With the Delaware bankruptcy court judge having to balance the myriad what-ifs scenarios, this case makes an interesting read.
A U.S. bankruptcy judge has given Elliott Management Corp eleven more days to formalize its plans to bid on Oncor Electric Delivery Co before it goes ahead with Berkshire Hathaway Inc’s $9 billion offer.
Judge Christopher Sontchi of the Delaware bankruptcy court has given Elliott Management Corp some headroom by pushing back the date of the hearing for the approval of Berkshire’s merger agreement with Oncor, which carries a $270 million termination fee should it fall through.
The next date of the hearing is August 21.
Oncor’s largest creditor, Elliott Management Corp, stated it needs more time to finalize the financing for its $9.3 billion offer, after securing about $1.4 billion in new equity for its bid so far. It has asked for a delay of 35 to 40 days.
As per Patrick Goodman, Berkshire Hathaway Energy’s CFO, if Berkshire is not granted court approval for its offer by August 21, it will walk away from the deal.
Incidentally, Berkshire’s all-cash bid has already secured regulatory approval. Berkshire has promises to turn around Oncor, the largest utility in Texas, out of its three-year plus bankruptcy.
Roger Wood, a Moelis & Co investment banker who’s represents Elliott Management, told the bankruptcy court that 10 other investors have expressed interest in joining Elliott in its bid. If they all put in their indicated amount, Elliott will be in a position to raise $9.7 billion to $11.85 billion.
“We would be oversubscribed,” said Wood.
He went on to add, nearly $3.7 billion of that investment interest comes from a single investor in the form of debt financing.
As per Chad Husnick, an attorney for Energy Future, if the court does not approve Berkshire’s bid on August 21, and subsequently were Elliott to fail in its bid to acquire Oncor, Berkshire’s potential return is likely to be at a lower price.
While Berkshire’s has valued Oncor at $18.1 billion, including debt, Elliot’s valuation has placed it at $18.5 billion.