Hunt Consolidated Inc. is teaming up with a group of creditors of bankrupt Energy Future Holdings Corp. to offer almost $19 billion for its profitable power-line unit, a person involved in the bid said.
The proposal may threaten efforts by NextEra Energy Inc. to buy the unit, Oncor Electric Delivery Co., because it requires the auction for that asset to be canceled, according to the person. NextEra was said to be leading the competition to be named the lead bidder, or stalking horse, for the auction.
The Hunt offer was sent to Energy Future on Friday, said the person, who requested anonymity because the talks are confidential.
The Hunt-backed plan is designed to resolve a long-running dispute over how best to reorganize Dallas-based Energy Future and its two main divisions, one of which owns 80 percent of Oncor and the other of which owns the money-losing electricity generating businesses.
Hunt and the creditors would get the Oncor side, while more senior lenders would get the power-generating side in a tax-free spinoff, the person said. The new company to emerge would own all of Oncor and be organized as a real estate investment trust, according to the person.
Jeanne Phillips, a spokeswoman for the energy conglomerate controlled by the Hunt family, didn’t immediately return calls for comment on the proposal. Allan Koenig, an Energy Future spokesman, declined to comment.
Oncor, the biggest owner and operator of power lines in Texas, is worth more than $10 billion, its chief executive officer said in April.
NextEra has emerged as the front-runner in the auction for the Oncor stake, people with knowledge of the matter said earlier this week. Energy Future could name Juno Beach, Florida-based NextEra the stalking horse in the next few weeks, said the people, who asked not to be identified because the information is private.
NextEra has made a cash offer worth about $18 billion, according to two people familiar with the matter.
Energy Future may delay choosing a stalking horse to consider Friday’s proposal, said the person with knowledge of the Hunt bid.
The new proposal forces Energy Future to either go forward with the separate Oncor sale and fight creditors over how to reorganize the rest of the company, or try to settle the entire bankruptcy at once.
The effort is being led by a group of unsecured creditors who hold debt in Energy Future’s power-making side, known as Texas Competitive Electric Holdings, the person said.
Those lower-ranking creditors have been joined by investors that hold senior debt as well, including affiliates of Centerbridge Capital Partners that held $935 million in first-lien debt as of August, the person said. GSO Capital Partners, a unit of asset manager Blackstone Group, is also part of the group, according to the person.
Michael Anderson, head of investor relations for GSO, and Jonathan Lewinsohn, senior managing director of Centerbridge, didn’t immediately respond to e-mailed requests for comment sent Saturday.
The group making the offer would raise cash through a sale of equity in the reorganized company, the person said. The money would be used to repay about $9.7 billion owed by Energy Future and its units that control the Oncor stake, according to the person.
The group would also spend about $2.4 billion to buy the 20 percent of Oncor that Energy Future doesn’t own and leave in place $6.3 billion in debt that Oncor owes independently, the person said. Adding in fees and other bankruptcy-related costs would raise the price of the deal to almost $19 billion, according to the person.
Hunt would contribute $1 billion to the deal and the creditors would raise $6.1 billion by selling equity in the reorganized Energy Future, the person said.
The equity sale would be backed with a guarantee from the creditors, including BlackRock Financial Management, Anchorage Capital Group and Arrowgrass Capital Partners, the person said. GSO and Centerbridge are also guaranteeing the equity sale, the person said.
BlackRock spokeswoman Paige Hofman declined to comment on the matter. Representatives of Anchorage and Arrowgrass didn’t immediately return calls seeking comment Friday.
The proposal also calls for about $5 billion of new debt and is meant to end the entire case, the person said.
The deal would still require approval from U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Delaware, who forced Energy Future to put Oncor on the block early in the bankruptcy.
Energy Future filed for creditor protection in April 2014 seeking to restructure $42 billion in debt by splitting itself in two, with senior lenders getting the generating side and a favored group of different creditors getting the Oncor stake.
That proposal was attacked by lower-ranking creditors who pushed for Energy Future to open up the bidding for Oncor.
To get senior lenders and the company’s private-equity owners to agree with the new plan, the lower-ranking creditors offered to drop legal claims against them, the person said.
The case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).