By Rich Heidorn Jr.

Attorneys for NextEra Energy and Energy Future Holdings told a bankruptcy court hearing Monday that they are not giving up on NextEra’s bid to acquire Oncor despite Texas regulators’ rejection of the deal.

NextEra is “exploring every alternative and action to try to resuscitate the deal,” NextEra lawyer Howard Seife said during a hearing for EFH at the U.S. Bankruptcy Court in Wilmington, Del., The Wall Street Journal reported.

EFH attorney Chad Husnick told the court that NextEra is attempting to negotiate a settlement with large energy users that had urged the Public Utility Commission of Texas to block the acquisition.

The PUC voted unanimously April 13 to reject the $18.7 billion deal for Oncor, which is central to parent company EFH’s bid to exit Chapter 11 bankruptcy proceedings.

The commission said it would not approve the deal without restrictions on NextEra’s ability to appoint and replace members of Oncor’s board of directors and the board’s ability to limit dividends or other “upstream distributions” from Oncor. The PUC said those two ring-fence provisions had insulated Oncor from EFH’s bankruptcy. (See Texas Commission Denies NextEra’s Bid for Oncor.)

Judge Christopher Sontchi expressed frustration over the PUC’s rejection of the deal — the second time in a year that the regulators blocked an Oncor acquisition. Last May, Dallas-based Hunt Consolidated withdrew its bid to acquire Texas’ largest transmission and distribution service provider over PUC conditions it found too onerous.

“The PUC seems unconcerned with the resolution of the bankruptcy estate as a factor in making its determination,” Sontchi said Monday, according to Bloomberg. “I find that concerning.”

NextEra has until May 8 to file a motion for rehearing with the PUC. It could also file a court challenge, Husnick said.

Sontchi and EFH lawyers agreed that the PUC’s insistence on retaining local control of Oncor is reducing the company’s value to potential acquirers.

The proceeds from the sale of Oncor would have been split among EFH’s creditors, who reached a settlement last year to end EFH’s $42 billion bankruptcy.

If the NextEra deal cannot be revived, EFH may have to seek a new exit that issues equity in Oncor rather than cash. The Journal reported that trading prices on EFH’s junior debt fell after the PUC’s rejection.

Another option would be a public offering of the stock. “It’s been difficult to please both bondholders and regulators,” Morningstar analyst Andrew Bischof told Bloomberg last week. “An IPO may be their best option at this point. If Texas regulators aren’t going to be a little more flexible, then an IPO is more likely.”