% of EFIH first lien debt, 35% of EFIH second lien debt and 73% of EFH unsecured debt, as well as the three private equity holders of EFH.

To implement this pre-arranged restructuring plan, Energy Future Holdings Corp. and certain of its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Delaware. The main case number is 14-10979.

The company intends to file a plan of reorganization to implement the proposed restructuring agreement as soon as is practicable. The consummation of the plan of reorganization will entail certain regulatory approvals, including, among others, the approval of the tax-free transaction by the Internal Revenue Service and approvals by the Public Utility Commission of the State of Texas and the U.S. Nuclear Regulatory Commission.

EFH is a Dallas-based holding company engaged in competitive and regulated energy market activities, primarily in Texas. Its portfolio of competitive businesses consists primarily of Luminant, which is engaged largely in power generation and related mining activities, wholesale power marketing and energy trading, and TXU Energy, a retail electricity provider with more than 1.7 million customers in Texas.

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