Tuesday, April 29, 2014

Everything's Great As Long As You Can Keep Refinancing

But when the music stops...
The takeover of TXU was an audacious transaction that epitomized the golden era of private equity. Buyout firms went on a buying spree, acquiring hotel chains, gambling icons, giant hospital systems and mammoth real estate properties.

When the financial crisis struck, many of these boom-era deals struggled. Still, amid dire predictions, few have actually failed, thanks to their owners’ savvy market movements that allowed them to refinance their mountains of debt at friendly terms over the last two to three years.

Earlier in the piece:
Energy Future will probably be split between its regulated electricity arm, Oncor, and its unregulated power-generation business. The talks had long been stymied by an array of issues, including whether such a split would create a tax bill of more than $7 billion.

I'm going to guess "no."
But they had contemplated a financial maneuver that could have cost Energy Future a multibillion-dollar tax bill, raising the specter of involvement by the Internal Revenue Service.

The matter has since been resolved.