The biggest leveraged buyout in history is beginning to look like a bust. In 2007, two private equity firms purchased Dallas-based TXU, the state’s largest utility, in a debt-ridden $45 billion deal.
At the time, consumer advocates and some legislators warned that the transaction was too risky and could end up being a bad deal for ratepayers. They pointed out that similar private equity takeovers had been rejected by regulators in Arizona and Oregon.
“The biggest red flag in the buyout was this enormous debt they were taking on,” says Tim Morstad, a consumer advocate for AARP.
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