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Surprise New Bidder Tops Berkshire Hathaway’s Oncor Proposal

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By Editors of Power Engineering

With just hours to go before the purchase hearing, Berkshire Hathaway’s $9 billion bid for Oncor was topped by a surprise new Party.

Sempra Energy, a natural gas utilities holding company, made a late offer to purchase Oncor’s bankrupt parent Energy Future Holdings Corp. for $9.45 billion, Bloomberg reported. The company is worth $18.8 billion, including debt.

Sempra plans to use its own debt and equity for the purchase, as well as third-party equity and $3 billion in loans from the reorganized company.

The new bid also tops a proposal by Elliott Management Corp 11, the largest creditor of Energy Future Holdings Corp., for $9.3 billion. As of late last month, the company indicated it was in the process of securing equity from other investors to back that bid.

In response to that bid, representatives of Berkshire Hathaway previously said the company would not raise its bid higher than $9 billion.

Representatives of Elliot supported Sempra’s bid, telling Bloomberg that bid provides “substantially greater recoveries” to Energy Future creditors than Berkshire’s offer.

A person familiar with the matter said Elliott’s public bid allowed Sempra to quietly work on its bid for weeks.

If approved, the purchase would be Sempra’s largest since it was formed in 1998, when it was formed through the merger of Pacific Enterprises, parent company of SoCalGas, and Enova Corporation, parent company of San Diego Gas & Electric.

The proposed purchase will be heard today before U.S. Bankruptcy Judge Christopher Sontchi.

Energy Future Holdings filed for Chapter 11 bankruptcy protection in April 2014, and originally proposed selling Oncor, Texas’ largest utility, to NextEra. However, Texas regulators blocked NextEra’s bid twice, saying their $18.7 billion bid raised concerns about the loss of ring-fencing measures that would protect Oncor’s credit rating, as well as who would control the company.

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