Energy Future creditor asks court to adjourn Berkshire merger hearing

By Caroline Salls

Pittsburgh, July 19 – Three Elliott funds requested a 35- to 40-day adjournment of Energy Future Holdings Corp.’s Aug. 10 merger agreement approval hearing, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

Elliott Associates, LP, Elliott International, LP and the Liverpool LP, collectively the Elliott funds, said they are the Energy Future debtors’ largest unsecured creditor, holding 74% of Energy Future Intermediate Holding Co. LLC’s unsecured bonds.

“Despite this, neither the debtors, nor the disinterested director for EFIH, sought Elliott’s input prior to executing the merger agreement with Berkshire Hathaway Energy Co.,” according to the motion.

Although they were in negotiations with Energy Future regarding a transaction that they said would provide hundreds of millions of dollars of additional value, the funds said the company, with agreement of an EFIH independent director, chose to execute the Berkshire merger agreement instead.

“If approved, that agreement will saddle these estates with a $270 million termination fee,” the funds said.

However, the funds said this fee does not position the Energy Future estates to get a higher and better deal because, if approved, the fee “effectively cancels out the additional consideration already on the table in a creditor-led equitization.

Elliott said the company will also not get a better deal “because Berkshire is well known for not engaging in competitive bidding; and finally, because the fiduciaries chose to instantly pursue a deal weighted with a termination fee, rather than pursuing a superior creditor-led deal, or merely pausing briefly to consider both transactions.”

As previously reported, Elliott had proposed an equitization transaction that it said was for substantially higher value, did not require the acquisition of the minority interests in Oncor Electric Delivery Co. LLC held by Texas Transmission Investment LLC, envisioned funding no later than Aug. 31 and called for completion of a consensual plan by no later than the end of the year.

Absent the requested adjournment, the funds said the court “will grant a costly de facto extension of exclusivity, to which the debtors are not entitled.”

“More important, failure to pause briefly now will irrevocably sacrifice the chance to maximize value for all creditors, and most particularly, the interests of the EFIH unsecured creditors,” the motion said.

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

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