(Reuters) – Elliott Management Corp, the largest creditor of bankruptcy company Oncor Electric Delivery Co., is looking into the sale of a bid by the Texas power transmission company that would fill Warren Buffett’s $ 9 billion cash transaction, they said. People familiar with the subject Friday A.
If Elliott, the hedge fund led by billionaire Paul Singer, proceed with such an offer, it would be a rare challenge for Buffett, who avoids auctions for companies and told his investors that he does not like to participate in a bidding war .
Elliott would seek to convert his debt to the company as equity, as well as increase capital financing for his offer, according to the same sources. As for Buffett, a bankruptcy judge must approve Elliott’s plan alternative.
The Elliott position illustrates the complexity of acquiring companies whose debt is traded at levels of difficulty. The CEO of Softbank Group Corp. (9984.T), Masayoshi Son, another famous retailer, saw the merger of 14 billion between the start of satellite company OneWeb and the entry of the company Intelsat SA (iN) depreciated in the Debt, last month, after many creditors of the latter refused to spin the case.
The hedge fund believes it may set a higher bid than the transaction announced on Friday by Berkshire Hathaway Inc. Buffett (BRKa.N), which has a total value of 18.1 billion, including debt, according to individuals .
In May, Elliott had approximately $ 2.9 billion in debt of about $ 10 billion from energy company Oncor TXU Energy, focusing investment on a layer of non-contractual transactions traded levels very distressed. The hedge fund has accumulated its position in Future Energy debt from October to May, according to court documents.
Elliott plans to pursue another deal for the future of energy because it believes Berkshire’s offer underestimates the Oncor activity, which is considered to be the crown jewel of the bankrupt company, he told the public.
Elliott can also try to use his rights as a future energy creditor to block the sale of the company to Berkshire in a bankruptcy court, according to sources.
The sources asked not to be identified because the deliberations are confidential. Elliott declined to comment, while Oncor and Berkshire Hathaway did not immediately respond to requests for comments.
Following the Energy of the Future Berkshire comes after two other contenders, more recently NextEra Energy (NEE.N) failed to get regulatory approval. [NL4N1JY1Y4]
Elliott’s noteworthy in-kind payment declined by almost 30 percent in the secondary trading Friday on the news of the Berkshire case, to about 29.5 cents, according to Thomson Reuters data, indicating concerns of the Investors on the prospects of recovery of the notes. ”
When NextEra reached an agreement last year to buy Energy Futures and Oncor in a $ 18.4 billion transaction, including debt, Berkshire also filed an offer at that time, according to sources. Berkshire’s offer then evaluates energy futures on its Friday market, the sources added.
Elliott has developed a reputation on Wall Street as investors aggressively debt, having participated in a fierce battle with Argentina for its sovereign debt that has lasted for more than a decade.
Elliott filed a lawsuit in May against Future Energy asking him to consider debt restructuring solutions, including a plan that would entail the conversion of large Elliott debts into the company’s equity, which would allow Oncor to control hedge funds.