Energy Future Rejects Aurelius Claim of $24 Billion Default

Energy Future Holdings Corp., formerly known as TXU Corp., is rejecting an assertion by hedge fund Aurelius Capital Management LP that it’s in default on a $24 billion loan that financed its record buyout by KKR & Co. and TPG Capital.

The allegations are “utterly meritless,” said Robert Walters, general counsel of Energy Future Holdings. Stephen Sigmund, spokesman for Aurelius, declined to comment.

The New York-based hedge fund, led by Mark Brodksy, said in a letter to Citigroup Inc., administrator of the buyout loans, that payments by the TCEH unit to parent Energy Future aren’t in accordance with the credit agreement, according to two people with knowledge of the matter, who declined to be identified because the letter has not been made public.

The hedge fund has bought about $50 million of Energy Future loans during the past 10 days, one of the people said. Citigroup will lead discussions with lenders about Aurelius’s assertion, the person said.

Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, didn’t immediately return a telephone message left at her office seeking comment.

Aurelius is among bondholders sponsoring an alternative reorganization proposal in the bankruptcy proceedings of Tribune Co., taken private for more than $8 billion in 2007 by billionaire property investor Sam Zell. The hedge fund was also party to lawsuits and restructurings involving General Motors Corp., MBIA Inc., Ambac Assurance Corp., Dubai World and Vitro SAB.

TXU, then the largest electricity supplier in Texas, was taken private for about $45 billion in 2007. The Dallas-based company has about $42 billion of debt, according to data compiled by Bloomberg.

To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net; Emre Peker in New York at epeker2@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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