| NEW YORK
NEW YORK May 11 Hedge fund Elliott Management
Corp filed a lawsuit against Energy Future Holdings Corp on
Thursday, claiming that the bankrupt power company has prevented
it from pursuing better options for it as its $18.7 billion deal
with NextEra Energy Inc falters.
Energy Future's plan to exit its three-year-long bankruptcy
hinges on selling its majority stake in Oncor, Texas' largest
power distribution network, but that deal is in limbo since
state regulators scuttled it over concerns it would not benefit
Elliott, Energy Future's largest creditor, wants to lay the
groundwork for a plan of reorganization for Energy Future that
involves converting its significant debt holdings in the company
to equity, eventually putting Oncor under the hedge fund's
control, according to the lawsuit, which was filed in U.S.
Bankruptcy Court in Delaware. Other options include finding
another buyer for Oncor.
"The precarious state of the NextEra transaction means that
creditors and (Energy Future) must immediately consider and
pursue other restructuring alternatives," Elliott said in the
Energy Future, Elliott and NextEra all declined to comment.
NextEra's bid for Oncor is the latest in a string of nixed
deals to get Energy Future out of its lengthy bankruptcy.
Energy Future has stymied Elliott from seeking other plans
for the company because it says that the fund must abide by the
terms of an earlier agreement with bondholders, according to the
Energy Future is waiting to see if the Public Utility
Commission of Texas chooses to re-hear NextEra's application to
Elliott is a new player in the Energy Future case, having
amassed since October enough of the company's debt to give it a
significant say in the bankruptcy process, according to the
complaint. Its total holdings tally $2.9 billion, according to a
person familiar with the matter.
To try to salvage its deal, NextEra held a meeting with the
company's debtholders in April asking for financial concessions
so that it could meet demands made by the Texas regulators,
including rate relief for ratepayers, but no agreement was
reached, according to the lawsuit.
(Reporting by Jessica DiNapoli; Editing by Leslie Adler)