Texas Lawmaker Wants ‘New York Hedge Funds’ To Steer Clear Of Energy Future

Jul 1 2014 | 7:23am ET

A powerful Texas legislator has had quite enough with alternative investment firms running the state’s largest electric utility.

State Sen. Troy Fraser, who heads the Senate’s Committee on Natural Resources, warned Friday that the state wants to see Energy Future Holdings’ power-distribution unit, Oncor, go to a long-term investor and not a short-term-minded hedge fund. Fraser, a Republican, noted that the state has the authority to veto any change in ownership at Oncor.

“My concern is New York hedge funds have a short-term approach,” Fraser told Reuters on Friday. “The view of Texas is obviously we’re interested in someone looking at the long-term strategy or solution, rather than someone who is trying to buy it and flip it.”

Fraser expressed his concerns ahead of a bankruptcy hearing for EFH yesterday, at which creditors urged the judge to reject EFH’s proposed debtor-in-possession financing plan for Oncor’s owner, its EFIH unit. The deal would give DIP creditors 60% of EFH when it exits bankruptcy.

EFH, which is owned by Kohlberg Kravis Roberts, Texas Pacific Group and Goldman Sachs, filed for bankruptcy in April. Fraser opposed the 2007 buyout of the company, then known as TXU Corp., by the p.e. firms.

Fraser told Reuters that he wants the new owners of Oncor to invest cash in it and is wary of an increase in debt levels.


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