Texas’ largest electricity transmission and distribution company, Oncor Electric Delivery Co., announced Thursday that it was acquiring InfraREIT Inc. for $1.275 billion and five law firms in Texas helped make the deal go.
The purchase includes the assumption of InfraREIT’s debt, which amounted to $945 million as of June 30.
The deal requires clearance from the Public Utility Commission of Texas, the Federal Energy Regulatory Commission, Hart-Scott-Rodino and InfraREIT shareholders. The transaction also includes a “go-shop” provision in which InfraREIT can solicit superior bids.
Sempra and Oncor expect to close the transaction by mid-2019.
Vinson & Elkins advised Dallas-based Oncor with a team led by partners Chris Rowley and Alan Bogdanow with associates Robert Stelton-Swan and Abby Branigan.
Texas specialists included partner Jo Ann Biggs and counsel Jaren Taylor on energy regulatory matters; partner Jim Meyer (tax); partner Chris Dawe (finance); and partner David D’Alessandro and associate Steven Oyler (executive compensation/benefits).
Others were senior associate Christie Alcala (labor/employment); associate Julie Monier (real estate); partner Peter Mims (IP); and partner Larry Nettles and associate Taylor Holcomb (environmental).
Gibson, Dunn & Crutcher represented InfraREIT, including partner Douglas Rayburn with assistance from partner Jeffrey Chapman, associates Paige Lager and Eric Pacifici and associate Krista Hanvey on benefits, all of Dallas.
Sidley Austin assisted InfraREIT and its units with respect to various debt and collateral matters relating to the acquisition, including partners Alison Boren and Banks Bruce and associate Justin Stone.
The in-house team for InfraREIT included Stacey Doré, general counsel of InfraREIT affiliate Hunt Utility Services, and Krysta Edwards, Hunt Utility’s assistant general counsel. InfraREIT went public in 2015.
Doré joined Hunt in 2016 after more than eight years at Energy Future Holdings, where she was general counsel for four-and-a-half years. She was a lawyer in the litigation section at Vinson & Elkins for more than 10 years. Doré also served as co-chief restructuring officer at EFH, helping guide the state’s largest power utility through Chapter 11 bankruptcy and reorganization.
InfraREIT’s conflicts committee was represented by Hunton Andrews Kurth partner Michael O’Leary, along with Houston partners John Clutterbuck, Tom Ford, Taylor Landry, Robert McNamara, Kelly Sandill and Greg Walker. The rest of the Houston team included associates Oliver Fankhauser, Audra Herrera, Garrett Hughey, Ashley Lewis and Amanda Thienpont.
White & Case advised Oncor’s 80 percent owner Sempra Energy, which is based in San Diego.
The New York-based team included Houston partner Charlie Ofner, who joined White & Case from Andrews Kurth in February, and associate Ted Seeger, who joined in July from Paul Hastings.
Lazard was Sempra’s financial advisor and Barclays assisted Oncor.
Oncor’s onetime parent, Energy Future Holdings, filed for Chapter 11 restructuring in 2014, but its 80 percent ownership of Oncor wasn’t part of the bankruptcy proceedings. Oncor was sold to Sempra earlier this year for $11 billion.
The InfraREIT transaction includes all of its equity interests and all the limited partnership units in InfraREIT Partners. The $1.275 billion price tag translates into $21 per share or partnership unit, excluding certain transaction costs.
As part of the deal, Sempra will buy a 50 percent limited partnership interest in a holding company that will own Sharyland Utilities for around $98 million. Oncor, through units of InfraREIT, will acquire certain North and West Texas assets of Sharyland.
Sempra CEO Jeffrey Martin said in a statement that the acquisition advances its growth strategy and will expand its regulated utility platform in Texas.
“These assets are highly desirable and supported by strong economic growth, attractive demographic trends and increased demand for electric transmission in Texas,” he said.
Martin expects the acquisitions to boost earnings and that Sempra will work with Sharyland on further developing electric transmission and related infrastructure in Texas.
Oncor CEO Allen Nye – who previously served as the company’s general counsel – said the purchase of InfraREIT gives Oncor access to high-quality transmission assets adjacent to its service territory.
“As growth continues across Texas and new generation projects continue to come online, this acquisition positions us to make future investments in transmission infrastructure that will better serve the ERCOT market and our customers,” he said.
Nye’s father was Erle Nye, the former CEO of TXU. The younger Nye graduated from St. Mary’s School of Law in 1993. He practiced energy regulatory law at Hunton & Williams in Dallas and then Vinson & Elkins before joining Oncor as general counsel in 2010.
In fact, many of the lawyers involved – Stacey Doré, Nye and Oncor’s GC Matt Henry and the Gibson Dunn team — all used to be partners together at V&E. Matt Henry joined Oncor this year from V&E.
Oncor plans to fund the acquisition of InfraREIT with capital contributions proportionate to ownership interests from Sempra and Texas Transmission Investment, which is a minority owner of Oncor.
Sempra expects to use the proceeds from pending asset sales to fund its capital contribution of $1.025 billion to Oncor, excluding certain transaction costs, and also to purchase the 50 percent interest in Sharyland.
As part of the deal, a unit of InfraREIT will exchange certain assets with Sharyland, with Oncor owning InfraREIT’s electric transmission and distribution business in Central, North and West Texas and Sharyland owning assets in South Texas.