Marathon’s Richards Sees TXU Debt Restructuring Before November

Energy Future Holdings Corp.’s October and November interest payments on its $43.6 billion of total debt will prompt the former TXU Corp. to restructure, according to Marathon Asset Management LP’s Bruce Richards.

The Dallas-based power company that was taken private by KKR & Co. and TPG Capital six years ago in the largest leveraged buyout in history will have to make about $270 million in interest payments Nov. 1 on two of its unsecured bonds.

“The company is asset-rich with a valuable business that will most probably require a restructuring sometime before the end of the year,” Marathon Chief Executive Officer and co-founder Richards said today in a telephone interview. Coupon payments in October and November may prompt the restructuring, he said in a separate interview on Bloomberg Television’s “Money Moves” with Erik Schatzker and Stephanie Ruhle.

Marathon, which is based in New York and has about $10 billion in assets, owns some Energy Future debt. Adam McGill, a spokesman for Dallas-based Energy Future, declined to comment.

The power company reported a $71 million loss for the three months ended June 30, its 10th straight unprofitable quarter. Wholesale electricity rates have dropped as natural gas prices declined about 75 percent from a July 2008 high.

Energy Future has interest payments due Nov. 1 on its $1.83 billion of 10.25 percent unsecured bonds due 2015 and the $1.75 billion 10.5 percent notes due 2016, according to the prospectuses for those securities. The debentures due 2015 traded at 6.5 cents on the dollar Aug. 12, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Forced Bankruptcy

Richards forecast a filing before in Bloomberg TV appearances in May and December.

“You’re going to see names like TXU in the next year probably file for bankruptcy and be forced to restructure,” he said on Market Makers on Dec. 4.

Marathon was founded in 1998 and specializes in global credit, including high-yield, bank, distressed and emerging-market bonds, along with structured finance, debt transactions and real estate.

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