Exit

Culminating a week of progress in pulling together the financing underpinning of its exit from Chapter 11 bankruptcy protection, Pacific Gas and Electric Co. on Friday announced that it intends to offer $6.7 billion in first mortgage bonds to help pay credit claims in its $12 billion utility bankruptcy. This followed announcement earlier in the week that the utility secured $2.9 billion in credit facility commitments and authorization from California state regulators for its new financial structure.

In line with its plans to exit the refinery business and concentrate on North American natural gas pipelines and production, El Paso Corp. announced progress Wednesday on three petroleum asset sales totaling approximately $156 million. The news came on the heels of a deal that fell through to sell some properties in the Uinta Basin to Vintage Petroleum Co. (see related story).

FERC last Tuesday rejected a petition filed by Southern California Edison Co. this summer asking the Commission to declare that Edison has no obligation to act as a scheduling coordinator for the Los Angeles Department of Water and Power (LADWP) under an existing exchange agreement between the utility and the LADWP.

Taking a significant step in its effort to exit the merchant energy business, Aquila Inc. Thursday sold 12 power plants totaling 643 MW to Teton Power Funding, LLC, an affiliate of ArcLight Capital Partners, LLC, for $300.9 million.

Aquila Inc. will exit its once promising gas and power business in Australia, where it had been an active participant since 1995, after agreeing to sell its assets for nearly $589 million to a consortium representing Australian-based AlintaGas, AMP Henderson and their affiliates.

TXU Corp.’s exit from Europe last fall pushed the Dallas-based utility to huge fourth quarter losses, with the write off of $4.2 billion on its failed investments overseas. However, management said it would “aggressively” refocus on North American and Australian assets going forward, estimating its growth “beyond” 2003 would be in the range of 4-6%.

CMS Energy could completely exit the wholesale natural gas and power marketplace; however, the company already has terminated speculative trading, CEO Ken Whipple said Monday. And, to prevent questionable business practices going forward, CMS will require all employees to complete an ethics program.

Draper added that with the pull out, there will be “significant reductions” in personnel, but he did not have any specific figures. The downsizing of merchant activity also will reduce AEP’s working capital needs, according to CFO Susan Tomasky. She said specific guidance would soon be ready, but added, “clearly, the working capital needs for 2003 [will be] reduced significantly.”

TXU Corp.’s investors continued to sell off their stock in record numbers on Wednesday, despite the third conference call in four business days by the executive management team. The hour-plus conference call offered a lot of plain speaking, but to no avail, and by the market’s close, the shares had tumbled another 15% and the European subsidiary had been downgraded by Moody’s Investors Service.