TXU Corp. announced last Wednesday the completion of its merger agreement with Texas Energy Future Holdings LP (TEF).

With the completion of the merger, TXU Corp. became a privately held company and changed its name to Energy Future Holdings Corp. (EFH). Shares of TXU common stock, which had been traded on the New York Stock Exchange and the Chicago Stock Exchange, ceased trading at close of market Wednesday and will be delisted. TXU shareholders will receive $69.25 in cash for each share of TXU common stock held. Lehman Brothers, Citigroup and Morgan Stanley became equity investors at closing.

TEF, which was formed for the transaction by a group of investors led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group, announced the $45 billion buyout (including $13 billion in debt) in February (see Power Market Today, Feb. 27), noting that when completed it would be the biggest leveraged buyout ever.

Former U.S. Secretary of Commerce Donald L. Evans has signed on as nonexecutive chairman of EFH and will lead the company's board of directors. As previously announced, with the successful completion of the transaction, C. John Wilder resigned as TXU Corp. CEO.

EFH, a holding company, will continue the transition of its businesses into three separate and distinct business units with separate boards, management teams and headquarters:

Current business unit management and organizational structures will remain in place at least through a transition period, which is expected to be complete in the first half of 2008. Headquarters for each of the three businesses will remain in the Dallas-Fort Worth area.

As a result of the close of the transaction, TXU Energy said it will reduce retail prices by an additional 5%, resulting in a total 15% price reduction in 2007 for most residential customers. TEF and TXU Energy announced the creation of TXU Energy Access, a comprehensive program representing a commitment of more than $150 million over five years to assist low-income customers. Luminant announced that it will withdraw eight air permit applications for coal-fueled generation units. The permits were suspended shortly after the merger agreement was first announced.

Fitch Ratings last week cut TXU's long-term issuer default rating to "B" from "BB+" and upgraded its negative outlook to stable, saying the new ratings reflect "the significant debt leverage and weak cash flow coverage rations" the deal will create.

TXU subsidiary Oncor Electric Delivery Co. recently said that along with TEF it had reached an agreement with major interested parties to resolve all outstanding issues in the Public Utility Commission of Texas review related to the proposed merger. The transfer of jurisdictional assets owned by Oncor and TXU Wholesale through the acquisition of TXU Corp. by TEF, which had been the final barrier to the deal's completion, was authorized by the Federal Energy Regulatory Commission in early September.

Following the close of the acquisition of TXU Corp. TEF will sell a 20% stake in Oncor. The purchaser of the stake will not be affiliated with any of the companies owned by TXU Corp. or the parties involved in the merger and will have meaningful representation on the Oncor board of directors. Oncor plans to secure all of its currently existing long-term debt, not including the $800 million principal amount of floating rate senior notes that were redeemed upon completion of the merger as required by the terms of the notes. Oncor's $2 billion credit facility is also secured.

In September TXU received Nuclear Regulatory Commission approval related to the merger, the final regulatory hurdle the deal needed to clear (see NGI, Sept. 17). That announcement came just days after shareholders approved the merger (see NGI, Sept. 10).

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