Elliott to block Berkshire Hathaway’s $9 billion acquisition bid
18 Aug 2017
Berkshire, which announced its bid to buy Energy Future Intermediate Holding, the parent company of Oncor Electric Delivery Co in July, is facing a determined challenge by Elliott Management, which has tried to delay consideration of Berkshire's offer even as the hedge fund cobbled together money for its own takeover proposal.
Elliott Management, a hedge fund holding $1.8 billion of the debt related to Oncor Electric Delivery Co, has opposed Berkshire's bid but signs had been pointing to Berkshire winning approval from Texas utility regulators and the US Bankruptcy Court.
But Oncor may be able to block Berkshire Hathaway's $9-billion acquisition bid, thanks to some bankruptcy rules, according to a financial industry newsletter editor yesterday.
The court in Delaware will hold a hearing Monday on Berkshire's offer, which will be followed by a second hearing in October on the entire reorganisation plan for Oncor's parent company, Energy Future Intermediate Holdings.
According to Madalina Iacob, an editor at Debtwire in New York City, Monday's hearing before judge Christopher Sontchi was still on, but Elliott took steps this week that could scuttle the reorganisation plan and Berkshire's purchase of Oncor.
Elliott's manoeuvre ''really makes it very hard for the plan to be confirmed,'' she said. ''There could be an escape hatch, but it seems like a stretch.''
According to bankruptcy law and past court rulings, in order to win an approval, a reorganisation needed to have agreement from at least one creditor that stood to lose money in the plan.
Elliott is the owner of one of the two ''impaired'' debts but recently acquired the second, a $60-million ''stub'' bond. Elliott told the court Wednesday that it would object to the reorganisation plan, which would see no impaired debtor favouring the plan.
Meanwhile, the energy unit of Warren Buffett's Berkshire Hathaway Inc said on Wednesday it will "stand firm" on its $9-billion offer for the acquisition of 80 per cent of Oncor Electric Delivery Company LLC and will not increase its offer.
Elliott Management Corp, the largest creditor of Oncor's bankrupt parent Energy Future Holdings Corp, has tried to outbid Berkshire for the Texas utility offering $9.3 billion.
Elliott's offer values Oncor at $18.5 billion, above Berkshire's $18.1 billion valuation, considering debt.
Meanwhile, Berkshire Hathaway Energy chief executive Greg Abel said in a statement, "We're committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state."
