Fitch Rates TXU Subsidiaries' New $1B Notes; Remain on Negative Watch.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch rates the TXU TXU Texas Utilities (Electric and Gas Company) TXU Transmitter Unit Energy Co's (Energy; Issuer Default Rating [IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ] 'BBB-' by Fitch) $1 billion floating-rate notes due 2008 'BBB-' and TXU Electric Delivery Co's (Delivery; IDR 'BBB-' by Fitch) $800 million notes due 2008 'BBB' (collectively the notes). The notes issues are senior unsecured and rank equally with existing and future unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. of Energy and Delivery, respectively. The ratings of Energy and Delivery remain on Ratings Watch Negative, where they were placed on Feb. 26, 2007 in conjunction with an announced LBO LBO See: Leveraged buyout LBO See leveraged buyout (LBO). transaction. The notes are mandatorily redeemable upon closing of the merger transaction. Proceeds from the notes will be used to pay down short-term debt including commercial paper (CP) issuances. Fitch notes that the companies would have difficulty accessing the CP market while ratings are on Ratings Watch Negative with the prospect of possible multiple notch downgrades, particularly at Energy and the parent company, TXU Corp. (TXU; IDR 'BB+' by Fitch). Fitch commented on March 2, 2007 that it expects the IDRs of TXU and Energy to be lowered to approximately the 'B' category following closing of the LBO transaction. The post-acquisition ratings of Delivery could be substantially higher than those of TXU if Fitch finds that Delivery is sufficiently ring-fenced from its affiliates. It should also be noted that Energy and Delivery have ample bank revolving facility capacity and currently are permitted under the terms of existing bank lines to repay the CP with revolving facility borrowings. Fitch downgraded the ratings of TXU and its subsidiaries; Energy, Delivery and TXU US Holding (IDR 'BB+' by Fitch), on Feb. 26, 2007. The rating actions followed the announcement that a Kohlberg, Kravis and Roberts (KKR KKR Korringa-Kohn-Rostoker (method) KKR Kohlberg, Kravis & Roberts & Co. KKR Kalkara (postal locality, Malta) KKR Kramers-Kronig Relations KKR Komarappa Gounder Ramalingam (hospital in India) ) and Texas Pacific Group-led consortium have signed an agreement to acquire TXU for $45 billion. The rating actions were based on Fitch's concerns that the acquisition of TXU would be funded through a highly levered entity or result in the incurrence of substantial indebtedness at the TXU holding company or subsidiary levels. TXU Corp is engaged in the generation, sale, delivery and transmission of electricity primarily in Texas. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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