Energy Future Holdings Faces Probable Bankruptcy In Fall 2014

Energy Future Holdings Corporation is an electric utility company headquartered in Energy Plaza in Downtown Dallas, Texas. In the photograph, the Energy Plaza is the skyscraper located in the middle. [Wikipedia/Andreas Praefcke]
2014 is likely to be a rough year for merger and acquisition activity in Texas — with one of the biggest deals in the state's history likely to unravel in the second half.

Jonathan Marino, senior editor for financial news service The Deal, says the new year will start out with a lot of deal “digestion” in Texas — most notably, the privatization of Dell by founder Michael Dell and Silverlake Partners.

“But the future probably isn’t that bright elsewhere in Texas, and I’m specifically referring to TXU Corp., now known as Energy Future Holdings — which, after its $45 billion LBO in 2007, in all likelihood, will either face restructuring or a Chapter 11 bankruptcy filing in 2014.”

Energy Future Holdings is the parent company of power generator Luminant, retailer TXU Energy, and distribution network Oncor. A group of three private equity firms acquired the company at the peak of the leveraged buyout market.

In the six years since, Energy Future Holdings has struggled under its debt load. It faces a four billion dollar debt payment this fall, which Marino says it’s unlikely to meet. He says a bankruptcy deal would probably break the company up into its component parts.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...