Energy Future disclosure statement, improved merger agreement OK’d

By Caroline Salls

Pittsburgh, Sept. 19 – Energy Future Holdings Corp. received court approval of the disclosure statement related to the plan of reorganization for its EFH/EFIH debtors, according to an order filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

In addition, the company received court approval of its merger agreement under which NextEra Energy, Inc. will acquire 100% of the equity of reorganized Energy Future, reorganized Energy Future Intermediate Holding Co. LLC (EFIH), Oncor Electric Delivery Holdings Co. LLC and other subsidiaries, including Oncor Holdings’ 80% ownership interest in Oncor Electric Delivery Co.

Merger amendment

According to a NextEra Energy news release, Energy Future and NextEra signed a merger agreement amendment that increased the purchase price set in the agreement by $300 million.

As part of the transaction, NextEra Energy said it intends to fund $9.8 billion, primarily for the repayment of EFIH debt for an implied total enterprise value of $18.7 billion.

Of that amount, some creditors are expected to be paid primarily in cash, with the remainder to be paid in NextEra Energy common stock. The number of shares issuable to creditors will be determined based on the estimated cash on hand at Energy Future 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.

NextEra Energy said it 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 said it intends to repay in full the EFIH first-lien debtor-in-possession financing facility, with $5.4 billion principal amount currently outstanding, using cash financed by a non-EFH/Oncor NextEra Energy affiliate upon closing.

According to the NextEra release, if Energy Future terminates the merger agreement any time before confirmation of the plan because it chooses to proceed with a superior alternative transaction, Energy Future 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 Energy Future’s plan, approval by the Public Utility Commission of Texas and the Federal Energy Regulatory Commission, the expiration or termination of the waiting period under the Hart-Scott-Rodino Act and other customary conditions and approvals.

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

Plan details

As part of Energy Future’s plan of reorganization, the transaction would extinguish all Energy Future and EFIH debt that currently exists above Oncor.

As previously reported, under the plan interests in EFH debtors other than EFH Corp. will be reinstated or canceled and released without distribution.

Interests in EFH Corp. and EFIH Finance, Inc. will be canceled and released without distribution.

Holders of interests in EFIH will either have their interests reinstated or receive their share of 100% of the reorganized EFIH membership interests.

In addition, NextEra Energy said some funds advised by Fidelity Management and Research Co., which are creditors of Energy Future, entered into an amended and restated plan support agreement with Energy Future and NextEra Energy.

PUC application

NextEra Energy also said it expects to file soon with Oncor a joint application with the Public Utility Commission of Texas requesting approval of the proposed transaction.

“Our proposed transaction provides Oncor with a financially strong, utility-focused owner,” NextEra chairman and chief executive officer Jim Robo said in the release.

“With this important milestone behind us, we look forward to working closely with additional EFH creditors to gain their support for successful confirmation of EFH’s plan of reorganization.”

Energy Future, a Dallas-based power generation company and utility operator, filed for bankruptcy April 29, 2014. The Chapter 11 case number is 14-10979.

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