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(Corrects fourth paragraph to reflect Energy Future is based inDallas, not Houston)
By Michelle Sierra and Nick Brown
April 28 (Reuters) - Energy Future Holdings is close tosigning up at least $9.7 billion of bankruptcy loans from aconsortium led by Citigroup and Deutsche Bank,according to two sources involved in the matter, allowing it tofinance its operations during a bankruptcy expected to be filedby Tuesday.
While the loan amounts remain subject to change, the Texaspower company plans to seek Chapter 11 protection by Tuesdaywith the so-called debtor-in-possession (DIP) loan in place,whether or not it reaches a consensual restructuring deal withits creditors before then, said the people, who declined to benamed because talks are private.
Citi is leading an approximately $4.5 billion DIP loan atthe company's unregulated merchant generation unit, whileDeutsche Bank is taking the lead on a $5.2 billion DIP at EnergyFuture Intermediate Holdings, which owns most of the company'sregulated business, said the people familiar with the matter.
A spokesman for the Dallas-based company declined tocomment. A Citi spokesperson could not be reached for commentand Deutsche Bank also declined to comment.
Other banks arranging loans include Morgan Stanley,Bank of America Merrill Lynch, Barclays, RoyalBank of Canada and Sumitomo Mitsui.
Unsecured bondholders at EFIH are expected to advance $2billion of bankruptcy financing on top of the bank commitments,a third person close to the matter told Reuters on Monday.
Energy Future, formerly TXU Corp, was created in 2007 in thelargest-ever leveraged buyout, led by KKR, TPG and Goldman Sachs' private equity arm. The dealloaded the company with debt just before a domestic energy boomthat reduced natural gas prices and eroded coal's costadvantage.
Several sources told Reuters on Friday that Energy Futureplanned to file for bankruptcy as soon as Monday evening orearly on Tuesday.
The company would like to do so with the framework of arestructuring already in place, which would save time and moneyin Chapter 11. It remains to be seen whether it will accomplishthat goal, with restructuring talks with creditors carrying oninto the eleventh hour.
The company's largest creditor faction, a group of securedlenders at its unregulated unit, is willing to accept a dealthat does not include a major tax savings mechanism it wasinitially seeking, another person close to the matter toldReuters on Monday.
The group, which includes private equity giants like ApolloGlobal Management and Oaktree Capital Group, would agree to adeal that would allow it to take ownership of Energy Future'sunregulated unit through a tax-free spinoff, but the deal wouldbe subject to the blessing of the Internal Revenue Service andcontingent on other milestones, said the person.
It would also depend on securing some other form ofcompensation for the lenders in exchange for their agreement toforgo the tax savings, which is still a point of discussion, the person said. (Reporting by Michelle Sierra and Nick Brown; Additionalreporting by Soyoung Kim and Billy Cheung; Editing by Tom Brown)
