Energy Future wins approval of amended Oncor interest bid procedures

By Kali Hays

New York, Jan. 14 – Energy Future Holdings Corp. received approval of revised bidding procedures related to a proposed investment or acquisition of its indirect ownership of Oncor Electric Delivery Co., LLC, according to a Jan. 14 order from the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Energy Future Intermediate Holding Co., LLC (EFIH) is a direct, wholly owned subsidiary of Energy Future Holdings and owns 100% of Oncor Electric Delivery Holdings Co. LLC, which in turn owns 80% of Oncor Electric Delivery.

Unaffiliated investor Texas Transmission Investment LLC and some members of Oncor management, through a separate investment vehicle, own the remaining equity interests in Oncor.

The revised procedures call for two rounds of closed bidding for the selection of a stalking horse bidder in March and April. The first round will run through 11:59 p.m. ET on March 2 and the second through 11:59 p.m. ET on April 13.

Confidential due diligence will be conducted during the initial stage of bidding and after the pool of bidders is narrowed, Energy Future will negotiate bids towards a final stalking horse agreement.

The company is required to submit details of all bidders after each round of bidding for approval by an independent review board, according to the order.

Previous bid procedures related to the sale elicited objections from several creditors who took issue with the lack of information required to be put forth during the initial marketing of the Oncor assets.

After a stalking horse is selected and approved, Energy Future will accept additional qualified bids for 30 days.

During any portion of the bidding process, a bid must be equal to the amount of the total value of the assets, including cash, debt and securities, according to the procedures.

Bids must also identify the direct source of the financing and specify whether it is intended to be structured in “a tax-free manner” or if any tax liabilities will be incurred by Energy Future.

If more than one qualified bid is received during the open bidding, an auction will be held “as soon as practicable after the bid deadline.”

Any overbid at auction must be made in increments of $20 million.

Energy Future, a Dallas-based power generation company and utility operator, filed for bankruptcy on April 29, 2014. The Chapter 11 case number is 14-10979.

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