Forward Motions: Energy Future Unit Seeks Bankruptcy Financing

An Energy Future Holdings Corp. unit on Thursday will seek bankruptcy-court approval to borrow more than $1.9 billion.

The Wilmington, Del., bankruptcy court will take up the borrowing request, which includes a $1.9 billion loan, plus another $95 million to cover closing fees, at a Thursday hearing.

The financing is the key to the proposed debt restructuring of Energy Future Intermediate Holdings, one of the two divisions of Energy Future that followed their parent company into bankruptcy last month. The $1.9 billion loan to refinance the company’s second-lien debt is the second piece of Energy Future Intermediate’s bankruptcy financing, following an earlier $5.4 billion loan.

Of the two loans that have been proposed, certain bondholders have balked at both. The $1.9 billion arrangement up for approval had support from holders of about 35% of the second-lien debt, according to early court filings.

The Dallas company filed for bankruptcy protection April 29 to address a heavy burden of about $42 billion in debt, approximately $7.7 billion of which was issued by Energy Future Intermediate.

Wednesday in Richmond, Va., James River Coal Co. will seek bankruptcy-court approval for an executive bonus plan that could spread up to $2.7 million in extra pay among top executives of the operation, which is being auctioned in July.

James River says the extra pay is key to getting a good result at the auction, where the troubled coal operation is inviting buyout offers and offers from investors willing to help get the company back on its feet.

Should the auction not go well, the top executive bonus pool could be as little as about $892,000, court papers say.

Details of how the proposed bonuses would be divided among Chairman and Chief Executive Peter Socha and eight other top-ranking insiders are being kept secret by the coal company, which filed for Chapter 11 bankruptcy protection on April 7 with more than $800 million in debt.

In addition to the bonuses, James River’s top-ranking executives are asking a bankruptcy judge to sign off on severance packages that could give them up to 10 times the median severance collected by rank-and-file employees, as well as $122,500 worth of “safety payments,” or rewards for mine safety, to be divided among three people.

Also this week, Brookstone Holdings Corp. will conduct an auction for interested buyers that want to challenge a $146.3 million bid from an affiliate of Spencer Spirit Holdings Inc.

The Spencer’s bid, which includes $120 million in cash, $7.5 million in notes and the assumption of liabilities, will set the a floor price at the auction, the results of which must later be approved by the Wilmington bankruptcy court

Competing offers were due May 28 and must be at least $250,000 higher than what Spencer’s, a novelty and gag-gift retailer, is willing to pay. Other bids must also cover a $3.7 million breakup fee to Spencer’s and up to $500,000 in expense reimbursements.

Brookstone—known for its quirky collection of merchandise, including massage chairs and travel electronics—filed for Chapter 11 protection in April.

-Peg Brickley and Sara Randazzo contributed to this article.

Write to Tom Corrigan at [email protected].  Follow him on Twitter at @TomCorrigan_.