Report: Elliott Management Buys Energy Future Debt

August 17th, 20176:36 am @


Elliott Management Corp. has found a way to potentially block Warren Buffett’s deal to buy Texas power transmission business Oncor Electric Delivery Co. LLC, according to a report in The Wall Street Journal citing people familiar with the matter.

According to the Journal report, Elliott Management, a hedge fund, has bought a portion of debt sufficient to allow it to block Buffett’s Berkshire Hathaway’s (BRK.A)   (BRK.B) plan to purchase Energy Future Holdings Corp. for $9 billion — a deal that would give Berkshire Hathaway possession of Oncor, one of the biggest electricity transmission companies in the U.S.

The report stated that sources said Elliott now controls all the impaired classes of notes, and that it intends to notify the court it won’t approve the Berkshire bid in its current form.

Oncor is owned by Energy Future, which the Journal noted was the subject of a massive leveraged buyout in 2007. Energy Future filed for bankruptcy in 2014. 

Berkshire Hathaway Energy, a division of Berkshire Hathaway, confirmed in early July that it planned to buy Oncor in a deal that valued the bankrupt unit’s equity at $11.25 billion. The terms of that deal have Berkshire Hathaway Energy paying $9 billion in cash to Energy Future Holdings Corp., which Buffett invested in, via a corporate bond, back in 2013, resulting in one of the Sage of Omaha’s rare losses.

Representatives from Elliott Management and Berkshire Hathaway could not be reached for comment on the Journal report late Wednesday.

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