Energy Future Holdings Announces $4b Debt Exchange

NEW YORK (Reuters) – Privately owned power company Energy Future Holdings Corp on Monday said it was offering to exchange up to $4 billion of new notes for outstanding notes to extend maturities and reduce debt.

The company said it is also seeking consent from debt holders to amend restrictive terms of its outstanding notes. If the amendments are not approved, the maximum amount of new debt to be issued in the exchange offer will be $3 billion, the company said in a statement.

Formerly called TXU, Energy Future Holdings was taken private in 2007 by Kohlberg Kravis Roberts, TPG Capital and Goldman Sachs Capital Partners. The company is the latest of scores of highly leveraged borrowers that have been exchanging debt to give themselves more time to pay it off as the economy struggles.

Moody’s Investors Service in August downgraded Energy Futures Holdings to Caa1, a deeply speculative rating, saying the company would likely have to restructure its debt to deal with maturities, including about $23 billion due in 2014.

The exchange offer covers Energy Future Holdings’ outstanding 5.55 percent notes due in 2014, its 6.5 percent notes due in 2024, 6.55 percent notes due in 2034, 11.25 percent notes due in 2017 and 10.875 percent notes due in 2017. Also included are 10.25 percent notes of Texas Competitive Electric Holdings Co due in 2015.

The new senior secured notes that investors will swap into will have a 9.75 percent coupon and be due in 2019. Given the enormous debt burden at Energy Future Holdings, the debt exchange is not surprising, high-yield research firm KDP Investment Advisors said in a research note. (Reporting by Dena Aubin; Editing by Chizu Nomiyama)