NextEra Energy Inc. (NEE) said that it plans to pursue a once-rebuffed bid to take control of bankrupt Energy Future Holdings Corp.’s profitable Oncor unit and that it has the balance sheet to do it.
NextEra, a Florida-based wind utility, and a group of creditors including Morgan Stanley floated the plan in a June 18 letter to Energy Future Chief Financial Officer Paul Keglevic, according to court filings. The proposal was rejected, they said.
They offered a $2.3 billion loan at lower rates than a rival group, as part of a plan that would put NextEra in control of Dallas-based Energy Future’s profitable Oncor electricity business.
The takeover proposal came to light in a June 23 filing in U.S. Bankruptcy Court in Wilmington, Delaware, ahead of a June 30 court hearing on Energy Future’s borrowing plan. The loan was reported earlier by Bloomberg.
NextEra yesterday filed details of its loan arrangement with JPMorgan Chase & Co. in court and issued a public statement saying it was committed to the deal for the benefit of Energy Future investors and Oncor customers.
“NextEra Energy brings to the table a proven track record in the utility industry, an extremely strong balance sheet and equally strong credit ratings,” it said in an e-mailed statement.
“Our proposal, we believe, would result in long-term financial stability for all concerned, and once and for all, bring closure to what has been an unsettling period of time for Oncor and its customers.”
While Oncor isn’t in bankruptcy, the unit that controls it is. Energy Future has been embroiled in fights and negotiations with creditors since long before its April 29 bankruptcy filing as it tries to cut debt costs after a record 2007 buyout by KKR & Co., TPG Capital and Goldman Sachs Capital Partners.
NextEra has allied itself with one of the lender groups that is at war with Energy Future over its unequal treatment of lenders. Morgan Stanley, along with Marathon Asset Management, Oak Hill Capital and BlackRock Inc., are big investors in Energy Future and together own $1 billion of debt in the holding company that controls Oncor, according to a court filing.
Allan Koenig, a spokesman for Dallas-based Energy Future, has declined to comment on the investors’ proposals.
Explaining why it wanted to control Oncor, NextEra said it had invested more than $7 billion in transmission, power generation and other operations in Texas and is “seeking to add more through this transaction.”
“We hope that the bankruptcy judge and the executives at Energy Future Holdings see as much value in our proposal as we see in a potential long-term strategic investment in Oncor and Texas,” it said.
Separately, NextEra said yesterday its NextEra Energy Partners LP, which runs renewable-energy plants, raised $406.3 million in a just-completed initial public offering that surged 28 percent.
Morgan Stanley was one of three banks managing the IPO.
The bankruptcy case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).