- Energy Future Holdings has filed a second bankruptcy plan in an effort to emerge from Chapter 11, after controversial plans for spinning off Texas utility Oncor have hit stumbling blocks.
Hunt Consolidated filed a request for rehearing last month after the Public Utilities Commission of Texas gave conditional approval to the deal, looking for more favorable treatment of its plan to operate Oncor as a Real Estate Investment Trust. Company officials say that as approved by Texas regulators, the deal will not move forward.
The Texas Tribune reports that EFH's plan would still spin off generation to creditors to pay them, but under the new plan, creditors could also take control of Oncor – or the utility could be sold, leaving open the possibility the deal with Hunt could be salvaged..
Five months after a U.S. bankruptcy court in Delaware approved Energy Future Holdings' plan to reorganize and emerge from bankruptcy protection, the company has filed a revised plan. What had looked like a successful deal in March, when Texas regulators appeared to approve a plan for the sale of Texas utility Oncor, now heads back to the drawing board.
According to The Texas Tribune, EFH's new plan still spins off Luminant and TXU Energy, but would likely leave Oncor in the hands' of creditors – though it leaves open the possibility of a sale, potentially salvaging the Hunt deal.
“The new plan filed by EFH early this morning explicitly contemplates a potential [real estate investment trust] transaction under our current proceeding before the Public Utility Commission of Texas,” Jeanne Phillips, a Hunt spokeswoman, told the newspaper. “Hunt will continue to move forward.”
Texas issued a decision on Hunt's plan for Oncor in an effort to meet a March 27 deadline for the transaction, and in doing so, placed stipulations on the company's projected tax windfall. The order also set some details aside for later determination. That led investors to inform regulators that "the transaction as currently configured will not close based on the order as written."
Hunt's investor group told the PUCT that if the deal does not close, "the matter will be returned to the bankruptcy court for an indefinite period of time, with all of the uncertainties inherent in a lengthy and contentious proceeding and no assurance that a new plan will be superior to the one before the commission in this proceeding."
That is occurring now, even as Hunt tries to drum up support for the original deal.
A group of 16 Dallas business leaders lobbied state utility regulators, urging them to ensure that Hunt Consolidated eventually winds up owning Oncor. The group said in the letter they were "initially pleased" with the commission's vote, but now understand that "unique and unprecedented conditions" will make it impossible for the deal to close.
They asked the commission to grant the rehearing, which Hunt has requested.
Correction: A previous version of this post identified Jeanne Phillips as a spokesperson for Oncor. Phillips is a spokesperson for Hunt.