Berkshire Hathaway stands pat on $18.1B offer for Oncor

Dive Brief:

Warren Buffet's Berkshire Hathaway issued a statement on Wednesday, saying it would not increase its $9 billion offer to acquire 80% of Oncor Electric Delivery Co.
Including debt, the bid values Oncor at $18.1 billion. Elliott Management, one of the largest creditors of Oncor's bankrupt parent, has been considering a higher offer of $18.5 billion.
The wrangling for a company to purchase Oncor out of bankruptcy has been going on for more than a year, and it may get more complicated. Reuters reports Elliott Management has additional portions of Energy Futures Holdings debt through an impaired class of notes — likely meaning its approval will be necessary for the deal to go through.

Dive Insight:

In an unusual statement, Berkshire Hathaway this week let it be known that $18.1 billion is as high as it will bid for Oncor Electric, the largest utility in Texas.

“We’re committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state,” Berkshire Hathaway Energy Chairman and CEO Greg Abel said in a statement.

Under Buffett's offer, Berkshire Hathaway Energy would indirectly own Energy Future Intermediate Holding Company's 80% interest in Oncor, leaving the current corporate structure in place.

Berkshire reached out to stakeholders before making its bid, and the structure of the offer would leave in place protections that separate Oncor's operation from its parent. "Ringfencing" was a sticky topic in two previous bids for the utility, particularly in NextEra Energy's $18.4 billion offer. The bid from Buffet's company would leave the protections in place and includes 47 regulatory commitments that have the support of a dozen stakeholder groups.

But Elliott Management is the largest creditor of Energy Future Holdings, the bankrupt parent of Oncor. The company has yet to make a formal bid, but has been considering one that would value the utility by $400 million more.

A bankruptcy judge has given Elliott until next week to formalize a bid.

But possibly throwing a wrench into Berkshire's plan, Reuters reports Elliott has purchased more of Energy Future Holdings debt. And the debt is a different type from what it already owns. The acquisition is of an impaired class of notes that will likely not be paid fully — meaning Elliott's approval would be needed for the deal to go forward.