Energy Future seeks OK of $2 billion DIP financing to lower interest

By Kali Hays

New York, May 16 - Energy Future Holdings Corp. is seeking court approval on $1,995,000,000 of debtor-in-possession financing and the use of cash collateral, according to a May 15 motion with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, the facility includes $1.9 billion in tranche A new money financing and $95 million in tranche B notes to be borrowed in the form of a closing fee payable to commitment parties upon entry of an order allowing the financing.

	The opportunity to fund the second-lien DIP facility is being granted to substantially all of the Energy Future debtors' unsecured creditors, including holders of	senior toggle notes and some holding company	notes, as well as Fidelity Investments and	some affiliates through an unregistered offering.
	Additionally, some senior toggle noteholders and selected partners and transferees agreed to backstop the full $1.9 billion DIP facility in the form of tranche A2 notes.
	Cortland Capital Market Services LLC is the administrative and collateral agent.
	The facility will mature on the earliest of 24 months from the closing date, the effective date of any reorganization plan, consummation of a sale of substantially all of the company's assets and the termination of any outstanding commitments within the terms of the second-lien intercreditor agreement.
	Base interest on the tranche A notes will be 8%, payable in cash, and the tranche B notes will be interest free. Also, the interest rate on the tranche A notes will increase by 4%, payable in kind, if	an Oncor tax-sharing agreement amendment is not approved by July 27.
	The company intends to use the proceeds of the financing, cash on hand and its first-lien DIP financing of $5.4 billion to repay the second-lien notes.
	The second-lien repayment will replace the high-interest-rate second-lien notes with a lower interest rate, saving the company about $8 million per month in interest payments, according to the motion.
	The second-lien facility is mandatorily convertible to roughly 64% of the equity in reorganized Energy Future Holding upon the effective date of a plan.
	A hearing is scheduled for June 5.
	Energy Future, a Dallas-based power generation company and utility operator, filed for bankruptcy April 29. The Chapter 11 case number is 14-10979.

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