Hedge Fund Billionaire Paul Singer Considers Bid for Oncor, Countering Buffett

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Hedge Fund Billionaire Paul Singer Considers Bid for Oncor, Countering Buffett

Oncor delivers electricity to 10 million Texas customers over the largest distribution and transmission system in the state, according to the company.

Elliott, the hedge fund run by billionaire Paul Singer, would seek to convert its debt in the company to equity, as well as raise new equity financing for its bid, the sources said.

Berkshire Hathaway, based in Omaha, Nebraska, will acquire a reorganized Energy Future, ultimately leading to the buyout of Oncor. Four years ago, he lost more than $870 million on Energy Future Holdings bonds-Oncor's parent.

The Public Utilities Commission of Texas (PUCT) recently rejected NextEra Energy's proposal to to purchase Oncor for $18.4 billion, as well as a previous proposal by Hunt Consolidated to spin the utility into a Real Estate Investment Trust (REIT).

The regulators failed to accept that the NextEra transaction was in the public interest - a requirement for the deal.

A buyout attempt previous year backed by the Ray Hunt family of Dallas also was reported to have failed.

Berkshire already owns traditional utilities MidAmerican Energy and NV Energy, serving some Midwest states and Nevada, respectively.

That caught up Mr. Buffett: He bought about $2 billion of Energy Future's debt, a decision that he said he had made without consulting his longtime business partner, Charles Munger.

Assuming the Oncor transaction closes, Oncor CEO Bob Shapard would become executive chairman and be replaced by general counsel Allen Nye, under a previously announced plan. "The stakeholders are eager to obtain a great outcome for Texas".

It is Berkshire's biggest takeover bid since the conglomerate bought Precision Castparts, an aerospace parts maker, for $37 billion two years ago. Zacks Investment Research downgraded shares of Berkshire Hathaway from a "hold" rating to a "sell" rating in a research report on Friday, April 28th.

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