Entergy's Enexus expected to issue $4 billion of bonds in spinoff

By Angela McDaniels

Tacoma, Wash., Nov. 2 - Entergy Corp. expects its non-utility nuclear business, which will be spun off as Enexus Energy Corp., to issue $3.5 billion in long-term unsecured bonds and $500 million in other debt securities, according to a company news release.

The company discussed the post-spin financial outlooks for itself and Enexus Energy in the release and said the outlook for Enexus' financing assumes a rate of 9%.

The company expects the proceeds from the $500 million of debt securities will be used to provide cash collateral as credit support.

Entergy announced its plans to separate the non-utility nuclear business from its rate-regulated utility business through a tax-free spinoff in November 2007. The spinoff date has not yet been determined.

In July, Entergy said its plan to spin off Enexus was being held up by concerns that the expected lower ratings of the spun-off business might affect its ability to reliably operate its nuclear plants.

Entergy expects Enexus' ratings to be in the BB/Ba range.

In May 2008, the New York Public Service Commission began a review of the proposed spinoff's potential to harm captive New York utility ratepayers. The commission raised concerns about Enexus' expected ratings during the review.

In response, the company offered in July to decrease the amount of long-term bonds at Enexus to $3.5 billion from $4.5 billion and increase its initial unrestricted cash balance to $750 million from $250 million.

Based on power prices at the time, Entergy estimated that Enexus would have about $1.88 billion of available liquidity at the spinoff date after satisfying credit support obligations and the authority to issue approximately $825 million of additional secured debt.

Entergy, a New Orleans-based electric power generator, hopes to complete the spinoff by the end of the year.

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