NEW YORK ( The Deal) -- Affiliates of private equity-backed Energy Future Holdings Corp. missed $119.3 million in interest payments due on its debt on Tuesday as the electricity provider works toward a prenegotiated bankruptcy filing.
The Dallas-based company is unlikely to reach a deal for a prepackaged Chapter 11 filing but is aiming toward a prearranged or prenegotiated filing, according to a source who asked not to be named.
Energy Future Holdings has lined up $4.475 billion in debtor-in-possession financing for affiliate Texas Competitive Electric Holdings Co. LLC and another $5.2 billion in DIP financing for affiliate Energy Future Intermediate Holding Co. LLC, a filing with the Securities and Exchange Commission disclosed on Monday.
On Tuesday, Texas Competitive Electric Holdings missed a $50.3 million interest payment due on its 11.5% senior secured notes due Oct. 1, 2020, as well as a $58.9 million interest payment due on its 15% senior secured second-lien notes due April 1, 2021, and its 15% senior secured second-lien notes due April 1, 2021, Series B.
The affiliate has 30 days to make up the missed payment.
Texas Competitive Electric Holdings owes $1.75 billion on the 11.5% senior secured notes and $1.571 billion on the second-lien notes, SEC filings said.
In addition, Texas Competitive Electric Holdings didn't make a $10.1 million interest payment, also due Tuesday, on various pollution control revenue bonds, on which $289 million is outstanding. A 60-day grace period exists to make up the missed payment on the bonds, SEC filings said.
In a statement Monday, Energy Future Holdings said that it was in ongoing negotiations "with certain of its financial stakeholders about various restructuring alternatives to strengthen the company's balance sheet and create a sustainable capital structure to position it for the future."
An agreement, however, hasn't yet been reached.
Formerly known as TXU Corp., Energy Future Holdings is owned by a group of private equity firms that includes Kohlberg Kravis Roberts & Co. LP, TPG Capital and Goldman, Sachs & Co. (GS).
KKR, TPG and Goldman paid about $32 billion in equity and assumed about $13 billion in debt in the deal to acquire the company.
When the $45 billion deal was announced in 2007, it was the largest leveraged buyout at the time.
Energy Future Holdings is being advised on its restructuring by Kirkland & Ellis LLP and Evercore Partners Inc. Rick Cieri and Edward Sassower are leading the legal team at Kirkland & Ellis. Roger Altman is helming the financial advisory contingent from Evercore Partners.
First-lien lenders are being advised by Paul, Weiss, Rifkind, Wharton & Garrison LLP and Millstein & Co. The Millstein group working on the restructuring includes CEO Jim Millstein, vice president Adam Preiss, managing director Elizabeth Abrams and partner Jane Vris.
Tim Coleman and Steven Zelin, senior managing directors at Blackstone Group LP, are assisting the private equity group, which is also being advised by legal counsel Richard G. Mason and Austin T. Witt at Wachtell, Lipton, Rosen & Katz.
According to SEC filings, the company had $763 million in cash on its balance sheet as of March 25.
If Energy Future Holdings fails to make up the missed interest payments by the end of the grace period and doesn't file for bankruptcy protection by then, the company would default on the debt and it would become payable immediately if at least 30% of the noteholders agree.
If Energy Future Holdings defaults on its debt, the repayment of $22.635 billion in secured debt and $5.237 billion in unsecured notes would also be accelerated.
On Monday, Energy Future Holdings also failed to file its annual report on time. The company noted that the annual report will contain a warning raising substantial doubt about the company's ability to continue as a going concern due to its anticipated problems repaying debt obligations due in 2014.
A company spokesman declined to comment.