Energy Future expecting additional transactions to improve balance sheet, debt profile

By Jennifer Lanning Drey

Savannah, Ga., Oct. 29 - Energy Future Holdings Corp. expects to continue to execute transactions that will improve its balance sheet by reducing debt and extending maturities, Paul Keglevic, chief financial officer of Energy Future, said Friday during the company's third-quarter earnings conference call.

The company carried out a series of such transactions during the third quarter.

Energy Future, excluding its indirect subsidiary Oncor, had liquidity of $3.7 billion at Sept. 30.

The amount excludes a commodity collateral positing facility that provides for uncapped borrowings for collateral support related to designated natural gas swap transaction volumes, Keglevic said.

Energy Future and Texas Competitive Electric Holdings have sufficient liquidity to meet their anticipated short-term needs but will continue to monitor market conditions to ensure financial flexibility, according to the slides accompanying Friday's presentation.

Also during Tuesday call, Keglevic said that Energy Future will continue to defer interest on Energy Future Holdings and Texas Competitive Electric Holdings PIK notes. The election will create an additional $130 million of liquidity by deferring the May 2011 interest payment on the notes and adding the respective principal balances, he said.

"As in the past, we'll continue to evaluate the use of a PIK feature at each election period, taking into account market conditions and other relevant factors," Keglevic said.

$2.9 billion net loss

Energy Future reported a third-quarter net loss of $2.9 billion, compared to a net loss of $80 million for the same period in 2009.

The current-year net loss included a non-cash goodwill impairment charge of $4.1 billion. The company said the goodwill impairment charge reflects the estimated effect of lower wholesale power prices on the enterprise value of Texas Competitive Electric Holdings, driven by the sustained decline in forward natural gas prices, and declines in market values of comparable companies.

Energy Future's management stressed on Friday's call that the impairment charge has no impact on liquidity and will not cause the company or its subsidiaries to be in default under any of their respective debt agreements.

Energy Future is a Dallas-based holding company engaged in competitive and regulated energy market activities, primarily in Texas.

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