Energy Future: amend-and-extend provides more time to create value

By Jennifer Lanning Drey

Savannah, Ga., April 29 - Energy Future Holdings Corp. has gained additional time to increase its enterprise value and allow the power markets to recover with the recent amend-and-extend transaction carried out with lenders under the senior secured credit facilities of Energy Future's indirect wholly-owned subsidiary Texas Competitive Electric Holdings Co., LLC, Paul Keglevic, Energy Future's chief financial officer, said Friday during its first-quarter earnings conference call.

As previously reported, Energy Future announced on April 13 that Texas Competitive had received commitments to extend $15.367 billion of its term loans, $1.02 billion of its letter of credit loans and $1.384 billion of its revolving credit facility.

Specifically, the revolving credit facility commitments were extended by three years to 2016 from 2013 and the letter of credit facility commitments were extended to 2017 from 2014.

"We are very pleased with the outcome of our amendment and extension efforts, and we appreciate the support of all of our investors," Keglevic said.

Energy Future's pro forma March 31 liquidity adjusted for the transaction and excluding its indirect subsidiary Oncor was $2.688 billion. The figure was down from actual liquidity of $3.258 billion at March 31.

Keglevic said the pro forma reduction in liquidity primarily resulted from the 50 basis point amendment fee and 350 bps extension fee paid by the company in connection with the transaction.

However, that reduction was offset by a $770 million pre-payment of term loan amortization that would have been made from 2011 to 2014, which was also accomplished as part of the transaction, he noted.

If the company had not financed the payment, the amortization would have been a use of pre-transaction liquidity over the period of 2011 to 2014, he said.

$362 million net loss in Q1

For the first quarter, Energy Future reported a consolidated net loss of $362 million, compared with reported net income of $355 million for the first quarter of 2010.

The current-year net loss included $203 million in commodity-related unrealized mark-to-market net losses largely related to positions in Energy Future's natural gas hedging program, partially offset by $92 million in unrealized mark-to-market net gains on interest rate swaps that hedge its variable-rate interest expense and a $14 million gain related to a counterparty bankruptcy settlement, the company said.

The prior-year net income figure included $639 million in unrealized commodity-related mark-to-market net gains and a $9 million debt extinguishment gain resulting from a first-quarter 2010 debt exchange, partially offset by $70 million in unrealized mark-to-market net losses on interest rate swaps and an $8 million deferred income tax charge recorded as a result of the healthcare legislation enacted by Congress in March 2010.

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

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