Energy Future Wrangles With Vistra Over Tax Breaks -- Update
11 Outubro 2017 - 5:24PM
Dow Jones News
By Peg Brickley
Energy Future Holdings Corp. is battling some of its former
businesses in a tax dispute with Vistra Energy Corp., and hedge
fund Elliott Management Corp. is chiming in.
Vistra is made up of Energy Future's former power-producing and
retailing businesses, which exited from bankruptcy last year as a
new company. Still stuck in chapter 11, Energy Future on Tuesday
sued Vistra, accusing it of violating an agreement on how to divide
the energy giant's tax breaks.
Elliott, Energy Future's largest creditor, filed papers seeking
to weigh in on the fight, which focuses on an agreement struck in
August 2016, as the former TXU retailing and power-generating
businesses, TXU Energy and Luminant, were preparing to exit
bankruptcy.
Vistra declined to comment on the case, which is set for a
status conference Thursday in the U.S. Bankruptcy Court in
Wilmington, Del. Most court papers were filed under seal, so the
value of the disputed tax breaks isn't known. Lawyers for Energy
Future say the information, including "numerical descriptions,"
needs to stay secret, because it "may impact future transactions in
which the parties may participate."
Taxes were a driving force in shaping Energy Future's
restructuring, which saw the company split in two. Done
incorrectly, the breakup of Energy Future could have left behind a
multibillion-dollar unpaid tax bill, which would have been a major
embarrassment for private-equity owners KKR & Co., TPG Capital
and an arm of Goldman Sachs Group Inc.
To prevent the tax-liability overhang, Energy Future engaged in
extensive talks with the Internal Revenue Service and devised a
complex deal structure meant to produce the desired effect,
accompanied by a pact to cooperate in filing tax returns.
New court papers say Energy Future doesn't believe Vistra is
abiding by the tax agreement, and will further violate it Oct. 16,
when it files its tax returns. Vistra plans to use certain tax
breaks in a way that would limit their availability to Energy
Future, lawyers for the bankrupt company say.
Energy Future, the former TXU Corp., filed for chapter 11
bankruptcy protection in April 2014, loaded down with more than $42
billion in debt. Last year's exit of the Vistra businesses from
bankruptcy cleared away more than $30 billion in debt, leaving the
parent holding company to resolve the rest.
Energy Future is hoping to sell its 80% stake in Oncor, a Texas
power transmission company, to California's Sempra Energy Inc., in
a $9.45 billion deal. Texas regulators must approve the transaction
first, a process that could take as long as eight months. Assuming
Sempra gets the nod from the Public Utility Commission of Texas,
Energy Future will seek confirmation of its chapter 11 exit
plan.
Elliott Management, which is run by billionaire Paul Singer,
bought up Energy Future debt this year, then dueled with Warren
Buffett's Berkshire Hathaway Energy Co. for the right to acquire
Oncor. In August, Sempra Energy swooped in and agreed to buy Oncor
in a deal that has Elliott's backing.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
October 11, 2017 16:09 ET (20:09 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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