HOUSTON (AP) — A Texas agency gave its approval Tuesday to a plan by bankrupt Energy Future Holdings to set aside $1.1 billion for land reclamation while it is restructuring, ensuring that there is money available to return land to its original condition should the company fail to fulfill its obligations.
The Railroad Commission, which oversees mining operations in the state, approved the priority bond presented by Energy Future, which is the parent company of Luminant Mining Co., one of the largest coal miners in Texas. Energy Future filed for Chapter 11 bankruptcy reorganization in April, citing $40 billion in debt.
The $1.1 billion commitment is carved out of nearly $4.48 billion in financing that the company secured so it could continue operating normally while it is reorganizing. The commission's approval means lenders have set aside that money for reclamation and it cannot be used for other purposes.
The Railroad Commission said in an emailed response to questions that Luminant's current restoration costs are estimated at $937.8 million.
Until the bankruptcy, Luminant qualified for self-bonding. That program allows companies that have $10 million and other assets to avoid putting up cash in advance for required restoration of mined land.
Energy Future has said it hopes to halve its debt through reorganization and emerge from bankruptcy in less than a year. The company's troubles can be traced back to its bet that natural gas prices would rise, which it was counting on to help repay the interest and loans it assumed to acquire TXU Corp. in 2007. But a glut of U.S. shale production instead brought natural gas prices to record lows, hurting the company's bottom line and its ability to pay its debt.
Plushnick-Masti can be followed on Twitter at https://twitter.com/RamitMastiAP