NextEra Energy failed to persuade skeptical utility regulators in Texas to take another look at its stalled $18.4 billion bid for Oncor Electric Delivery, Bloomberg News reported. The Public Utility Commission of Texas yesterday refused NextEra’s second request for a rehearing on a deal which it originally rejected in April. The sale of the biggest transmission operator in the state is key to rescuing Oncor’s parent Energy Future Holdings Corp. from bankruptcy. Both Oncor and NextEra declined to comment. “It is time to bring this chapter in the EFH bankruptcy to a close and consider other options more suitable to Oncor and its ratepayers,” Commissioner Kenneth Anderson Jr. wrote in a memorandum before yesterday’s meeting.
Billionaire investor Peter Thiel may have to open his books to Gawker Media's bankrupt estate after a judge yesterday said that Gawker had shown "good cause" for additional discovery in a years-long legal battle, Forbes.com reported. The decision is a win for the now-defunct Gawker, which was forced into bankruptcy last summer in the wake of an invasion of privacy lawsuit brought by former professional wrestler Hulk Hogan and funded by Thiel. Gawker's estate is currently considering a separate lawsuit against Thiel for his role in bankrolling the Hogan case. While the company's protracted bankruptcy winds down, lawyers for its estate still want answers to basic questions about Thiel's involvement, including when he became involved in funding litigation against Gawker and how much money he's spent doing so. Yesterday’s decision by Bankruptcy Judge <b>Stuart Bernstein</b> did not allow for discovery immediately, but rather directs lawyers for both sides to agree on a narrowed scope of the inquiry in advance. If that doesn't happen, Judge Bernstein will likely have to issue another ruling on the matter this summer.
Westinghouse Electric Co. was dealt another blow on Tuesday when its chances of getting nearly $2 billion for its doomed acquisition of a nuclear construction firm were extinguished by the Delaware Supreme Court, the Pittsburgh Post-Gazette reported. The Cranberry, Pa.-based nuclear technology firm is working through a complicated bankruptcy caused in large part by its December 2015 acquisition of Stone & Webster from Chicago Bridge & Iron. For more than a year, Westinghouse has been asserting that it is due $2.15 billion for that deal. Since 2008, Westinghouse and Stone & Webster had been partners in building the first four new nuclear plants in the U.S. in three decades. The projects are worth tens of billions of dollars and by late 2015, all the major parties involved — Westinghouse, Stone & Webster, and the utilities that commissioned those plants in Georgia and South Carolina — were suing each other, arguing about who bears responsibility for delays and $2 billion in cost overruns.
Puerto Rico's financial oversight board said yesterday that it was still in debt restructuring talks with creditors of the island's power utility, PREPA, a day after rejecting a proposed deal to restructure $9 billion of the utility's bonds, Reuters reported. In public documents posted on its website, the board said that its main concern about the deal was that it could squeeze consumers as demand at PREPA declines. The board's rejection had riled creditors, and it faced a lawsuit from insurers of PREPA bonds who argued the board, created last year under a federal law enacted by the U.S. Congress, had no legal authority to veto the deal. The board said yesterday that it could still be persuaded to embrace the debt restructuring agreement with certain changes, including a cap on charges to customers. A special charge on consumer bills would back new debt issued under the deal. PREPA began debt restructuring talks with holders of its $9 billion in bonds nearly three years ago, but an initial workout agreement stalled over regulatory concerns and was then rejected by Puerto Rico Governor Ricardo Rosselló. Under the new deal, reached in April, PREPA creditors agreed to accept 15 percent repayment cuts in exchange for new debt backed by a charge on customer bills. Read more.
In related news, the chief mediator in Puerto Rico's massive bankruptcy set an initial meeting with the U.S. territory and its creditors for July 12, saying it would be introductory, rather than substantive, Reuters reported yesterday. Bankruptcy Judge Barbara Houser, speaking at a court hearing in San Juan yesterday, said that the meeting would be mandatory for Puerto Rico's stakeholders, though mediation itself will be voluntary. The meeting will take place in New York, Judge Houser said, adding that "I ask all involved in or infected by these cases to trust me when I say my team and I will work tirelessly" to facilitate settlements in Puerto Rico's complex — and likely expensive — bankruptcy. Read more.
Additionally, the U.S. Securities and Exchange Commission may take action against bankers from Barclays Plc and Morgan Stanley for their roles in Puerto Rico bond sales before a worsening fiscal crisis sent it hurtling toward bankruptcy, Bloomberg News reported yesterday. The SEC’s staff recommended that the agency file an enforcement action against Barclays’ Luis Alfaro and James Henn for alleged violation of fair dealing rules for their roles in the island’s debt sales, according to brokerage records filed with the Financial Industry Regulatory Authority. The staff also suggested sanctioning Morgan Stanley’s Charles Visconsi, the co-head of public finance, and his former colleague Jorge Irizarry, in connection with disclosures Puerto Rico made in documents circulated to investors, according to Finra records. That inquiry centers on whether Morgan Stanley adequately reviewed the island’s representations. Barclays and Morgan Stanley were both underwriters of Puerto Rico’s $3.5 billion bond sale in March 2014, its last major borrowing, with Barclays serving as lead manager. Read more.
