Dive Brief:
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Texas Competitive Electric Holdings Co. (TCEH), a subsidiary of bankrupt Energy Future Holdings (EFH), has secured $4.25 billion in financing from lenders represented by Deutsche Bank.
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The financing comprises a $2.85 billion senior secured, super-priority term loan, a $750 million senior secured, super-priority revolving credit facility, and a $650 million senior secured, super-priority funded term loan letter of credit facility.
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EFH said $2.65 billion of the proceeds from the financing was used to repay an existing credit facility and the remaining funds are earmarked for general corporate purposes. The company is currently seeking approval to sell its distribution utility, Oncor, to Florida-based NextEra Energy.
Dive Insight:
Straining under a massive debt load, EFH declared bankruptcy in April 2014. The plan included the tax-free spinoff of the company’s competitive businesses, including Luminant and TXU Energy, and the sale of its distribution company, Oncor Electric Delivery.
EFH’s first bankruptcy plan was approved by the court, but then abandoned by the company in favor or a revised plan that sought approval for the sale of Oncor to the family of Ray Hunt.
Hunt sought to convert Oncor into a Real Estate Investment Trust — a first for a utility of its size. Critics said the tax structure of a REIT would unfairly transfer wealth from ratepayers to investors.
Regulators approved the plan, but imposed restrictions they said would ensure benefits were shared with all customers. Hunt balked, abandoning the proposal a day before the vote on a rehearing.
Hunt's departure opened the door for NextEra Energy, which had just failed to secure approval for its bid to buy Hawaiian Electric Industries. Last month, the company announced it would buy Oncor for $18.4 billion. The deal is still subject to bankruptcy court approval, as well as state and federal regulatory approvals.
EFH still has its Luminant generating subsidiary, which has 17,000 MW of generation including 2,300 MW of nuclear power, 8,000 MW of coal generation, and 6,450 MW of gas-fired plants.
Last November, Luminant bought two power plants totaling 2,998 MW from NextEra in a $1.59 billion deal.
EFH also owns TXU Energy, the largest electricity retailer in Texas.