Tyler, Texas (KETK) — Energy Future Holdings, the Energy giant parent company of TXU Energy, Luminant and Oncor, filed for Chapter 11 bankruptcy protection Tuesday morning.
EFH reached a debt restructuring agreement with creditors, share and stakeholders to help eliminate more than half its $40 billion in debt. Brad Watson, Luminant’s company spokesperson, said that Luminant and TXU would be going “sperate ways” from Oncor; which was not a part of the bankruptcy filing.
Watson tells KETK News the Chapter 11 filing will not affect jobs at any Luminant plants or mines across the state, and is not expected to impact the 1.5 million TXU Energy customers.
The filing comes expectedly after private equity firms KKR & Co., TPG and Goldman Sachs Capital Partners bought out the shareholders of the former TXU Corp. for $45 billion in 2007.
According to a news release, under the terms of the restructuring proposal the power giant’s generation and retail sector, Texas Competitive Electric Holdings, would break off from the parent company EFH. First-lien lenders with claims on $23 billion in debt would take over TCEH, which includes Luminant and TXU Energy, according to an EFH news release.
Creditors of the company’s regulated transmission arm, which owns Oncor, would receive equity in the reorganized EFH in exchange for giving up $2.5 billion in debt claims. Unsecured creditors would contribute up to $1.9 billion in cash into the new company. Creditors of the parent company EFH would give up $600 million in debt claims.
“Today, we took an important step to address our balance sheet issues and put the company on a sustainable path for a stronger future,” EFH CEO John Young wrote in a memo to employees Tuesday. “As a result of the constructive discussions we have had in recent months with the company’s key financial stakeholders, we have reached an agreement on a restructuring plan that will give us the opportunity to reduce our debt, lower our annual cash interest costs and access significant additional capital.”