Oct. 9, 2002 — TXU reaffirmed Tuesday that it is in strong financial position and has ample liquidity, and that it knows of no fundamental reason for the way the TXU common stock traded Tuesday morning.
The stock prices of several energy merchants fell to 52-week lows Tuesday as news came out that Allegheny Energy was in technical default on credit agreements.
TXU shares halted trading at 11:06 a.m. Eastern time after their value fell as much as 39 percent. CBS MarketWatch.com said at one point during the day that the stock was at a 52-week low of $17.95.
As previously stated, the company has $2.6 billion of available liquidity before any financings. As a point of clarification, the company has no outstanding borrowings on either its $800 million of back up bank facilities in North America or GBP 300 million of bank facilities in Europe, which expire in November 2002.
The company has already paid off over $1.5 billion of 2003 maturities this year, which leaves total remaining maturities over the next 12 months of approximately $1.5 billion.
Planned financings at Oncor and TXU Gas (regulated entities in North America) and terming out of $325 million of Pollution Control Revenue Bonds at TXU Energy over the next twelve months total $1.8 to $1.9 billion. This leaves ample liquidity even before considering strong cash flows from operations.
This and free cash flows will provide ample funding for the strong dividend, continued debt reduction and capital expenditures. The company has the opportunity to enter into bank facilities at the regulated entities (Oncor and TXU Gas) in lieu of their capital market financings.
As previously stated, the only credit facility at the TXU Corp. level is its $500 million working capital facility. This facility has a cross default provision that would be triggered by a default by TXU Europe. There are no other facilities at the TXU Corp. level, and no other North America facilities, including commercial paper programs, that would be impacted by a TXU Europe default.
The company also reaffirms its operating earnings guidance for 2002 ($3.20 to $3.25 per share of common stock) and 2003 ($3.45 to $3.55 per share) that it issued last Friday.
On Monday, Moody’s revised the outlooks for ratings assigned to securities issued by TXU Corp (Baa3) and TXU Gas (Baa2) to negative from stable in response to deterioration in the credit profile of TXU Europe (Baa1) and pressure on the credit profile of TXU Gas.
Securities ratings for TXU Europe remain on review for potential downgrade. The outlooks for securities ratings assigned to TXU Australia (Baa2), Oncor Electric Delivery (A3 sec.) and TXU Energy (Baa2) remain stable. The two US businesses dominate the credit profile and support the parent’s Baa3 rating.
TXU provides electric and natural gas services, merchant energy trading, energy marketing, energy delivery, telecommunications, and energy-related services. With $41 billion in assets, TXU is one of the most influential energy companies in the world.
TXU is an energy retailer in the US and one of the largest in the world. TXU owns or controls extensive competitive generation around the world, and is a portfolio manager and trader globally.
TXU, which sells over 330 million megawatt hours of electricity and 2.8 trillion cubic feet of natural gas annually, serves over 11 million customers worldwide, primarily in the US, Europe and Australia. Visit www.txu.com for more information about TXU.
Source: TXU Corp.