Energy Future exchanges $549 million of 5.55% notes under liability management program

By Angela McDaniels

Tacoma, Wash., July 7 - Energy Future Holdings Corp. exchanged approximately $412 million principal amount of new 10% senior secured notes due 2020 for about $549 million principal amount of its 5.55% series P senior notes due Nov. 15, 2014, according to an 8-K filing with the Securities and Exchange Commission.

The private exchange took place on July 2.

The company said this transaction allowed it to capture approximately $137 million of debt discount.

The holder of the exchanged notes - who held a majority of the outstanding principal amount of the 5.55% notes prior to the exchange - consented to some amendments to the indenture governing the notes that modify or eliminate substantially all of the restrictive covenants, modify or eliminate some events of default, modify covenants regarding mergers and consolidations and modify or eliminate certain other provisions.

Liability management program

The exchange is part of the liability management program the company began in October 2009.

Energy Future said that excluding Oncor Electric Delivery Holdings Co. LLC, the company and its subsidiaries have about $38 billion principal amount of debt outstanding. Of that amount, about $22 billion matures in 2014, and the majority of the remaining amount matures from 2015 to 2017.

Since the start of the second quarter of 2010, Energy Future has engaged in a series of other liability-management transactions.

In these other transactions, Energy Future acquired $413 million of its debt and subsidiary Texas Competitive Electric Holdings Co. LLC's debt.

As consideration for this acquired debt, Energy Future issued approximately $72 million principal amount of the 10% notes and paid approximately $211 million of cash, excluding accrued interest payments.

The exchange completed on July 2 brings the total amount of debt acquired since the start of the second quarter to approximately $962 million, the total amount of 10% notes issued to approximately $484 million and the total amount of cash paid to approximately $211 million.

These transactions have extended the maturities of $695 million of outstanding debt.

Total results to date

Energy Future said it has acquired approximately $1,366,000,000 of debt since October 2009.

As consideration for this acquired debt, Energy Future issued approximately $518 million of the 10% notes and $115 million of 9¾% senior secured notes due 2019 and paid approximately $211 million of cash, and Energy Future Intermediate Holding Co. LLC has issued approximately $141 million of its 9¾% senior secured notes due 2019.

These transactions have resulted in Energy Future capturing approximately $381 million of debt discount and extending the maturities of $985 million of outstanding debt.

The $381 million debt discount together with the related $115 million of projected interest savings (pre-tax) through 2014 result in a total projected 2014 net debt reduction of approximately $496 million.

The following is a summary of the debt acquired through July 2 under Energy Future's liability management program:

• Approximately $566 million of the 5.55% notes;

• Approximately $10 million of Energy Future's 6½% series Q senior notes due 2024;

• Approximately $6 million of Energy Future's 6.55% series R senior notes due 2034;

• Approximately $188 million of Energy Future's 10 7/8% senior notes due 2017;

• Approximately $213 million of Energy Future's 11¼%/12% senior toggle notes due 2017;

• Approximately $311 million of Texas Competitive's 10¼% senior notes due 2015 and 10¼% senior notes due 2015, series B;

• Approximately $52 million of Texas Competitive's 10½%/11¼% senior toggle notes due 2016; and

• Approximately $20 million of Texas Competitive's initial term loans under its senior secured credit facilities.

Energy Future is a Dallas-based energy holding company.

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