Sempra Revises Oncor Takeover Financing
By Peg Brickley
Sempra Energy Inc. has revised the financing for its $9.45 billion proposal to buy Oncor, a Texas power transmission business that is largely owned by bankrupt Energy Future Holdings Corp.
The San Diego-based power company said Energy Future creditors will still get cash in the deal for their 80% stake in Oncor, a profitable, regulated business. The financing structure, however, has been simplified in an effort to help the buyout pass muster with Texas regulators.
Sempra said it and Oncor will on Thursday begin the formal process of seeking approval from the Public Utility Commission of Texas, a regulatory body that has ended two earlier attempts to buy the transmissions business.
Instead of bringing in outside investors, as it had originally planned, Sempra will use its own equity and debt to pay for Energy Future, which owns 80% of Oncor, the company said. Additionally, some $3 billion worth of debt that was going to be left on Energy Future and paid off over time will instead be eliminated.
The financing for the Oncor deal was revised in response to Texas stakeholders, Sempra said. Active talks with stakeholders continue, as Sempra prepares to guide its Oncor buyout through the regulatory process.
If it hopes to close on the acquisition, Sempra must convince Texas regulators its deal won't add risk to Oncor's finances or complications to the utility's corporate structure.
Owner of San Diego Gas & Electric, Sempra was chosen by Energy Future to replace Warren Buffett's Berkshire Hathaway Energy Co. as Oncor's proposed owner. Berkshire had already lined up support from major Texas customers to buy Oncor but was knocked out of the running by a higher price from Sempra.
According to Sempra, key Texas stakeholders have said the revised proposal has "substantially addressed" many of their concerns, and they are open to "constructive regulatory settlement discussions."