(Reuters) – Kohlberg Kravis Roberts and Co’s plan to restructure the debt of Energy Future Holdings Corp (EFH), following a leveraged buyout in 2007, is in jeopardy due to opposition from its key bondholders, the New York Post said, citing sources.
Franklin Templeton Investments, one of the major lenders holding more than half the bonds in the company, rejected the private equity owners’ restructuring plan because the newly issued debt, though more secure, would only have a face value of half of the current loan, the paper said.
According to the Post, KKR and TPG Capital had proposed reducing $6 billion debt at EFH to $4 billion, and then shifting that debt to its Oncor unit.
However, the owners may bypass holding company bondholders like Franklin Templeton and make a similar offer to the lenders of EFH’s other unit, Texas Competitive Electric Holdings (TCEH), though that would not enable them to strip TCEH from the rest of the privately-held energy group, the paper said.
Representatives of Kohlberg Kravis, TPG Capital and Energy Future Hldings could not be reached immediately for comment outside regular U.S. business hours. (Reporting by Biswarup Gooptu in Bangalore; Editing by David Holmes)