Although it did not provide formal earnings guidance for next year, TXU Corp. said it is “more comfortable” with full-year 2003 earnings estimates of about $2/share because of a planned stock sale and the completion of a recent sale of exchangeable subordinated notes. The company earned $3.78/share in 2001.

TXU was unable to provide earnings guidance for the fourth quarter. Analysts currently expect earnings of 38 cents/share for the fourth quarter and $2.43/share for next year. However, the company is expecting a huge $4.2 billion 4Q write down due to its failed European energy operations, which filed for administration last month.

Like Chapter 11 in the United States, administration protects a company in financial distress from creditors and gives it breathing space for reorganization. However, the daily business operations of the company falls to an administrator, who determines the value of a company’s assets with a view to either selling them as a going concern or breaking them up for disposal to meet creditor obligations.

In October, TXU Europe sold its retail electric and gas utility operations in the United Kingdom and three power plants to Powergen UK, a unit of Germany’s E.ON AG, for $2.1 billion in cash.

TXU Europe’s trading units apparently still owe about $1.2 billion to banks and more than double that to bondholders for a total debt of about $4.6 billion. TXU said the administrative filing would have no further effect on North American or Australian businesses.

The company already cut its dividend 80% and plans to ask shareholders for permission to reclassify nearly $7.5 billion of equity to “surplus” capital from “stated” capital to fund its remaining dividend.

Subsidiary TXU Energy Co. LLC recently closed its issuance of $750 million of exchangeable subordinated notes due 2012. The note sale will help pay off $800 million in credit due this week. TXU also plans to issue 28 million shares of common stock to help raise cash and strengthen its balance sheet.

The current range of earnings expectations from Wall Street analysts is $2.80-3.22 for 2002 and $2.04-3.25 for 2003. TXU shares were down 6% Monday to $15.19.

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