Energy Future Holdings Corp., the Texas power producer taken private in the largest-ever leveraged buyout, said it won’t submit its annual report on time as talks with creditors on a potential bankruptcy plan continue.
The failure to submit the 10-k today puts Energy Future in breach of covenants with its creditors, the Dallas-based company said in a filing with the U.S. Securities and Exchange Commission. Energy Future said March 31 that it missed $109 million in debt payments and has until May 1 before it’s in default.
Energy Future’s owners, the company’s management and holders of the electricity provider’s $43.5 billion of debt are discussing a plan for Chapter 11 bankruptcy, according to a March 31 filing. The proposal would limit the chaos of a free-for-all filing and allow the company to avoid a tax bill that could exceed $7 billion, people with knowledge of the talks said last month.
Formerly known as TXU Corp., Energy Future was taken private by KKR & Co., TPG Capital and Goldman Sachs Group Inc. for $48 billion in 2007. The acquisition was essentially a bet that natural gas prices would rise, boosting electricity rates. Instead, prices have fallen 68 percent since July 2008.
The power producer said last month it would also be in default if, as it expects, the next annual report includes an auditor statement questioning its ability to continue as a “going concern.” The company said today there’s a 30-day grace period after receiving notice for failing to submit the financial statement before it’s considered in default.