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Parent of Texas Retail Provider Reaches Agreement To Acquire Oncor

July 28, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

NextEra Energy, Inc., the ultimate parent of Gexa Energy, announced a definitive agreement under which a newly formed subsidiary of NextEra Energy will acquire 100 percent of the equity of reorganized Energy Future Holdings Corp. (EFH) and certain of its direct and indirect subsidiaries, including EFH's approximately 80 percent indirect interest in Oncor Electric Delivery Company, which implies a total enterprise value of approximately $18.4 billion.

The definitive agreement will be filed publicly as part of the restructuring of EFH currently before the United States Bankruptcy Court for the District of Delaware. The definitive agreement is part of an overall plan of reorganization that is designed to allow EFH to emerge from Chapter 11 bankruptcy. Bankruptcy court approval of EFH entering into the definitive agreement is required for the agreement to be binding upon EFH and Energy Future Intermediate Holding Company LLC (EFIH).

NextEra said that it is committed to retaining the Oncor name

NextEra said that it is also committed to retaining Oncor's Dallas headquarters and local management.

NextEra said that the transaction will extinguish all EFH and EFIH debt that currently exists above Oncor.

NextEra Energy said that it will employ, "a traditional utility organizational structure."

"The transaction is a straightforward, traditional acquisition by a utility holding company," NextEra Energy said

As part of the transaction, NextEra Energy intends to fund $9.5 billion, primarily for the repayment of EFIH debt. Of that amount, it is expected that certain creditors will be paid primarily in cash with the remainder in NextEra Energy common stock. The number of shares issuable to such creditors and EFH creditors will be determined based on the estimated cash on hand at EFH at the closing of the transaction, the volume weighted average price of NextEra Energy common stock for a specified number of days leading up to the closing and other factors specified in the definitive agreement. NextEra Energy intends to use a combination of debt, convertible equity units, and proceeds from asset sales to fund cash being provided to creditors.

The transaction is not subject to any financing contingencies. NextEra Energy intends to repay in full the EFIH first lien debtor-in-possession ("DIP") financing facility (currently approximately $5.4 billion principal amount) using cash financed by a non-EFH/Oncor NextEra Energy affiliate upon closing. As part of EFH's plan of reorganization, the transaction would extinguish all EFH and EFIH debt that currently exists above Oncor.

EFH is not prohibited from soliciting proposals from third parties prior to bankruptcy court approval of EFH entering into the definitive agreement with NextEra Energy. At any time after bankruptcy court approval of EFH entering into the definitive agreement and prior to confirmation of the EFH plan of reorganization, if EFH terminates the definitive agreement because it chooses to proceed with a superior alternative transaction, EFH would be obligated to pay NextEra Energy a $275 million termination fee upon the closing of the alternative transaction.

The transaction is subject to bankruptcy court confirmation of EFH's plan of reorganization, approval by the Public Utility Commission of Texas, the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, the Federal Energy Regulatory Commission and other customary conditions and approvals.

NextEra Energy expects the transaction, which has been approved by the boards of directors of both NextEra Energy and EFH, to be completed in the first quarter of 2017.

As previously reported, EFH's competitive businesses, TXU and Luminant, are to be spun off in a separate transaction

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