Energy Future Holdings (EFH) electrified headlines this week as rumors grew that the company might file for a Dallas bankruptcy. In its annual report filed with the Securities and Exchange Commission, EFH warned about their financial restrictions and limited flexibility, and that any unexpected breach could result in a default of their debt agreements.
Energy Future Holdings Seeks Future
Since three buyout firms including Texas Pacific Group and Kohlberg Kravis Roberts & Co. performed what was hailed as the largest buyout in history, EFH has struggled to pay back its $52 billion debt. The energy company says any forced acceleration on its payments could result in a Dallas bankruptcy. In the case of a default, they would seek protection or to liquidate their assets.
To avoid a Dallas bankruptcy, EFH has sought the expertise of bankruptcy attorneys with years of experience. EFH has hired Kirkland & Ellis and Blackstone Group LP for guidance on paying back their outstanding debt load. If EFH can continue repaying the $52 billion they owe, they hope to avoid dealing with a bankruptcy attorney and prevent bankruptcy, liquidation, or insolvency.
An EFH Dallas bankruptcy could have a potentially large thumbprint on the economy, as it is the largest power generator in Texas. Luminant owns over 15,000 megawatts of nuclear, coal, and gas-based power plants. To put this into perspective, Iraq’s nationwide consumption peaked at 15,000 MW in 2011.