Energy Future continues focus on balance sheet improvement, financial flexibility

By Jennifer Lanning Drey

Portland, Ore., Feb. 19 - Energy Future Holdings Corp. remains focused on improving its balance sheet, increasing financial flexibility and extending maturities, Paul Keglevic, chief financial officer of Energy Future, said Friday during the company's fourth-quarter earnings conference call.

"We have borrowing capacity that we can use for public exchanges, private exchanges or to issue and buyback in the marketplace, and we'll consider those and other measures as appropriate based on trading levels and where we think we can get the best return on those transactions," Keglevic said.

The statement was made following the CFO's formal remarks in response to question regarding the company's capital structure strategy for 2010.

Energy Future, excluding its indirect subsidiary Oncor, had $3.8 billion of liquidity at Dec. 31. The figure does not include $500 million in cash proceeds resulting from the company's January issuance of new 10% notes due 2020.

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

Energy Future has about $22 billion of secured debt that needs to be refinanced on or before Oct. 1, 2014.

During 2009, the company obtained approval from its credit facility lenders to amend the related credit agreement, which Keglevic said provided it more flexibility to extend the maturities of the existing debt.

The amendment also provided the company with $4 billion of additional second-lien capacity at subsidiary Texas Competitive Electric Holdings Company LLC that may be used for certain new capital asset purchases or refinancing and deleveraging the balance sheet, he said.

According to the slides used in conjunction with Keglevic's Friday presentation, Energy Future and TCEH have sufficient liquidity to meet their anticipated short-term needs but will continue to monitor market conditions to ensure financial flexibility.

During the question-and-answer of Friday's call, Keglevic said Energy Future has not repurchased any bonds since its $500 million bond issuance in January.

Q4 earnings improvement

For the fourth quarter, Energy Future reported consolidated net income attributable to EFH Corp. of $137 million versus a net loss of $8.855 billion for the fourth quarter of 2008.

On an adjusted basis, the company posted a fourth-quarter net loss of $351 million, compared to a net loss of $367 million for the same period in 2008.

"The fourth quarter was a solid operational quarter for the company even though the economic environment remains challenging, and the future outlook for the economy and commodity prices remain uncertain," John Young, chief executive officer of Energy Future, said during the call.

Energy Future Holdings is a Dallas-based energy holding company.

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