TXU to buy back $400 million mandatory convertibles to end litigation

New York, May 7 - TXU Corp. said it will buy back 8.1 million equity-linked debt securities or around $400 million principal amount under an agreement that will result in the dismissal of a lawsuit.

The suit, brought by holders of 39% of the securities, alleged that a termination event had occurred and that therefore they were not required to buy common stock under the purchase contract component of the securities. The stock purchase contracts require the holders to buy TXU common stock on specified dates in 2004 and 2005.

The lawsuit is currently on appeal after the trial court granted TXU's motion to dismiss.

TXU will buy back the convertibles held by the plaintiffs at a price of $47.75 per unit.

The Dallas energy company issued the mandatory convertible units in October 2001 at $50 per unit. They carry an 8.75% coupon and convert at prices of $45.64 to $55.68. TXU stock was at $36.91 in late afternoon trading Friday.

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