Energy Future completes exchange offers, does not get needed consents

By Angela McDaniels

Tacoma, Wash., Nov. 12 - Energy Future Holdings Corp., Energy Future Intermediate Holding Co. LLC and EFIH Finance Inc. received tenders for $357.5 million principal amount of notes in the exchange offers and consent solicitation that began Oct. 5, according to a company news release.

The companies did not receive the amount of consents necessary to amend the note indentures.

Holders tendered the following notes issued by Energy Future:

• $17.3 million of the $1 billion of 5.55% series P senior notes due 2014;

• $10.2 million of the $750 million of 6½% series Q senior notes due 2024;

• $5.7 million of the $750 million 6.55% series R senior notes due 2034;

• $11.7 million of the $2.65 billion 11¼%/12% senior toggle notes due 2017; and

• $169.5 million of the $2 billion 10 7/8% senior notes due 2017.

Tenders were also received for the following notes issued by Texas Competitive Electric Holdings Co. LLC and TCEH Finance, Inc.:

• $55.9 million of the $3 billion 10¼% senior notes due 2015; and

• $87.2 million of the $2 billion 10¼% senior notes due 2015, series B.

All of the tendered notes were accepted.

The consent date and offer expiration date were midnight ET on Nov. 10. They were originally set for Oct. 19 and Nov. 3, respectively, and were later extended. The offers began Oct. 5.

Consent solicitation

The companies were soliciting consents from holders of the Energy Future notes to some proposed amendments that would eliminate substantially all of the restrictive covenants in the indentures, eliminate some events of default, modify covenants regarding mergers and consolidations and waive all claims of any breach, default or event of default.

For the toggle notes and 10 7/8% notes, the amendments would have also amended the limitation on the incurrence of debt and liens, such that an unlimited amount of secured debt could be issued by Energy Future, and some provisions relating to defeasance that would otherwise prevent a defeasance without, among other things, the delivery of an opinion of counsel confirming that such defeasance does not constitute a taxable event.

For the remaining Energy Future notes, the amendments would have also changed the limitation on the incurrence of secured debt.

Consents were not being solicited from the holders of the Texas Competitive Electric notes.

Holders who tendered Energy Future notes were deemed to have consented to the proposed amendments, and holders could not deliver consents without also tendering their notes.

Holders were offered a consent payment of $2.50 in cash per $1,000 principal amount of notes.

In order to execute the proposed amendments for a series of Energy Future notes, consents were needed from the holders of a majority of those notes.

Exchange payments

For each $1,000 principal amount of notes tendered, holders will receive:

• $710 principal amount of exchange notes for the 5.55% notes;

• $475 principal amount of exchange notes for the 6½% notes;

• $465 principal amount of exchange notes for the 6.55% notes;

• $660 principal amount of exchange notes for the toggle notes;

• $745 principal amount of exchange notes for the 10 7/8% notes; and

• $720 principal amount of exchange notes for both series of 10¼% notes.

In each case, the exchange amount includes an early tender premium of $30 principal amount of exchange notes. The early tender deadline was eliminated, so all holders who tendered will receive this premium.

The exchange amount is payable 45% in new 9¾% senior secured notes due 2019 issued by Energy Future and 55% in new 9¾% senior secured notes due 2019 issued by Energy Future, Energy Future Intermediate and EFIH Finance Inc.

If the needed consents had been received, the exchange amount would have been payable entirely in new 9¾% notes issued by Energy Future.

The companies expect to issue a total of $256.6 million of new notes in the offer.

Holders will receive accrued interest up to but excluding the settlement date, which is expected to be Nov. 16. Accrued interest on the toggle notes will be paid in the form of $3.30 principal amount of new notes for each $1,000 principal amount of notes exchanged.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) and Goldman Sachs & Co. (800 828-3182 or 212 357-4692) were the lead dealer managers and the lead solicitation agents. Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc., KKR Capital Markets LLC and Morgan Stanley & Co. Inc. also acted as dealer managers and solicitation agents.

Global Bondholder Services Corp. (866 387-1500 or 212 430-3774) was the information agent.

Energy Future is a Dallas-based energy holding company.

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