© 2017 The Texas Lawbook.
By Jon Prior of the Dallas Business Journal
(Sept. 6) – U.S. Bankruptcy Judge Christopher Sontchi has given his approval for Energy Future Holdings to sell its 80 percent ownership stake in Oncor to Sepra Energy for $9.45 billion in cash.
The judge’s thumbs up means the deal heads to the Texas Public Utility Commission, which is the regulatory authority that must give its blessing before the deal can be final.
The ruling marks a milestone in the bankruptcy case that has lagged for years as Texas regulators have struck down previous suitors’ bids for Energy Futures’ remaining jewel.
It also means that the $9 billion deal for Warren Buffett’s Berkshire Hathaway to snap up Oncor is dead.
Kirkland & Ellis is advising EFH in the bankruptcy and transaction.
The Sempra deal is a win for the holders of debt owed by Oncor’s parent company Energy Future Holdings. One of the biggest among them being hedge fund Elliott Management, which had attempted to outbid Berkshire as the firm balked at the price Buffett was paying.
Elliott has supported Sempra’s bid for Oncor.
Between a crucial court hearing on Aug. 21 and today, Berkshire could have come back with a better offer, but Buffett has long shied away from bidding wars.
Berkshire could have another chance if the Sempra deal runs into trouble with the Texas agency, but that isn’t likely. Sempra has agreed to leave certain regulatory protections and Oncor’s minority owners in place.
Buffett’s company had negotiated a $270 million termination fee, but it was never approved by the bankruptcy judge.
Oncor is the largest electricity provider in Texas, serving about 10 million customers in the state. It is seen as a recession-proof utility and a rare opportunity in a market flush with buyers but short on profitable, healthy companies for sale.
“Oncor is a well-managed, top-tier utility, operating in one of the strongest U.S. growth markets,” Sempra CEO Debra Reed said in a statement. “We believe it will be an excellent strategic fit with our portfolio of utility and energy infrastructure businesses, while opening up a new avenue for our long-term growth.”
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