A deregulated unit of Energy Future Holdings Corp. that filed for bankruptcy protection last week is planning to issue $9 billion of new debt to pay senior creditors including Apollo Global Management LLC and Oaktree Capital Group LLC, Bloomberg News reported yesterday. First-lien lenders to the Texas Competitive Electric Holdings subsidiary will forgive about $23 billion of debt in exchange for ownership of the restructured company as well as proceeds from the $9 billion transaction, according to court documents. The other lenders include Centerbridge Capital Partners LP and Angelo Gordon & Co. Energy Future, a Dallas-based power producer taken private in a record-setting leveraged buyout, filed for bankruptcy April 29 with a proposal to restructure $40 billion of $49.7 billion in liabilities. The LBO was a bet that natural gas prices, which set the cost of electricity in Texas, would rise. Instead, prices have fallen more than 65 percent since July 2008.
