While KKR dance off to their next vulture capitalistic venture, what is going on with EFH?
Update Earnings Report
Second Quarter GAAP Results
For the second quarter 2013, EFH reported a consolidated net loss (in accordance with GAAP) of $71 million compared with a reported consolidated net loss of $696 million for the second quarter 2012. The second quarter 2013 net loss included $220 million (after tax) in unrealized mark-to-market net gains on interest rate swaps that hedge our variable-rate interest expense, a $186 million favorable income tax adjustment, including $3 million in the regulated business, related to the resolution of certain Internal Revenue Service (IRS) audit matters, and $27 million (after tax) in unrealized commodity-related mark-to-market net losses largely related to positions in our natural gas hedging program.
WSJ July 14 2013-
Energy Future Holdings LLC, a Dallas-based collection of power plants, transmission lines and an electricity-sales business, wants to shed $32 billion of debt that it amassed after a 2007 leveraged buyout that still ranks as one of the biggest in history.
But that debt-shedding effort has hit some stumbling blocks. In April, the former TXU Corp. said it had offered its senior creditors 85% of the firm and $5 billion in new debt or cash, but the creditors didn't bite
What's kind of hilarious here is that TXU customers pay more for electricitity than those that compete on price and that would make it more attractive to new buyers. Let's say that again. How's that deregulation goin' for ya, TXU customers?
Bloomberg July 24 2013-
Creditors of Energy Future Holdings Corp.’s regulated-unit holding company are working on a debt reduction plan as part of a broader restructuring being negotiated at the former TXU Corp., people with knowledge of the matter said.
Junior bondholders at Energy Future Intermediate Holding Co., which holds most of regulated Oncor Electric Delivery Co. and its almost $8 billion in debt, hired Centerview Partners LLC and Akin Gump Strauss Hauer & Feld LLP to advise on de-leveraging the unit’s obligations, said the people, who asked not to be named because the matter is private.
Platts.com July 30 2013
The US utility industry continues to face a divided business outlook with merchant power companies still struggling in a low price environment, while regulated utilities have been able to win support from regulators, Moody's Investors Service said Tuesday.
US merchant generators are facing sustained low natural gas prices that will "keep a lid on power prices," as well as weak demand growth and surplus capacity, the Moody's analysts said in the report.
Even though natural gas price have recovered somewhat from their 2012 lows, there is little likelihood of a substantial rise in gas prices beyond seasonal variations, Moody's said, noting that low gas prices are the primary reason for depressed power prices.
Bloomberg july 25 2013
KKR & Co. (KKR) and TPG Capital’s best chance for salvaging their failing $48 billion purchase of Energy Future Holdings Corp. in the biggest leveraged buyout ever may hinge on $1.48 billion of junior bonds.
The odds are rising that the group of private-equity firms will try to buy the 11.25 percent debt due December 2018 and linked to the company’s regulated business, according to debt research firm CreditSights Inc. That would give them increased bargaining power to push secured lenders of the company’s unregulated unit into a reorganization that leaves a portion of the Dallas-based company in the hands of the buyout firms.
The article says that one reason creditors turned down a previous offer from EFH earlier this year is that "the holding company that controls the regulated unit burns through cash". EFH apparently also wanted a deal that would let them keep 15 percent interest in the new company that was created, but the creditors said NO.
Other large corporations that own stakes in Energy Future are Owen Bicksilver and Goldman Sachs Capital Partners. The article goes on to say that EFH's financial position might make them more agreeable to an equity swap.
“They’re not covered because they’re free cash flow negative,” said Gross, who oversees about $3.5 billion in fixed-income funds and doesn’t own Energy Future debt. While it’s unlikely the private-equity firms will put up additional cash, “I suspect in the end you’ll probably have some new equity coming in,” he said.
Injecting equity into the regulated side of Energy Future’s business, which controls the profitable Oncor Electric Delivery Co. utility, would help address one objection by lenders of the competitive side, which include Apollo and Oaktree Capital Group LLC. They don’t want cash flows from a restructured Texas Competitive Electric Holdings Co. unit plugging deficits in Energy Future Intermediate, according to the April 15 filing.
Losing money and getting ready to go bankrupt doesn't stop the lobbying money
BIG SECOND QUARTER SPENDERS, CONTINUED: Some more big Q2 numbers as lobbying reports continue to trickle in: T-Mobile spent $1.4 million and the Credit Union National Association spent $1.2 million. Other big spenders under $1 million: Energy Future Holdings spent $800,000 and the American Forest & Paper Association spent $880,000.
Speaking of Goldman Sachs, from Politico 7/13/2013
Bank ownership: The Senate Banking Committee holds a hearing on whether financial holding companies should be able to own and control power plants, oil refineries and other facilities. The hearing comes just days after the Federal Reserve said it is "reviewing" its 2003 decision letting regulated banks trade on the physical commodity markets. It also comes on the heels of a New York Times report from Sunday on a Goldman Sachs arrangement involving moving aluminum from warehouse to warehouse (http://nyti.ms/15VFqUI). Hearing info: http://1.usa.gov/13v511s. 10 a.m., Dirksen 538
Who will succeed KKR? New York Post July 27 2013
After two-and-a-half years of fund-raising, the firm finally hit the $8 billion target it set for its 10th mainstream leveraged buyout fund — well short of the prior $17.7 billion fund it raised in 2006.
