As a Berkshire holder, I am very glad that CNP has a management team that was dumb enough to borrow at 12.75%.We now hold the mortgages to the utilities as collateral so the CNP management team had better get busy or we will walk off with the assets. 12.75% isn't as bad as the 30% we charged Williams but its still easy money for Buffett and a place to park a large sum of money at higher than 2% money market rates.
I don't believe it is. The reason I say that is when Berkshire bought Norhtern Natural Gas pipeline from Dynegy(which had bought it from Enron), they ran into the same problem. NNG had taken out loans and passed them on to the parent company (Enron). Dynegy assumed the debt that came with NN and passed it on to Berkshire when it bought it. The FERC said that that loan could not be recouped from rate increases. So Berkshire simply bought the pipeline for 600 million less that Dynegy paid for it 6 months earlier.