Dive Brief:
- Texas generator Energy Future Holdings (EFH) is in line for loan of up to $3.5 billion to keep it afloat in advance of a Chapter 11 bankruptcy filing, Bloomberg reported Friday. The lenders vying for the loan reportedly are Citigroup, JPMorgan Chase, Bank of America and Morgan Stanley.
- EFH's companies include retail provider TXU Energy, generating unit Luminant and Oncor, which operates the largest distribution and transmission system in Texas with more than 117,000 miles of transmission and distribution lines.
Dive Insight:
Luminant's generation business has been key to EFH's problems. When the company was taken private in 2007 after the largest leveraged buyout in history at $48 billion, investors did not anticipate that natural gas prices would drop as low as $2/MMBtu from a July 2008 high of $13/MMBtu. Before long, 60 cents of every dollar taken in was being used to pay interest on the deal.
