Fidelity preparing bid for Energy Future’s Oncor with creditors, say sources: Reuters

Fidelity Investments is working on preparing a bid with other creditors of Energy Future Holdings Corp to acquire through Energy Future’s bankruptcy the company’s crown jewel, Oncor, according to people familiar with the matter.

Energy Future has been in bankruptcy for over two years. Plans for Oncor, a utility serving Texas that is prized for its steady cash flow, have come together and then collapsed over that time, partly because of financing and regulatory issues.

Fidelity would have been one of the owners of Oncor had an earlier plan panned out.

Now, the mutual fund giant, seeking to protect its original investment in Energy Future, joins a crowded field of bidders for the power distribution company. NextEra Energy Inc is thought to be the lead bidder, according to people familiar with the matter, and Warren Buffet’s Berkshire Hathaway Inc has also ramped up its interest in Oncor, the people said.
Creditors have estimated Oncor’s value at $19 billion.

Spokesmen for Fidelity, Energy Future and NextEra declined to comment. A request for comment from Berkshire Hathaway was not immediately returned.

Energy Future began work on a new bankruptcy plan earlier this year.

Like the prior plan, the new one calls for spinning off Energy Future’s power plants and retail business to senior creditors, a process scheduled to wrap up this summer. Unlike the earlier plan, the spin off can happen without waiting for a deal on Oncor.

Attorneys for Energy Future had been scheduled to have a new plan for the unit of the company that holds Oncor by July 8, but asked for a suspension of that deadline.

Energy Future filed for bankruptcy burdened by debt stemming from a record 2007 leveraged buyout, led by KKR & Co LP, TPG and the private equity arm of Goldman Sachs Group Inc. The company’s bankruptcy filing has been among the largest ever in the U.S.