$4Bn impairment for KKR-backed Energy Future Holdings

Energy Future Holdings Corp, which is backed by Kohlberg Kravis Roberts & Co, expects to take a non-cash $4 billion goodwill impairment charge in the third quarter because of lower wholesale power prices, according to Reuters. KKR and Texas Pacific Group bought the company in 2007. In July, Standard & Poor’s cut its rating on the company by four notches, saying that it sees a debt exchange as distressed and equivalent to a default.

(Reuters) – Privately held utility Energy Future Holdings Corp expects to take a non-cash $4 billion goodwill impairment charge in the third quarter to reflect the effect of lower wholesale power prices, the company said in a regulatory filing on Friday.

“The goodwill impairment charge reflects the estimated effect of lower wholesale power prices … driven by the sustained decline in forward natural gas prices,” the company said in its filing.

The Dallas-based energy company, formerly known as TXU Corp, was bought out in 2007 by Kohlberg Kravis Roberts & Co and Texas Pacific Group.

Standard & Poor’s in July cut its rating on Energy Future Holdings by four notches, saying it views a debt exchange by the energy company as distressed and equivalent to a default. Energy Future Holdings announced the debt exchange as it was seeking to reduce the heavy debt taken on in its 2007 leveraged buyout.
(Reporting by Nick Zieminski; Editing by Gary Hill)