CORRECTED-Energy Future close to $9.7B bankruptcy financing commitment from banks
(Corrects fourth paragraph to reflect Energy Future is based in Dallas, not Houston)
By Michelle Sierra and Nick Brown
April 28 (Reuters) - Energy Future Holdings is close to signing up at least $9.7 billion of bankruptcy loans from a consortium led by Citigroup and Deutsche Bank, according to two sources involved in the matter, allowing it to finance its operations during a bankruptcy expected to be filed by Tuesday.
While the loan amounts remain subject to change, the Texas power company plans to seek Chapter 11 protection by Tuesday with the so-called debtor-in-possession (DIP) loan in place, whether or not it reaches a consensual restructuring deal with its creditors before then, said the people, who declined to be named because talks are private.
Citi is leading an approximately $4.5 billion DIP loan at the company's unregulated merchant generation unit, while Deutsche Bank is taking the lead on a $5.2 billion DIP at Energy Future Intermediate Holdings, which owns most of the company's regulated business, said the people familiar with the matter.
A spokesman for the Dallas-based company declined to comment. A Citi spokesperson could not be reached for comment and Deutsche Bank also declined to comment.
Other banks arranging loans include Morgan Stanley, Bank of America Merrill Lynch, Barclays, Royal Bank of Canada and Sumitomo Mitsui.
Unsecured bondholders at EFIH are expected to advance $2 billion of bankruptcy financing on top of the bank commitments, a third person close to the matter told Reuters on Monday.
Energy Future, formerly TXU Corp, was created in 2007 in the largest-ever leveraged buyout, led by KKR, TPG and Goldman Sachs' private equity arm. The deal loaded the company with debt just before a domestic energy boom that reduced natural gas prices and eroded coal's cost advantage. Continued...