Tuesday, 29 July 2014
Last updated 17 hours ago
Mar 22 2013 | 11:44am ET
Two years after first leveling accusations that Energy Future Holdings was playing fast-and-loose with its books, hedge fund Aurelius Capital Management has sued the power company's board and CEO.
Aurelius alleges that it and other creditors were harmed by billions of dollars in loans EFH took from a subsidiary, Texas Competitive Electric Holdings, between 2007 and January. In 2011, Aurelius said those loans put EFH in default on nearly $24 billion in debt.
"The loans did not reflect a fair transaction between the companies," Aurelius, a creditor of Texas Competitive, alleged in the March 19 complaint. "No unaffiliated third party would have extended such loans." The hedge fund said that EFH saved $725 million borrowing from Texas Competitive.
According to Aurelius, Texas Competitive has been insolvent since 2010. In 2011, the International Swaps and Derivatives Association ruled against Aurelius on that claim.
EFH is owned by Kohlberg Kravis Roberts and TPG Capital Management. It did not comment on Aurelius' lawsuit, but two years ago said the hedge fund's claims were baseless and a bid to manipulate the credit default swaps market.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…