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TXU Parent Forecasting Lower Retail Revenues, as Various Restructuring Proposals Made Public
Energy Future Holdings, parent of TXU Energy, has filed in an 8-K with the SEC summaries of various restructuring proposals raised by various groups of debt-holders and creditors.
EFH Corp. and its subsidiaries generally do not publicly disclose detailed prospective financial information.
However, in connection with discussions with the creditors and their advisors, EFH provided certain financial information, consisting largely of forecasts, to the creditors and their advisors pursuant to confidentiality agreements, but the agreements provided such information would be made public if certain conditions were not met (thus the inclusion of this information in the 8-K).
This prospective financial information was prepared in the first half of 2013, except for the assumptions regarding natural gas prices and power prices, which in some cases are as of August 30, 2013, and, "is speculative by its nature and was based upon numerous expectations, beliefs, opinions, and assumptions, as further described below, which are inherently uncertain and many of which are beyond the control of the Companies, Oncor, and their respective subsidiaries and may not prove to be accurate"
EFH further said that the information does not necessarily reflect current estimates or expectations, beliefs, opinions, or assumptions.
In any event, in the prospective information EFH forecasts that changes in retail revenues will negatively impact TCEH Consolidated Adjusted EBITDA for the year 2013 due to, "[l]ower volumes, weather, and continued competitive pricing environment in 2013." The negative impact in 2013, versus 2012, is $45 million to $105 million
For the year 2014, EFH forecasts another $75 million to $125 million decrease from retail revenues, due to, "[c]ompetitive pricing" and a, "higher commodity price environment."
Retail revenue deltas are also included in the 8-K for 2015-17, driven by the same factors.
The 8-K also contains discussion of various restructuring proposals for EFH.
Link to 8-K (click here)
The various proposals note that a consensual restructuring will avoid, "[v]alue degradation of the retail business," which could occur under a protracted and contentious Chapter 11 proceeding.
Each of the restructuring proposals would have resulted in a pre-negotiated restructuring of Energy Future Competitive Holdings Company LLC 's (EFCH) approximately $32.2 billion principal amount of debt, EFH Corp.'s approximately $650 million principal amount of debt and Energy Future Intermediate Holding Company LLC's (EFIH) approximately $7.6 billion principal amount of debt (each as of June 30, 2013 and excluding debt held by affiliates). To effect the restructuring, the proposals contemplated that some combination of EFH Corp. and certain of its subsidiaries (including EFIH, EFCH and TCEH but excluding Oncor Holdings and Oncor Electric Delivery Company LLC) would implement a plan of reorganization by commencing voluntary cases under Chapter 11 of the United States Bankruptcy Code. The confirmation of the plan of reorganization in such cases would be subject to applicable regulatory approvals. Each of the proposals contemplated that after the restructuring EFH Corp. would continue to hold all of the equity interests in EFCH and EFIH; EFCH would continue to hold all of the equity interests in TCEH; and EFIH would continue to hold all of the equity interests in Oncor Holdings.
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October 15, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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