Report: KKR In Talks To Swap Energy Future Debt

(Reuters) – Private equity firm Kohlberg Kravis Roberts & Co is in talks with certain lenders to swap unsecured debt in Energy Future Holdings Corp for debt guaranteed by Oncor, the New York Post reported, citing a source close to the situation.

KKR is in negotiations with Franklin Templeton Investments, the leader of the lending group, and the new debt would be valued at a 20 to 25 percent discount to the former obligation, the paper said.

On Thursday, Energy Future sold $500 million of senior notes at 10 percent interest and, according to the Post, the purpose of this is to use the rate as a point of reference in working out a debt swap deal with lenders who hold $7 billion in Energy Future loans.

KKR and Franklin Templeton did not immediately respond to emails seeking comment that were sent outside of regular U.S. business hours.

Energy Future, formerly TXU, was loaded with debt when KKR, TPG Capital and Goldman Sachs Capital Partners took it private in the largest-ever leveraged buyout. The company has been burning cash since the market for power worsened and a weak economy hurt demand. (Reporting by Santosh Nadgir in Bangalore, editing by Will Waterman)