The earlier fund, which had a 5.6 percent annual return as of the end of last year, included the largest leveraged buyout in history: the $44 billion deal for Texas energy concern TXU, later renamed Energy Future Holdings, which is on the brink of bankruptcy.
KKR said yesterday that second-quarter earnings fell by 74 percent mostly because the value of companies it owned declined.
The shares dipped 1.3 percent to $20.67.
PR Watch- Justice Denied -Have you been injured by a corporation? ALEC wants THEM to win, not you.
ALEC Bills Limit Corporate Accountability, Change Liability Rules
Some ALEC bills limit how much a corporation might have to pay for causing injury.
The ALEC "Noneconomic Damage Awards Act" (versions of which were introduced in five states in 2013) limits the amount a jury can award to compensate a person for their diminished quality of life as the result of an injury.
The misleadingly-named "Full and Fair Noneconomic Damages Act" (introduced in two states) limits the amount a corporation might have to pay to compensate a person for their pain and suffering.
The "Phantom Damages Elimination Act" (introduced in two states) changes the rules so a person who paid health insurance premiums for years would recover less for their medical bills than a person who had no insurance: rather than placing the full cost of paying for medical bills on the wrongdoer, the bill would reduce the amount they must pay if a person's insurance company negotiated a discount.
Other ALEC bills change how liability is apportioned when more than one individual or corporation is at fault.
Three states introduced versions of the "Comparative Fault Act," which changes the rules so that "if a company is 49% responsible, they are completely off the hook," Doroshow says.
Two states introduced the misleadingly-named "Joint and Several Liability Act," which actually eliminates the Joint and Several rule that has worked for many years and protects victims in situations where it is difficult to pinpoint which defendant is at fault -- such as when multiple companies may have manufactured lead paint -- or where one of the defendants is insolvent. The bill eliminates the rule that had established that after a jury finds a defendant substantially responsible, they can be required to fully reimburse a person for their injury.
Other ALEC "model legislation" would provide immunity for certain forms of lawsuits.
Five states introduced the "Emergency Care Immunity Act," which provides immunity to emergency personnel who provide assistance, without compensation, at the scene of an emergency. Providing some legal protections for volunteers in emergency situations may be important, but Doroshow suspects the bill is primarily advanced "for PR purposes" to promote the notion that the tort system is broken.
Ten states introduced the "Trespasser Responsibility Act," which would largely absolve landowners from a responsibility to maintain safe premises, and tends to benefit large landowners like railroads, utility companies, and big agriculture. These large corporations would be absolved from their duty to act responsibly, and would be immune if a person accidentally wanders onto their property and are injured by poorly-maintained electrical boxes, dangerous chemicals or farm implements.
ALEC's corporate members are a who's-who of companies that face tort liability. Its corporate board, recently renamed by ALEC as the "Private Enterprise Advisory Board," includes representatives of fossil fuel interests (Koch Industries, Peabody Energy, Exxon Mobil, Energy Future Holdings), the pharmaceutical industry (PhRMA, Pfizer), and big tobacco (Altria, formally known as Phillip Morris). It also includes insurance companies like State Farm, which profits from a rigged tort liability system by paying out less in claims (even while raising premiums).
Tax values and Luminant in Marshall Co TX
P.S. WHY aren't we seriously looking at solar? In TEXAS????? Is it because entities like KKR won't be able to buy themselves multiple jets and eat prime rib every night?
Many municipalities and businesses are bracing for big surcharges this year, after having been hit hard last summer, as energy use by oil drilling and production equipment outpaces the capacity of the region's power grid. State regulations largely shield residential customers from the added power costs.
In Midland, a city of about 112,000 residents where the unemployment rate was just 3.3% in May, electricity costs for offices and facilities operated by the city climbed more than 20% in 2012, to $4 million, despite using about the same amount of power as in the previous year. "Last year, the surprise charges were quite shocking, actually," said Robert Patrick, director of general services for the city.
Frontier Texas, a history museum in Abilene, about 150 miles east of Midland, had almost $4,000 of unexpected power charges on its July 2012 bill alone, the equivalent of admissions from 620 additional visitors, Executive Director Jeff Salmon said. Those additional costs were a big factor in the museum's decision to cancel an annual festival this fall where dozens of live actors would have portrayed Texans from the 1700s and 1800s
P.,P.S. This is slightly off topic but interesting. A man sued EFH over a background check.
On May 30, 2003, Drew completed a deferred sentence stemming from a criminal charge in Rosebud County, Mont., which was entered by the Rosebud County District Court, according to the complaint.
Drew claims pursuant to Montana Code of Criminal Procedure regarding dismissal after deferred imposition, the court ordered his plea stricken and dismissed the charges that were lodged against him and all information regarding the charge was to be considered confidential and may only be obtained by a court order for good cause.....
Drew claims on March 6, 2012, he received a telephone call from an Energy Future Holdings employee who identified herself as Adelade and informed him that the offer was rescinded because a 2001 criminal conviction appeared on his background check.
During the telephone call, Drew refuted the criminal conviction and stated that the information was erroneous, according to the suit.
Drew claims on March 28, 2012, he contacted the Clerk of the Rosebud County District Court and was told that on March 12, 2012, the court had provided the defendants with a facsimile that stated that no information had been found regarding Drew’s conviction, so Drew emailed Hemphill to let her know that the court had sent the facsimile.