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Hunt Companies: Oncor Transaction "Will Not" Close Under PUCT Approval Order As Written
Various Hunt Consolidated companies seeking to purchase Oncor claimed that the acquisition transaction as currently configured, "will not close," based on the Public Utility Commission of Texas's order approving the acquisition with various conditions.
Among other things, the Hunt companies said that the requirement to establish a regulatory asset to address any future decision on tax cost treatment (including potentially sharing tax savings from a REIT structure with ratepayers), "significantly alters the fundamentals of the Transaction in a manner that lessens its attractiveness to investors, creates significant uncertainty as to the amount and timing of financial return and, as a result, makes it less likely that the Transaction will close."
Additionally, the Hunt companies said that the order's requirement that leases between two Oncor companies, which are to be established to own the assets and then lease and operate the assets, shall be treated as tariffs, "creates a significant obstacle to closing and should be eliminated or modified," due to a potential delay in approving the initial leases.
"Purchasers are concerned that the potential delay associated with the need to obtain approval of the initial leases could significantly interfere with Purchasers' ability to close the Transaction since the Order provides that the authority granted under the Order will terminate if the leases are not approved prior to August 5, 2016. This is especially so if the lease approval proceeding is treated as a typical base rate proceeding for a utility under Subchapter C of Chapter 36 of PURA, despite the fact that it will not affect rates," the Hunt companies said, in seeking rehearing of several aspects to the order to address these issues
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April 19, 2016
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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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