NEE NextEra Energy Inc

By Peg Brickley 

NextEra Energy Inc. has boosted its offer for Energy Future Holdings Corp.'s Oncor electricity transmission business by $300 million, quieting creditor worries about the sale that will be the key to getting the Dallas company out of bankruptcy.

Over the weekend, NextEra agreed to increase the cash component of its deal to $4.4 billion from $4.1 billion. Additionally, NextEra is making other changes to the proposed Oncor buyout that will allow Energy Future creditors to receive $450 million more from the sale of the crown jewel business than previously planned.

The changes were made in a 48-hour flurry of activity, Energy Future lawyer Chad Husnick told Judge Christopher Sontchi at a hearing Monday in the U.S. Bankruptcy Court in Wilmington, Del., to approve the deal. Judge Sontchi authorized Energy Future to move ahead on the NextEra deal after lawyers lined up to speak in favor of it.

"This is an improvement that's a significant improvement that benefits all [Energy Future] creditors," said Gary Kaplan, lawyer for mutual fund giant Fidelity Management & Research Co., a former critic.

Many creditors of the parent Energy Future, which is the former TXU Corp., are getting paid in full from the proceeds of the deal. One class of junior investors who on Friday expected to recover 16 cents for each dollar they are owed can now count on collecting up to 50 cents for each dollar of debt because of the higher price, Mr. Kaplan estimated.

The Oncor sale is built into a chapter 11 exit plan that could move through bankruptcy courts before the end of the year, given the momentum of the improved deal price, Mr. Kaplan said. In addition to $4.4 billion in cash, NextEra is paying off $5.4 billion in bankruptcy financing and shouldering some liabilities.

Once the Oncor sale gets through court, it still must pass muster before the Public Utility Commission of Texas, which killed an earlier buyout offer in the spring. That offer, led by Hunt Consolidated Inc., foundered due to concerns it involved financial engineering.

The sale agreement carries a $275 million breakup fee, and leading creditors questioned whether the bid protection was necessary to keep NextEra interested in a deal.

Mr. Husnick said Fidelity, a former opponent, has now agreed to support the Energy Future bankruptcy plan, which is premised on the sale of Oncor to NextEra. Other objectors also dropped protests over the breakup fee once NextEra improved the terms.

A few months after Energy Future filed for chapter 11 bankruptcy protection in April 2014, NextEra went public with its interest in buying Oncor, a thriving piece of the Texas electricity infrastructure. The regulated company operates free and clear of its parent's bankruptcy case.

Hunt beat NextEra in the first round of competition, which ran from 2014 through 2015. When Texas regulators scuttled the Hunt takeover, Energy Future returned to the bargaining table. The result was a pair of chapter 11 plans: one involving Energy Future's Luminant energy-generating business, and TXU Energy, the retailing business; and the other involving the parent company, which indirectly owns 80% of Oncor.

The Luminant and TXU Energy chapter 11 exit plan has already been confirmed, clearing the way for those businesses to exit bankruptcy having shed tens of millions of dollars in debt.

The Energy Future exit plan must be circulated for creditor votes and then face another crucial court session.

Write to Peg Brickley at peg.brickley@wsj.com

(END) Dow Jones Newswires

September 19, 2016 13:53 ET (17:53 GMT)

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