Judge to Reconsider NextEra Breakup Fee on Oncor Deal
September 19 2017 - 12:55PM
Dow Jones News
By Peg Brickley
A bankruptcy judge on Tuesday dealt a blow to NextEra Energy
Inc.'s campaign to collect a $275 million breakup fee for its
failed attempt to take over Energy Future Holdings Corp.'s Oncor
power-transmission business.
Judge Christopher Sontchi said he made an error last year when
he approved the breakup fee in a deal Energy Future hoped would
bail it out of bankruptcy. Reconsideration of the breakup fee order
is appropriate, the judge said.
Tuesday's ruling is a win for creditors of Energy Future, which
are now counting on a new deal -- the sale of Oncor to Sempra
Energy, for $9.45 billion. That isn't enough money to pay off all
the debts remaining in Energy Future's bankruptcy case, which began
in 2014.
NextEra's claim to a $275 million breakup fee, had it succeeded,
would have put a big dent in the pile of money Energy Future is
expecting from the Sempra deal, leaving some creditors with a
depleted recovery. Judge Sontchi's ruling that the breakup fee was
approved based on an erroneous understanding casts serious doubt on
whether NextEra will be able to collect.
The product of years of effort, NextEra's takeover attempt was
rejected by the Public Utility Commission of Texas in a surprise
ruling this year. Regulators said NextEra's buyout of Oncor, a
power-transmission business that is a vital piece of the Texas
power system, wasn't in the public interest.
Defeated in the deal, NextEra claimed it was entitled to collect
the breakup fee from Energy Future, to cushion the blow of a
takeover campaign that cost tens of millions of dollars.
The decision came in a fight led by Elliott Management Corp., a
hedge fund that picked up big stakes in Energy Future debt earlier
this year. Elliott has been leading creditors in an effort to spur
aggressive action by Energy Future to defeat the breakup fee.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
September 19, 2017 12:40 ET (16:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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