Energy Future once more elects to use PIK option on toggle notes

By Jennifer Chiou

New York, Feb. 19 - Energy Future Holdings Corp. elected to use the pay-in-kind feature on its toggle notes for the May interest payment, according to a 10-K filed with the Securities and Exchange Commission.

According to the filing, subsidiary Texas Competitive Electric Holdings Co. LLC also elected to use the PIK feature for its toggle notes.

Both companies previously elected to use the PIK feature on the toggle notes for the May 1, 2009 and Nov. 1 interest payments due to uncertainty regarding access to the capital markets and the general economic weakness.

For Energy Future's notes, the interest rate is increased to 12% from 11¼% for the upcoming interest period. The company increased the aggregate principal amount of the notes by $150 million and $159 million in May 2009 and November, respectively, and will further increase this amount by $168 million in May.

According to the 10-K, the elections increased liquidity in 2009 by about $290 million and will further increase liquidity in May by approximately $157 million.

If paid in cash, the annual interest expense would increase by $54 million due to the increased principal, the company said.

For Texas Competitive's notes, the interest rate on the notes is increased to 11¼% from 10½% during this period. The company said it increased the aggregate principal amount of the notes by roughly $98.5 million and $104 million in May 2009 and November.

It will further increase the amount by about $110 million in May.

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

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