Saturday, December 3, 2022 Dec 3, 2022
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Energy Future Holdings Under the Media Spotlight, Ctd.

By Tim Rogers |

Yesterday it was the Wall Street Journal. Today it’s the New York Times. And this story has more teeth when it comes to analyzing Energy Future Holdings’ (EFH) enormous debt:

Today, the TXU deal is unwieldy and unpredictable. The buyout was, in effect, a gargantuan bet that natural gas prices would keep climbing; instead, plunging prices coupled with a hobbled national economy have cut into the cash the company generates. …

TXU, rechristened as Energy Future Holdings when the deal closed in October 2007, is hardly the only private equity bet suffering these days. Many other deals from the height of the buyout boom are mired in problems, as companies buffeted by the weak economy or overwhelmed by once-plentiful and oh-so-cheap debt are struggling to stay upright.

“There is no doubt that these are good companies with bad balance sheets,” says Colin C. Blaydon, a professor at Dartmouth’s business school who specializes in private equity. But some of the companies, he says, are so deeply buried that an economic rebound might not be enough to let them pay their debt.

“The cash flows are not going to be strong enough to let them fully recover and dig their way out,” he says.

It mentions other private equity bets. But this story is all about EFH, and it can’t make the company or its owners happy.