An $850 million bond sale from Energy Future Holdings Corp. is paving the way for the power producer KKR & Co. and TPG Capital bought in 2007 for $43.2 billion to potentially put its unregulated unit into bankruptcy, Bloomberg News reported yesterday. Proceeds from the sale, a portion of which was secured by the firm’s equity interest in Oncor Electric Delivery Co., will be used to repay a loan to Energy Future's Texas Competitive Electric Holdings Co. Repayment allows the power producer to put Texas Competitive into bankruptcy without triggering defaults elsewhere in the company, according to Covenant Review LLC. Natural gas prices have tumbled 80 percent since July 2008, dragging down electricity rates and cutting Energy Future’s cash flow, leading to six consecutive quarterly losses. The Dallas- based company’s $36.6 billion of long-term debt, $23.5 billion of which may be due in 2015, make the capital structure "untenable," Moody’s Investors Service wrote last week.
