With little fanfare, following three conference calls over the course of the week, late Friday, Dallas-based TXU Corp. said it would increase its available cash by $2.6 billion by Monday or Tuesday, drawing upon its unsecured bank facilities at TXU US Holdings and TXU Energy.

“Today’s market conditions require us to exercise an abundance of caution,” CFO Mike McNally said in a statement. “Drawing on these bank facilities supplements strong cash flows from our North American operations and improves their financial flexibility.”

TXU is fighting to retain its investment-grade credit ratings in spite of faltering business overseas. Earlier on Friday there were reports that subsidiary TXU Europe Ltd. apparently will dismiss at least half of the 135-member workforce in Geneva, Switzerland. TXU Corp. had said on Thursday that cutbacks would be made corporate-wide.

More reductions from its 2,000-member Euro workforce are expected. TXU Europe and its subsidiaries have offices in Germany, the Nordic region and Switzerland, with its largest operations in the United Kingdom, where two-thirds of its business is located. TXU Europe’s UK retail energy business currently serves about 5.5 million customers. A TXU Europe spokesman affirmed that the company was undergoing cost-cutting measures across the board, which included “reducing numbers in Geneva.” Other European offices also are expected to be downsized.

The Dallas-based corporation now is trying to resolve a cross-fault provision that ties a $500 million revolving credit facility at TXU Corp. to TXU Europe. On Wednesday, CFO Mike McNally claimed confidence that lenders would waive the credit trigger (see Daily GPI, Oct. 10 ). Although the parent will give TXU Europe about $700 million in equity to shore up its liquidity for now, McNally also noted that the parent is committed to retaining its credit ratings above all else.

The $700 million in equity will be used to restructure UK power purchase agreements, many signed before UK electricity prices dropped about 40%. There are five long-term contracts TXU wants to renegotiate, but there is no guarantee it will be able to do so. Most of the current contract problems are apparently tied to an agreement with AES Corp., which owns a 4,000 MW coal-fired plant in England. It accounts for about 60% of the problem contracts, according to TXU.

Still, the subsidiary has other options, if the contracts cannot be redone, said analysts. It could restructure financially, sell some units or even declare bankruptcy — but bankruptcy is most unlikely at this point.

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