Sempra Energy revised its $9.45 billion bid for Texas transmission firm Oncor Electric Delivery, offering dozens of regulatory commitments and vowing to acquire 100 percent of Oncor’s parent company using the buyer’s own equity and debt.
San Diego-based Sempra filed its application Thursday with the Public Utility Commission of Texas (PUCT). The revision offers a new financing structure that avoids any outside investors and acquires full ownership of bankrupt parent Energy Future Holdings Corp., which holds majority control of Oncor.
“Since we announced our transaction in August, we have met with many stakeholders to gain their perspectives on how we can best meet the needs of Oncor customers and the state of Texas,” Sempra CEO and Chairman Debra Reed (pictured above) said in a statement. “Our application responds to their feedback and details our financing plan and regulatory commitments, as well as our approach to resolving the long-running EFH bankruptcy proceeding. “
Sempra swooped in two months ago to outbid Berkshire Hathaway Energy for Oncor. Texas regulators previously had rejected deals with Hunt Consolidated and NextEra Energy over debt and rate concerns, among other things.
The revised bid avoids saddling any debt on Energy Future Holdings. Instead, Sempra plans to fund approximately 65 percent of the $9.45 billion with its own equity and the remainder with Sempra debt.
The move should enable Sempra to purchase 100 percent of the parent company at the transaction’s close. Oncor is the centerpiece of the deal, with millions of customers and more than 120,000 miles of transmission and distribution lines in its system.
Oncor CEO Bob Shapard expressed support for the Sempra offer.
“Sempra Energy’s strong ring-fence protections demonstrate how they will be a good long-term partner for Texas,” he said in a statement. “We also are pleased that, with this new financing structure, several of the key stakeholders have expressed interest in entering into constructive regulatory settlement discussions.”
Energy Future Holdings filed for bankruptcy protection three years ago. The parent firm was saddled with more than $40 billion in debt due to cratering energy prices.
On Sept. 6, the U.S. Bankruptcy Court for the District of Delaware approved EFH’s entry into the merger agreement with Sempra Energy. The agreement remains subject to customary closing conditions, including further approvals by the Bankruptcy Court, the PUCT and the Federal Energy Regulatory Commission.
