The transaction will be a crucial element in getting Energy Future – the former TXU Corp. – out of chapter 11 bankruptcy, which began in April 2014.
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The deal, which has the support of both companies’ boards, will provide an escape route for Energy Future as it will wipe out all the debt of the company and Energy Future Intermediate Holding Company LLC that now exists above Oncor.
“We are incredibly impressed by Oncor’s management team and its employees, and we are committed to retaining the Oncor name, its Dallas headquarters and local management”, said NextEra Chairman and CEO Jim Robo.
NextEra Energy Inc opened for trading at $127.02 and hit $128.1 on the upside on Thursday, eventually ending the session at $127.42, with a gain of 0.20% or 0.25 points. But it includes NextEra forming a new subsidiary to assume Energy Future Holdings’ share of Dallas-headquartered Oncor, which supplies power to more than 3 million people in Texas. Any buyer must have approval by the Public Utility Commission of Texas and the bankruptcy court. A Fortune 200 company and included in the S&P 100 index, NextEra Energy has been recognized often by third parties for its efforts in sustainability, corporate responsibility, ethics and compliance, and diversity, and has been ranked No. 1 in the electric and gas utilities industry in Fortune’s 2016 list of “World’s Most Admired Companies”.
Once NextEra announced it was interested in buying Oncor, Energy Future chose to invite offers for the business. NextEra lost in the original bidding process to Hunt.
The agreement is part of a reorganization plan created to allow Energy Future to emerge from bankruptcy after restructuring $50 billion in debt, according to a statement from Florida-based NextEra.
Deutsche Bank gave shares of Nextera Energy, Inc. a price target of 133 indicating a potential increase of 4.48% from Nextera Energy, Inc.’s current price of 127.3.
NextEra has been looking to expand its footprint.
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Bidding had been robust for Oncor, with interest from energy companies and others including Berkshire Hathaway, Edison International, Hunt Consolidated and Fidelity Investments. NextEra will repay $9.5 billion of Energy Future’s debt as part of the deal. Of that amount, it is expected that certain creditors will be paid primarily in cash with the remainder in NextEra common stock.
