Sempra has committed to ensuring that Oncor remains “independent, financially strong and based in Dallas with local management, while keeping in place the ring-fence measures that help insulate Oncor from Energy Future’s bankruptcy proceedings,” according to a company statement announcing the court action.
Its plan includes setting up a holding company for Oncor that would start with $3 billion in debt.
“Oncor is a well-managed, top-tier utility, operating in one of the strongest U.S. growth markets,” said Debra L. Reed, Sempra’s chairman, president and CEO, in a statement. “We believe it will be an excellent strategic fit with our portfolio of utility and energy infrastructure businesses, while opening up a new avenue for our long-term growth.”
Sempra, based in San Diego, emerged last month when it outbid Warren Buffett’s Berkshire Hathaway Energy for the prized utility. The Berkshire bid had won praise from state leaders, but hit a roadblock when one of Energy Future’s largest debt holders balked at the $9 billion sale price.
New York hedge fund Elliott Management publicly battled the billionaire investor and Buffett declined to raise his offer. The night before Berkshire’s proposal was to go before the bankruptcy court, Energy Future struck a deal with Sempra, which owns San Diego Gas & Electric Co. and other companies.
For state regulators, the biggest sticking point has been keeping Oncor financially healthy from owners who otherwise might drain its profits to support other business interests. Oncor’s steady cash production has long made it the crown jewel of the bankrupt parent company and a key in paying off Energy Future’s debt.
An investment group led by Dallas-based Hunt Consolidated Inc. was Energy Future’s first choice as a buyer, but investors walked away when state regulators imposed conditions. Florida-based NextEra Energy was next up, but regulators rejected its bid as not in the public interest.
Sempra, based in San Diego, operates utilities and energy infrastructure businesses that produced $10 billion in revenue last year.
It owns and operates electric and gas utilities in the U.S. and South America, including San Diego Gas & Electric and SoCalGas in California, Luz del Sur in Peru, and Chilquinta Energía in Chile. It also invests in, develops and operates infrastructure through subsidiaries Sempra Renewables, Sempra LNG & Midstream and Sempra Mexico.