TXU sells assets, raises guidance

In what it called “the first phase” of restructuring transactions, Dallas-based TXU disclosed the sale of its Australian unit for $3.72 billion and said it’s reached a deal to sell gas transportation unit TXU Fuel Co. for $502 million.

In addition, the company plans to sell TXU Gas Co., its gas transmission and distribution unit serving markets in Texas, later this year.

TXU also said it has moved to cut debt by repurchased TXU Energy’s exchangeable preferred membership interests for $1.84 billion, cutting debt. In the process, the company said it’s eliminating $750 million in face value of 9 percent securities as well as 57.1 million of its outstanding common shares.

TXU revised its forecast for 2004 operating earnings to $2.45 to $2.55 a share, up from a prior estimate $2.15. Earnings from continuing operations are forecast at $1.74 to $1.84 a share.

For the first quarter, the company expects earnings of 59 cents a share.

The average estimate of analysts polled by Thomson First Call is for first-quarter earnings of 44 cents and 2004 earnings of $2.17 a share.

TXU Australia is being purchased by Singapore Power in a transaction expected to close in the third quarter. TXU will realize proceeds of about $1.8 billion after taxes and transaction costs, yielding a pretax gain of $375 million.

Energy Transfer Partners is picking up TXU Fuel, which operates some 1,900 miles of intrastate pipeline. TXU, which will record a pretax gain of $390 million on the deal expected to close June 1, concluded an eight-year agreement with the buyer to transport gas to its energy-generating assets.

Pending completion of the divestiture of TXU Gas by the end of the year, TXU said it will realize an estimated $3.36 billion on these transactions.

The proceeds, TXU said in a statement, will be used “to increase value and reduce risks through executing a comprehensive liability management initiative. We expect this initiative will include repurchasing and issuing, over time, various forms of securities, including debt, preferred, and equity securities.”

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