Luminant bankruptcy pushed back

Still no shutdowns forecast at Sandow

While energy analysts are still predict a bankruptcy filing for Energy Future Holdings (EFH), parent company of Luminant, it’s no longer expected by the first of the year.

That’s because EFH made a $270 million payment to unsecured creditors just over a month ago, forestalling the need for a 2013 bankruptcy filing.

But that’s only postponing what appears to be inevitable.

Two key dates are coming up in 2014 and a bankruptcy filing could predate either one.

In March an auditor’s “going concern” opinion is due on EFH’s financial outlook.

And a $3.8-billion principal payment is due next October.

‘NO PLANS’—Rockdale-area residents, of course, aren’t concerned with corporate maneuvers. They want to know if Luminant— the area’s largest employer—will close Sandow Power Plant Units 4 and 5 or the Three Oaks Mine.

“We have no plans to shut down plants or mines,” Meranda Cohn, Luminant spokesperson, continues to maintain.

She pointed out that a Chapter 11 Bankruptcy, the type envisioned by analysts, is a financial restructuring, not an operational one. And the future of Texas energy also argues against closing any such facilities.

“ERCOT (Electric Reliability Council of Texas) is projecting a declining reserve margin for the market, so every megawatt becomes important, especially during the high demand of summer,” she said.

SCENARIOS—The bankruptcy, if and when it comes, would be one of the largest corporate bankruptcies in American history.

KKR & Co., Goldman Sachs and TPG bought out shareholders of the former TXU Corporation for $45 billion in 2007, the largest leveraged buyout in U.S. history. Price was $45-billion. Those are entities who will have to decide when to file bankruptcy.

Luminant’s Sandow 5 unit was built after that transaction, and a lengthy court fight triggered by environmental groups.

In intervening years, power prices have fallen, leaving EFH with a debt load that company admitted it could no longer service past 2014.

Prior to this fall’s interest payment, there were six months of negotiations with creditors.

Major issue is believed to be how EFH’s roughly $30 billion in assets would be divided, post-bankruptcy.

EFH includes power generators Luminant and TXU Energy, along with Oncor, on the power transmission side.

“The value in this company is in our people, our plants and our mines,” Cohn said.

Once bankruptcy is filed, the ultimate decisions, regarding Sandow and EFH’s other assets, will be made by a judge.

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2013-12-19 digital edition

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