Energy Future's Profitable Road to Oblivion

Five years ago, buyout funds Kohlberg Kravis Roberts, TPG Capital, and Goldman Sachs Capital Partners took a Dallas-based utility called TXU private in a $43.2 billion transaction, the largest leveraged buyout in history. While the company’s troubles have kept the buyout from being profitable for investors, the dealmakers are doing all right: They’ve paid themselves $528.3 million in fees, according to company filings. And TXU? Now called Energy Future Holdings, it’s so burdened with massive debts that it may need to restructure to survive.

Back in 2007, Energy Future profited from rising natural gas and power prices and low power-generation fuel costs. Since the buyout natural gas prices have fallen 74 percent below their 2008 peak, and Energy Future’s long-term debt has soared to $42 billion. The company, which traces its roots in North Texas to 1882, expects to post a third-quarter net loss of $407 million (its seventh straight quarterly deficit) on operating revenue of $1.8 billion, according to an Oct. 18 filing.