Texas Regulators Approve Sempra's $9.45 Billion Oncor Buyout
March 08 2018 - 1:14PM
Dow Jones News
By Peg Brickley
Texas regulators that killed two earlier deals for a major piece
of the state's power infrastructure, Oncor, Thursday gave the nod
to Sempra Energy's $9.45 billion deal for a majority stake.
Sempra, of California, was the winner of a competition that
lasted years, a contest for the thriving transmissions business
that dominated the bankruptcy of Energy Future Holdings Corp., the
former TXU Corp.
The Public Utility Commission of Texas voted to approve Sempra's
buyout of Energy Future's 80% stake in the business, which carries
power to millions of people.
Earlier contenders included Hunt Consolidated Inc., which
attempted a feat of financial engineering that worried regulators,
and NextEra Energy Inc., a Florida power company that balked at
safeguards regulators insisted on for Oncor.
Last summer, Sempra topped an offer from Warren Buffett's
Berkshire Hathaway Energy Co., then sat down with Texas groups that
had opposed the Hunt and NextEra deals. Sempra agreed to
protections to keep Oncor under local management, and protected its
balance sheet, winning support for its deal from cities and major
industrial power customers, among others.
Cash from the Sempra deal will be divided among creditors of
Energy Future, which filed for chapter 11 bankruptcy protection in
April 2014, burdened with $42 billion in leveraged buyout debt.
Most of the former TXU Corp., businesses that generate and sell
power, exited bankruptcy in 2016, to become Vistra Energy. The
chapter 11 plan for the so-called T-side of Energy Future's
business resolved the bulk of the LBO debt.
Energy Future, the holding company, was left in chapter 11, with
its Oncor stake to sell and billions of dollars in debt to pay
off.
The regulated power-carrying business was a little-noticed
element of the 2007 LBO by Kohlberg Kravis Roberts, TPG and a
Goldman Sachs affiliate. As energy prices dove, plunging Energy
Future into a contentious bankruptcy, creditors began referring to
Oncor as a crown jewel, worth enough to make good some of their
losses.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
March 08, 2018 12:59 ET (17:59 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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