By Tom Hals
(Reuters) - As Energy Future Holdings Corp nears a deadline for ending its bankruptcy, Texas's largest power company has crowned a group supported by Hunt Consolidated Inc as the new leader in the effort to craft the best plan.
Hunt has teamed up with junior creditors of Energy Future Holdings to raise about $12.1 billion to repay the power company's debt and convert its power distribution business, known as Oncor, into a real estate investment trust, or REIT.
Energy Future Holdings filed an amended plan of reorganization on Thursday. In a court document, it said the Hunt-backed plan was considered superior to a competing reorganization plan backed by investment firm Fidelity Management.
"Subject to the resolution of certain critical issues, which the debtors believe can be resolved, the debtors view the REIT transaction as the superior path to exit because it would resolve the vast majority of contested issues in this case," Energy Future said in a court document.
In June, the company said the Fidelity plan, which would convert Energy Future debts to equity, was more advanced and was the more likely path out of bankruptcy.
The U.S. Bankruptcy Court in Wilmington, Delaware is expected to hold hearings to confirm an exit plan as soon as October.
The Hunt-backed plan envisions raising $5.1 billion from a rights offering backed by junior creditors, including affiliates of BlackRock, Centerbrige Partners, Goldman Sachs (NYSE:GS) and Avenue Capital. That money would be used to repay more senior debt in full, according to court documents.
"We look forward to working diligently with EFH in the coming days to be chosen as the final bankruptcy plan," Hunter Hunt, chief executive of Hunt Consolidated Energy, said in a statement.
Energy Future's 80 percent stake in Oncor, the largest power lines business in Texas, is considered the company's crown jewel thanks to its steady cash flows. Creditors have estimated its value at $19 billion.
Both plans envision spinning off the company's Luminant power generation and TXU utility businesses to senior creditors.
Energy Future filed for bankruptcy protection in 2014, squeezed by weak power prices and unsustainable debt. Much of the company's $42 billion in debt stems from a record 2007 leveraged buyout of TXU Corp, led by KKR & Co, TPG and the private equity arm of Goldman Sachs.
The case is In re Energy Future Holdings, U.S. Bankruptcy Court, District of Delaware, No. 14-10979.