© 2012 The Texas Lawbook.
By Mark Curriden, JD
Senior Writer for The Texas Lawbook
Energy Future Holdings announced Thursday that two of its wholly-owned subsidiaries are issuing $750 million in senior secured notes in a private offering designed to improve liquidity at two other EFH subsidiaries.
The two subsidiaries, Energy Future Intermediate Holding Company (EFIH) and EFIH Finance, intend to commence a private offering of $250 million in senior secured notes due 2017 and another $500 million principal amount of additional 11.750% senior secured second lien notes due 2022.
Gibson, Dunn & Crutcher corporate partner Rob Little is the legal adviser on the deal for EFH. Dallas associates Jonathan Whalen and Rachel Harrison also are working on the transaction.
“The Issuers intend to use a portion of the net proceeds from the offering to pay a dividend to EFH in January 2013,” according to the press release. “EFH will use the proceeds of the dividend to repay the outstanding balance of demand notes that are payable by EFH to its wholly-owned subsidiary Texas Competitive Electric Holdings Company LLC (“TCEH”) that have arisen from cash loaned by TCEH to EFH.”
EFH said that a portion of the net proceeds from the offering to be used to repay the demand notes will be deposited into an escrow account. The remaining net proceeds will be used for general corporate purposes, which may include the payment of dividends to EFH.
The new debt is being issued through EFIH, which has an 80 percent equity stake in transmission and distribution subsidiary Oncor Electric. This structure allows EFH to raise funds notwithstanding the financial difficulties on the competitive side of the business, which includes TXU Energy and Luminant.
Luminant, which is EFH’s power generation arm, has suffered in large part due to the prolonged low price of natural gas. EFIH has no ownership interests in TXU Energy or Luminant.
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