Energy Future Creditor Trustee Faults Financing Plan

A trustee for lenders to an Energy Future Holdings Corp. unit faulted a plan to turn $3.5 billion in debt into bankruptcy financing, saying holders of first-lien notes were offered widely different incentives to take part.

Energy Future failed to disclose the offers, which were “entirely incoherent” when compared with the lenders’ contractual rights, CSC Trust Co. of Delaware said in a filing in U.S. Bankruptcy Court in Wilmington yesterday. CSC accused Energy Future of designing the “tactic” to avoid normal procedures for a bankruptcy plan.

Energy Future, taken private seven years ago by Henry Kravis and David Bonderman in a record $48 billion leveraged buyout, filed for bankruptcy April 29 after negotiating a restructuring deal among creditors, owners and management. As part of the deal, Energy Future offered first-lien lenders the right to exchange long-term notes for short-term restructuring money carrying a series of fees.

Lenders to Energy Future Intermediate Holdings LLC, which controls regulated electricity-transmission provider Oncor, were offered redemption premiums ranging from about 8 percent to more than 33 percent, CSC said.

The redemption premium for 10 percent noteholders was about 19 percent, according to the filing. CSC said there is no rational explanation for the gaps, unless the company is trying to entice two specific holders “to accept and then stampede other holders, with insufficient time and inadequate information.”

Energy Future plans to file a motion asking for court approval of the financing deal, Allan Koenig, a spokesman for the Dallas-based company, said today in an e-mail.

The case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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