By: JAMES OSBORNE |
The fight between NextEra Energy and Hunt Consolidated for control of Oncor will have to wait.
Energy Future Holdings, the Dallas power giant, filed a notice Tuesday with the U.S. Bankruptcy Court in Delaware requesting that the court take over the auction process and extend the time frame for bidding.
The development will probably set back the sale of Oncor, an electricity transmission company, until at least the beginning of 2015.
NextEra had been in negotiations with EFH to file a public bid for Oncor, beginning an auction process expected to be completed this fall. But the Florida-based power company withdrew its restructuring proposal Tuesday, after EFH’s announcement.
EFH said in its filing that the decision to delay “is based on extensive consultations with potential bidders and key creditor constituencies.”
“We believe that a transparent and court-supervised marketing process will maximize the assets’ value, and we look forward to providing the court with proposed procedures for this marketing process in the coming weeks,” EFH spokesman Allan Koenig said in a prepared statement.
Both NextEra and Hunt, the private Dallas firm with energy and real estate interests around the globe, declined to comment.
The sale of Oncor, the regulated and profitable transmission arm of EFH, has long been predicted to spark a bidding war within the power sector.
It was unclear what changed in negotiations with NextEra to prompt EFH to want to market Oncor to the wider public. But it could result in a higher sale price for Oncor, said Stephen Pezanosky, a bankruptcy attorney with Dallas law firm Haynes and Boone.
“A great example is the Texas Rangers. The auction went late into the evening and brought in a much higher price for the creditors than anyone thought would happen,” he said. “Of course, with Oncor we’re talking about a few more zeros.”
EFH filed for bankruptcy in April, seeking Chapter 11 protection from $40 billion in debts largely amassed during a 2007 leveraged buyout led by private equity firms KKR & Co. and TPG.
In the reorganization plan filed in April, Oncor was to be spun off to a creditors’ group aligned with Hunt. But NextEra, which already owns power plants and wind farms in Texas along with the electricity retailer Gexa Energy, interjected.
NextEra aligned with a rival creditors’ group and earlier set the high bid for Oncor, outbidding their own previous offer by $500 million. The terms of that bid remain confidential.
Now Hunt and NextEra could potentially face additional bidders for Oncor.
“The timing depends on how complicated it is. And this one’s going to be complicated. I wouldn’t be surprised if this was a six- to nine-month process. You have more assets. Regulatory authorities are going to have their nose in this,” Pezanosky said.