Energy Future entities complete merger transactions tied to IRS ruling

By Caroline Salls

Pittsburgh, April 16 - Energy Future Holdings Corp. and Energy Future Competitive Holdings Co. completed transactions resulting in the elimination of a deferred intercompany gain and an excess loss account in connection with an Internal Revenue Service ruling, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

Energy Future said the IRS issued a private letter ruling on April 1 under which the gain and account would be eliminated without causing the recognition of tax gain or loss upon completion of the transactions.

The account and deferred gain were reflected in the tax basis of the Energy Future Competitive stock held by the parent company.

In connection with the transactions, the holding company contributed all of the Energy Future Competitive stock to newly formed wholly owned subsidiary EFH2 Corp.; Energy Future Competitive was converted to a Delaware limited liability company from a Texas corporation and was renamed Energy Future Competitive Holdings Company LLC; and the holding company merged with and into EFH2, with the separate corporate existence of Energy Future Holdings having ceased and EFH2 continuing as the surviving corporation, named Energy Future Holdings Corp.

The surviving corporation's directors and officers are the same as before the merger, as are Energy Future Competitive's managers and officers.

The company said the transactions will have no affect on the surviving corporation's or Energy Future Competitive's results of operations, liquidity or financial statements.

In addition, the surviving corporation entered into supplemental indentures for Energy Future's 5.55% series P senior notes due Nov. 15, 2014, 6½% series Q senior notes due Nov. 15, 2024, 6.55% series R senior notes due Nov. 15, 2034, 10 7/8% senior notes due 2017 and 11¼%/12% senior toggle notes due 2017, 9¾% senior secured notes due 2019 and 10% senior secured notes due 2020.

The surviving corporation assumed all of Energy Future Holdings' obligations on these notes.

Energy Future is a regulated utility and power generation company based in Dallas.

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