KKR & Co.'s Energy Future Holdings Corp., struggling toavoid default, is enjoying a $450 million windfall at the expenseof bondholders.

Energy Future, formerly called TXU Corp. and taken private byKKR, TPG Capital and Goldman Sachs Capital Partners five years agoin the largest leveraged buyout, exchanged $1.15 billion of newnotes last week for old ones with a face value of $1.6 billion. Themove came after the old securities tumbled when the firm said in anOct. 30 regulatory filing that it may be liable for $23 billion oftaxable income if it cuts ties to units that default.

The disclosure “allowed them to get a better” deal on theexchange, Andy DeVries, an analyst at independent bond researchfirm CreditSights Inc., said in a telephone interview. The filingprobably was intended to rattle bondholders and cut the value ofthe outstanding debt before the swap, he said.