Published on 10/24/2007 in the Prospect News High Yield Daily.
New Issues: TXU upsizes to $7.5 billion, includes $2.5 billion toggle notes tranche
By Paul A. Harris
St. Louis, Oct. 24 - TXU Corp. priced a massively upsized $7.5 billion three-part note offering on Wednesday, according to market sources.
The transaction, which was upsized from $4.5 billion, included an unannounced $2.5 billion issue of toggle notes.
Texas Competitive Energy Holdings Co. LLC (TCEH) priced an upsized $3 billion issue of eight-year senior cash-pay notes (B3/CCC) at par to yield 10¼%.
The TCEH cash-pay notes tranche was upsized from $2.5 billion. The notes were priced on top of price talk.
Goldman Sachs & Co., Morgan Stanley, Citigroup, JPMorgan, Lehman Brothers and Credit Suisse were joint bookrunners.
Meanwhile Energy Future Holdings (EFH) priced an upsized $4.5 billion two-part notes transaction (B3/CCC+), which included the unannounced $2.5 billion toggle notes tranche - the overall amount by which EFH was upsized.
EFH priced a $2 billion issue of 10-year senior cash-pay notes at par to yield 10 7/8%, in the middle of price talk that had the EFH notes pricing 50 to 75 basis points behind the TCEH cash-pay notes.
In addition EFH priced the unannounced $2.5 billion tranche of 11¼% 10-year senior toggle notes at 97.815 to yield 11 5/8%. No price talk was circulated on the toggle notes.
Morgan Stanley, Goldman Sachs & Co., Citigroup, JP Morgan, Lehman Brothers and Credit Suisse were joint bookrunners for the EFH tranches.
Proceeds will be used to help fund the leveraged buyout of the company by Kohlberg Kravis Roberts & Co. and Texas Pacific Group.
TXU is a Dallas-based energy company.
| Company: | TXU Corp.
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| Overall amount: | $7.5 billion (increased from $4.5 billion)
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| Issuer: | Texas Competitive Energy Holdings Co. LLC
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| Amount: | $3 billion (increased from $2.5 billion)
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| Maturity: | Nov. 1, 2015
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| Security description: | Senior cash-pay notes
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| Bookrunners: | Goldman Sachs & Co., Morgan Stanley, Citigroup, JPMorgan, Lehman Brothers, Credit Suisse
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| Coupon: | 10¼%
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| Price: | Par
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| Yield: | 10¼%
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| Spread: | 603 bps
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| Call features: | Callable on Nov. 1, 2011 at 105.125, 102.563, par on and after Nov. 1, 2013
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| Equity clawback: | Until Nov. 1, 2010 for 35%
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| Trade date: | Oct. 24
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| Settlement date: | Oct. 31
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| Ratings: | Moody's: B3
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| Standard & Poor's: CCC
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| Distribution: | Rule 144A/Regulation S with registration rights
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| Issuer: | Energy Futures Holdings
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| Amount: | $4.5 billion (upsized from $2 billion)
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| Underwriters: | Morgan Stanley, Goldman Sachs & Co., Citigroup, JPMorgan, Lehman Brothers, Credit Suisse
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| Trade date: | Oct. 24
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| Settlement date: | Oct. 31
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| Ratings: | Moody's: B3
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| Standard & Poor's: CCC+
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| Cash-pay notes
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| Amount: | $2 billion
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| Maturity: | Nov. 1, 2017
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| Security description: | Senior notes
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| Coupon: | 10 7/8%
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| Price: | Par
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| Yield: | 10 7/8%
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| Spread: | 655 bps
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| Call features: | Callable on Nov. 1, 2012 at 105.438, 103.625, 101.813, par on and after Nov. 1, 2015
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| Ratings: | Moody's: B3
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| Standard & Poor's: CCC+
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| Price talk: | 50 to 75 bps behind the Texas Competitive Energy notes
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| Distribution: | Rule 144A with registration rights
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| Toggle notes (added tranche)
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| Amount: | $2.5 billion
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| Maturity: | Nov. 1, 2017
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| Security description: | Senior notes
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| Coupon: | 11¼%
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| Price: | 97.815
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| Yield: | 11 5/8%
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| Spread: | 730 bps
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| Call features: | Callable on Nov. 1, 2012 at 105.625, 103.75, 101.875, par on and after Nov. 1, 2015
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| Ratings: | Moody's: B3
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| Standard & Poor's: CCC+
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