Dive Brief:
- Delaware Judge Christopher Sontchi has confirmed the Chapter 11 bankruptcy plan proposed by Energy Future Holdings, The Wall Street Journal reports, setting up a deal that would find new ownership for T&D utility Oncor Electric Delivery.
- The next step will be for the Public Utility Commission of Texas to approve NextEra Energy's plan to purchase Oncor, a deal valued at more than $18 billion.
- The Oncor sale is a key to Energy Future's plan to exit bankruptcy. A previous proposal, spearheaded by Texas real estate magnate Ray Hunt, failed last year setting up NextEra's offer.
Dive Insight:
Oncor continues to inch towards new ownership, and the Delaware court's decision last week is a key approval. The utility has been mired in the bankruptcy proceeding since 2014 when its parent company folded with more than $40 billion in debt.
The complicated deal has been moving forward in stages. In summer 2015, there was speculation NextEra was in talks to acquire Oncor, but ultimately Hunt Consolidated put forth a bid which proposed to convert Oncor into a Real Estate Investment Trust. That deal ultimately failed, opening the door for NextEra's current proposal.
In September, Energy Future Holdings won approval from the Bankruptcy Court for the District of Delaware to sell Oncor, but only after NextEra added $300 million in cash to the purchase price. NextEra announced in October that it had reached an agreement to purchase Texas Transmission Holdings Corp., which indirectly owned a 20% interest in Oncor.
The deal also required NextEra to reach a $27 million agreement to acquire a 0.22% interest in Oncor that is owned by Oncor Management Investment LLC.
Approval by the Texas PUC would finalize the deal, but regulators have previously cited concerns about provisions related to the rights of minority owners of Texas Transmission Investment that could be eliminated should NextEra fail to acquire those interests.
