Energy Future moving to put its Oncor subsidiary up for auction

Energy Future Holdings, in Chapter 11 protection since earlier this year at the U.S. Bankruptcy Court for the District of Delaware, said in a Nov. 4 Form 10-Q filing at the SEC that it is making progress on selling its regulated Oncor Electric Delivery Co. LLC power distribution business.

Oncor Electric Delivery is a direct, majority-owned subsidiary of Oncor Holdings and an indirect subsidiary of EFH Corp. It is engaged in regulated electricity transmission and distribution activities

“In September 2014, with input and support from several key stakeholders, the Debtors filed a motion with the Bankruptcy Court seeking the entry of an order approving bidding procedures with respect to the potential sale of EFH Corp.’s/EFIH’s economic interest in Oncor,” said the Form 10-Q. “During October 2014, the bankruptcy court held hearings regarding the motion. On November 3, 2014, the Bankruptcy Court conditionally approved the motion.

“In conditionally approving the motion, the Bankruptcy Court required that, among other things, the Debtors modify the proposed bidding procedures and order to (a) allow up to five advisors for each of the official unsecured creditor committees at TCEH and EFH Corp./EFIH to access information regarding the bidding process on terms to be negotiated with these advisors, (b) allow additional time for bidders to evaluate potential transactions and submit bids and (c) prohibit material modifications to the bid procedures without the consent of the committees or further order of the Bankruptcy Court. In addition, the Bankruptcy Court required that prior to a modified order becoming effective, the respective boards of directors of EFH Corp., EFCH, TCEH and EFIH must vote to approve the proposed modified bidding procedures (along with an affirmative vote of the respective disinterested directors at EFIH and TCEH). The Debtors intend to continue to work closely with each of their respective stakeholders to formulate a bidding process that will maximize enterprise value for each of the Debtors.”

If Oncor, considered the company’s most valuable asset, is sold, then that basically leaves Energy Future Holdings with its unregulated power plants in Texas, which includes coal, gas and nuclear capacity. Texas Competitive Electric Holdings Co. LLC (TCEH), a direct, wholly owned subsidiary of Energy Future Competitive Holdings Co. LLC (EFCH) and an indirect subsidiary of EFH Corp., and/or its subsidiaries, is engaged in electricity generation and wholesale and retail energy market activities. Its major subsidiaries include Luminant and TXU Energy.

The Form 10-Q added: “In order for the Debtors to emerge successfully from the Chapter 11 Cases as reorganized companies, they must obtain approval from the Bankruptcy Court and certain of their respective creditors for a Chapter 11 plan, which will enable each of the Debtors to transition from the Chapter 11 Cases into reorganized companies conducting ordinary course operations outside of bankruptcy. In connection with an exit from bankruptcy, TCEH and EFIH will require a new credit facility, or ‘exit financing.’ TCEH’s and EFIH’s ability to obtain such approval, and TCEH’s and EFIH’s ability to obtain such financing will depend on, among other things, the timing and outcome of various ongoing matters in the Chapter 11 Cases.”

EFIH is Energy Future Intermediate Holding Co. LLC, a direct, wholly owned subsidiary of EFH Corp. and the direct parent of Oncor Holdings.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.