Energy Future settles first-lien and second-lien make-whole claims

By Caroline Salls

Pittsburgh, Dec. 20 – Energy Future Holdings Corp. and Energy Future Intermediate Holding Co. LLC (EFIH) agreed to a settlement with its restricted first-lien and second-lien creditors, according to an 8-K filed with the Securities and Exchange Commission.

Under the first-lien settlement, which resolves make-whole claims, the first-lien creditors will recover 95% of the make-whole claims if a class of EFIH unsecured noteholder vote to accept an amended Chapter 11 plan and no EFIH unsecured noteholder objects to approval of a plan support agreement related to the settlements.

The first-lien creditors will recover 97% of the claims if the EFIH unsecured noteholders reject the amended plan or object to approval of the plan support agreement.

In each case, first-lien creditors will receive 100% of unpaid interest unrelated to the EFIH first-lien make-whole claims.

Meanwhile, under the second-lien creditors’ settlement of make-whole claims, the second-lien creditors will recover 87.5% if the EFIH unsecured noteholders vote to accept and plan and do not object to approval of the support agreement or will recover 92% if the unsecured noteholders reject the plan or oppose the support deal.

Interest payments

In each case, the second-lien creditors will receive 100% of unpaid principal, interest unrelated to their make-whole claims.

Assuming an April 30, 2017 effective date of the amended plan, Energy Future said the amount of the EFIH first-lien make-whole claims will be about $574 million, and the amount of the EFIH second-lien make-whole claims will be $244.6 million, not taking in account the application of the settlement percentage discount noted above.

Both settlements also call for payment in full of unpaid interest, fees and expenses.

Assuming an April 30 effective date, $1.1 million in “additional interest” and $1.2 million in interest on interest will be due in connection with the first-lien make-whole claims.

In the context of the first-lien settlement, the restricted EFIH first-lien creditors estimated the amount of reimbursable fees and expenses, assuming an April 30 effective date of the Amended Plan, to be about $38 million.

Assuming an April 30 effective date, $1.7 billion in unpaid principal, $439.1 million in unpaid interest and $46.3 million in unpaid interest on interest will be due in connection with the second-lien make-whole claims.

In the context of the second-lien settlement, the restricted EFIH second-lien creditors estimated the amount of reimbursable fees and expenses through Oct. 31 to be $17.1 million.

Unsecured noteholders

During the negotiations with the restricted EFIH first-lien and second-lien creditors, the company said professionals for the restricted EFIH unsecured noteholders said those noteholders would be supportive of a settlement consisting of an amendment or amendments to an agreement and plan of merger among NextEra Energy, Inc., EFH Merger Co., LLC, EFIH and Energy Future Holdings that would result in $150 million of additional distributable value under the plan.

The settlement with the unsecured noteholders would also include resolution of the EFIH first-lien make-whole claims for 93% of those claims, with the remaining 7% to be used to satisfy allowed claims under the amended plan.

EFIH second-lien make-whole claims would be settled for 80% of the claim amount, with the remaining 20% to be used to satisfy claims under the plan.

In addition, the Energy Future debtors proposed to the restricted EFIH unsecured noteholders that they would agree to settle the EFIH first-lien and second-lien claims, with the first-lien make-whole claims to be settled for 94% and the second-lien make-whole claims for 85%.

The balance of those claims would be used to satisfy allowed claims under the plan.

However, EFIH said the restricted EFIH unsecured creditors did not accept this proposal within the 24-hour time period specified in the offer.

As a result, the company said it has not reached agreement on the terms of any plan changes with the restricted EFIH unsecured noteholders.

Some of those noteholders have directed their advisers to continue to work with the Energy Future debtors to explore further whether the parties can reach an agreement on plan changes and plan support, the 8-K said.

Energy Future is a Dallas-based power generation company and utility operator. The company filed for bankruptcy on April 29, 2014 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 14-10979.

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