PE-Backed Energy Future Posts Q1 Profit

NEW YORK (Reuters) – Privately owned power company Energy Future Holdings Corp reported a $442 million quarterly profit on Friday, compared with a big loss a year earlier, a plus for the three private equity firms that bought it for $32 billion.

The buyout of TXU Corp, as it was formerly known, was the largest leveraged buyout, measuring $44 billion, including debt. Its three owners, which inked the deal in October 2007, are private equity giants Kohlberg Kravis Roberts & Co, Texas Pacific Group and Goldman Sachs Capital Partners.

Private equity firms have been struggling to keep investments above water as the economy sputters.

KKR’s Amsterdam-listed fund KKR Private Equity Investors (KKR.AS) in March marked down its valuation of its investment in Energy Future by $109.6 million. It was marked at 0.7 times the cost of the investment at the end of December, vs. 1 times cost as of Sept. 30.

Dallas-based Energy Future said first-quarter net income was $442 million, compared with a year-earlier net loss of $1.3 billion. Last year’s figures were hit by unrealized mark-to-market net losses related to the company’s hedging program. The company hedges its natural gas prices.

Part of the gains this year came from lower purchase power costs during scheduled plant outages and higher margins from asset management activities, Energy Future said.

By Megan Davies