Creditors of Energy Future Holdings Corp., the bankrupt Texas power provider, agreed to drop objections to $4.5 billion in loans needed to keep its main operating unit running while under court protection.
U.S. Bankruptcy Judge Christopher Sontchi said today that he will approve the loans once he sees the final wording of the terms. The company may still face opposition to a separate proposed package of $5.4 billion in loans that would be used to pay off bondholders of the company’s regulated unit. The judge said he will consider approving those loans at a hearing tomorrow.
The Dallas-based company resolved disputes with creditors over the smaller set of loans by agreeing to clarify what collateral will be used to guarantee repayment, Energy Future attorney Chad Husnick told Sontchi today in U.S. Bankruptcy Court in Wilmington, Delaware.
Energy Future is seeking court approval for the loans of as much as $9.9 billion to fund its two main units, Texas Competitive Electric Holdings, which generates and sells power in Texas, and Energy Future Intermediate Holding, the owner of a controlling stake in the state’s biggest electric transmission system. EFIH’s business is regulated by the state and federal governments.
Creditors have opposed the $5.4 billion loan partly because Energy Future has proposed paying a $57 million fee to lenders should Sontchi approve a rival loan.
The judge also allowed payments of about $100 million a month to the company’s senior lenders to compensate them for any potential loss in the value of the collateral that secures more than $22 billion they are owed.
Energy Future filed for bankruptcy April 29, listing $49.7 billion in liabilities. The company is seeking approval of a plan that would hand control of Texas Competitive to senior lenders and give EFIH to a different group of creditors. Some lower-ranking creditors oppose the proposal.
The case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).