For updated news and analysis of Puerto Rico's debt crisis, along with current docket filings in Puerto Rico's case, be sure to visit ABI's "Puerto Rico in Distress" webpage.
Japan's Toshiba Corp. is expected to face the wrath of shareholders at its annual meeting yesterday after failing to sign a deal to sell its flash memory chip unit by a self-imposed deadline, Reuters reported yesterday. The ailing Japanese conglomerate is rushing to sell the prized unit to cover billions of dollars in cost overruns at its bankrupt Westinghouse nuclear unit. It had promised to sign a definitive agreement with a preferred bidder by yesterday’s meeting. But the preferred bidder, a group led by Japanese government investors and including U.S. private equity firm Bain Capital, has not agreed on conditions of the deal.
Lawyers for people injured by exploding Takata Corp. air bags told a U.S. bankruptcy court judge yesterday that the company's restructuring plan is being skewed to benefit automakers over victims, Reuters reported. TK Holdings Inc, the U.S. business of Takata, filed for chapter 11 bankruptcy on Sunday due to tens of billions of dollars of liabilities from recalls and lawsuits over its air bags, along with 11 Mexican and U.S. subsidiaries. Most of Takata's obligations are owed to automakers for recalling and replacing millions of its air bags, and the Japanese supplier's restructuring plan relies heavily on financial support from its customers. Several personal-injury lawyers told U.S. Bankruptcy Judge Brendan Shannon that Takata had made too many concessions to automakers, without investigating the value of their claims. Lawyers for TK Holdings and General Motors Co. argued that the need for financing outweighed the need to investigate the protections granted to the automakers, which could be investigated later. Authorities have linked 16 deaths, mostly in the United States, and more than 180 injuries to explosions of Takata air bag inflators made with ammonium nitrate that became volatile with age and prolonged exposure to heat.
Carmakers may end up shouldering the bulk of the costs of replacing the estimated 100 million defective airbags made by Takata Corp. after the company filed for the biggest postwar bankruptcy by a Japanese manufacturer, Bloomberg News reported yesterday. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. yesterday issued separate statements saying they may not be reimbursed for the majority of their recall-related claims by Takata, which earlier filed for bankruptcy protection in the U.S. and Japan. Seventeen vehicle makers including BMW AG and Tesla Inc. were named as unsecured creditors with unknown claims related to recalls and indemnification, according to Takata’s chapter 11 filing, which listed more than $10 billion in liabilities. Takata is unable to disclose the exact total of its liabilities as the company hasn’t reached an agreement on how to split the recall costs with the automakers. Tokyo-based Takata also announced an agreement on a sale to Key Safety Systems Inc. for 175 billion yen ($1.6 billion). The U.S. air-bag maker owned by China’s Ningbo Joyson Electronic Corp. will substantially retain all of Takata’s employees worldwide and the acquisition of the businesses and bankruptcy proceedings are expected to be completed by the first quarter of 2018.
Embattled airbag maker Takata Corp. filed for bankruptcy protection in Japan and said that it would seek $1.588 billion in financial aid from U.S.-based auto parts supplier Key Safety Systems, Reuters reported yesterday. The KSS deal would help it deal with the fallout from its defective airbag inflators at the centre of the global auto industry's biggest ever recall, the two companies said in a joint statement. The filing at the Tokyo District Court followed a Chapter 11 bankruptcy protection filing in the United States. As part of the bankruptcy protection plans, KSS would acquire all of Takata's assets barring certain assets and operations related to the airbag inflators involved in the global recall in the planned deal worth $1.59 billion. Takata would keep operations of its affected inflators for now to continue supplying recall replacement parts, and would eventually wind down those operations, the two companies said in a statement.
J. Crew Group Inc.’s debt restructuring can’t go forward because not all lenders agreed to it, and it seals the deal on an improper shift of trademark assets to benefit the retailers’ private equity owners, two holdouts said, Bloomberg News reported yesterday. Funds affiliated with Eaton Vance Corp. and Highland Capital Management sued J.Crew and the agent to its $1.57 billion term loan in New York State Supreme Court yesterday. They say that the agent, Wilmington Savings Fund Society FSB, needed unanimous consent of lenders for the deal it inked earlier this month; consenting to the restructuring deal and waiving potential lawsuits against J. Crew over its controversial transfer of its trademark assets last year. On Wednesday, J. Crew said that 88 percent of lenders consented to the deal.
A court-appointed trustee for bankrupt Molycorp Minerals LLC will ask a judge Friday to approve the sale of the last remaining assets associated with a rare-earth mine at Mountain Pass, Calif. But a lawsuit over mineral rights and complaints by the losing bidder for those assets are complicating efforts to reopen the mine, Bloomberg News reported yesterday. The dispute pits Oaktree Capital Management LP, which owns the most advanced ore processing equipment at the mine, against JHL Capital Group and QVT Financial LP, which control the most important mineral rights at the site. All of them held debt in Molycorp’s now-defunct parent, Molycorp Inc. until they traded their $1.9 billion in claims for different parts of the company. The court-appointed trustee held an auction on June 14 for the remaining parts of the mine hoping to attract a buyer to restart production and take responsibility for about $100 million in cleanup costs.
