Need Another Reason to Vote DOWN the Somervell Hospital District? What if EFH Goes Bankrupt?Somervell County Salon-Glen Rose, Rainbow, Nemo, Glass....Texas


 

Need Another Reason to Vote DOWN the Somervell Hospital District? What if EFH Goes Bankrupt?
 


3 March 2013 at 12:27:24 PM
salon

Here's an article from Bloomberg News of Feb 25 2013

Texas Competitive Electric Holdings, the utility’s wholesale power unit, faces an October 2014 deadline on the maturity of a portion of its loans. Informal restructuring talks already have taken place, according to two people with knowledge of the matter. Senior lenders -- including Franklin Resources Inc., Apollo Global Management LLC, Oaktree Capital Group LLC and GSO Capital Partners -- probably would seek to seize the unit if there is a bankruptcy, said one creditor, who asked not to be identified because the process is private.

The buyout of Energy Future, the Dallas-based company formerly known as TXU Corp., in 2007 for $48 billion marked the peak of a private-equity boom that went bust a year later with the onset of the financial crisis. A bankruptcy would wipe out much of the $8.3 billion investment made by buyers including KKR, TPG and Goldman Sachs Capital Partners in what was the biggest LBO in history. It would be the highest-profile private equity-backed company to go under since Chrysler was bailed out by the U.S. government in 2009.

 

Maybe that's what rich zillionnaries KKR hope to have happen, for YOU AND ME to bail them out.

 

“This deal never made sense,” Erik Gordon, a private- equity and law professor at the University of Michigan, said in an interview. “It could only have been done during the times of hysterical overoptimism by everybody -- by KKR and TPG and by all the lenders who put up the money.”

What's kind of hilarious about this is that even though EFH is doing poorly and keeps losing boatloads of money, Hey, KKR is doing fine!

For the private-equity backers, not all is lost. KKR and the others have reaped $560 million in advisory and monitoring fees since the buyout, translating into almost 8 percent of what they invested, according to regulatory filings. Reminds me of Bain Capital.

Anyway, bottom line. Let's say that Energy Future Holdings cannot restructure its debt, ie, find some investment suckers to take on this white elephant before October 2014 when they have to START PAYING THE LOANS BACK.  As one person said in one of these articles, it's not really a quesion of IF but WHEN EFH will declare bankruptcy. Do you really think that Somervell County citizens should be taking on 17 cent tax rate for a hospital district when the tax base is this insecure? Really?

P.S. We heard a rumour that EFH has already filed for bankruptcy. We can't find any evidence that this is so and consider it an unfounded rumour at this time. If we find out different, with a legitimate source, such as a pointer to the SEC, we'll post it.


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Comments!  
1 - humanbeing   3 Mar 2013 @ 9:33:51 PM 

Not sure what the restructuring would mean for the plant and the future taxes it would be paying but I do know one thing: Private equity investment is just another name for fraud.


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2 - salon   4 Mar 2013 @ 11:00:16 AM 

With you, HB. It's interesting that the people working for the plant got their pensions either cut or drilled way down but KKR is making sure to be the vulture picking from the carcas.


Latest Blog Post by salon -Video- Somervell County Commissioners Court Special Sessions (2) Dec 23 2019
3 - humanbeing   10 Mar 2013 @ 8:13:00 PM 

Your analogy is appropriate, Salon. I believe the term is 'Vulture Capitalism'.


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