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Sempra $9.5 bln Oncor fine print bears close read

22 August, 2017, 01:19 | Author: Samuel Sharp
  • Buffett and Anka

Multiple sources reported Sunday evening that Sempra's $9.45 billion offer for Oncor has been accepted by Energy Future Holdings, a bankrupt Texas utility that is the parent company of Oncor.

The new proposal would see Sempra own 60% of a restructured Energy Future business and in a statement it noted that the deal had a transaction value of almost US$19bn including Oncor's debt, which will be assumed by Sempra.

Energy Future's board on Sunday favored Sempra's offer over Berkshire Hathaway $9 billion deal to buy Oncor, sources told Reuters, after Sempra also offered assurances it could get its acquisition of Oncor approved by Public Utility Commission of Texas, as well as a USA bankruptcy judge. The most recent bid in July by Berkshire Hathaway Energy, a subsidiary of billionaire investor Warren Buffett's Berkshire Hathaway, said it would pay $9 billion for Energy Future and Oncor. The transaction's enterprise value would be roughly $18.8 billion.

Sempra Energy's headquarters in downtown San Diego. Hedge fund Elliott Management, which owns a significant portion of Oncor's debt, opposed Berkshire's takeover bid, saying it wasn't enough.

The transaction of the largest power distribution/transmission system in Texas should be accretive beginning next year, Sempra officials said. The conglomerate, which filed for Chapter 11 bankruptcy in 2014, is saddled with about $50 billion in debt.


This is the fourth time that that an acquisition attempt has been made for Oncor.

Sempra plans to maintain the existing independence of Oncor's board, which has protected the electricity company and its customers during the ongoing EFH bankruptcy that has dragged on for three years.

Claiming the deal will strengthen Oncor's underlying financial strength and credit ratings, Sempra said it is committed to supporting Oncor's $7.5 billion, five-year capital investment plan. It had announced rare support from utility commission and consumer groups, and it circulated a document with 44 regulatory commitments that it says parties that might intervene at the utility commission have already agreed to. Allen Nye, now Oncor's general counsel, will succeed Shapard as Oncor CEO.

Reed added: "It is important for Oncor to remain financially strong".

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