Energy Future, Texas Competitive to pay interest in-kind on 11¼%/12%, 10½%/11¼% notes

By Susanna Moon

Chicago, Oct. 31 - Energy Future Holdings Corp. will pay in-kind interest on May 1, 2009 on its $2.5 billion 11¼% - or 12% in-kind - senior toggle notes due 2017 in lieu of cash interest payments and on subsidiary Texas Competitive Electric Holdings Co. LLC's $1.75 billion 10½% - or 11¼% in-kind - senior toggle notes due 2016, according to an 8-K filing with the Securities and Exchange Commission.

The companies said they have sufficient liquidity but chose to use the payment-in-kind feature as "an efficient and cost-effective method to further enhance liquidity, in light of the substantial dislocation in the financial markets."

Incremental liquidity gained for the May 2009 payment period more than offsets the liquidity lost as a result of the default by affiliates of Lehman Brothers Holdings, Inc. under Texas Competitive's senior secured credit facility, the filing noted.

The companies said they will consider this option at each election period, taking into account market conditions and other relevant factors.

The PIK option is available every six months until Nov. 1, 2012.

Energy Future is a nonregulated retail electric provider based in Dallas.

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