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EX-4.1 - SECOND SUPPLEMENT INDENTURE - Energy Future Holdings Corp /TX/dex41.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (date of earliest event reported) – November 15, 2010

 

 

Energy Future Holdings Corp.

(Exact name of registrant as specified in its charter)

 

 

 

Texas   1-12833   75-2669310
(State or other jurisdiction of incorporation)   (Commission File Number)   (I.R.S. Employer Identification No.)

 

 

Energy Future Competitive Holdings Company

(Exact name of registrant as specified in its charter)

 

 

 

Texas   1-34543   75-1837355
(State or other jurisdiction of incorporation)   (Commission File Number)   (I.R.S. Employer Identification No.)

Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201

(Address of principal executive offices, including zip code)

214-812-4600

(Registrants’ telephone number, including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

Introductory Note

On November 15, 2010, Texas Competitive Electric Holdings Company LLC (“TCEH”), a wholly-owned subsidiary of Energy Future Competitive Holdings Company (“EFCH”), and TCEH Finance, Inc., a direct, wholly-owned subsidiary of TCEH (“TCEH Finance” and, together with TCEH, the “Issuer”), completed a private exchange transaction (the “Exchange Transaction”) pursuant to an Exchange Agreement among the Issuer, EFCH, the subsidiary guarantors named therein (the “Subsidiary Guarantors” and, together with EFCH, the “Guarantors”) and an institutional investor (the “Exchange Holder”). In the Exchange Transaction, the Issuer issued approximately $885 million aggregate principal amount of its 15% Senior Secured Second Lien Notes due 2021, Series B in exchange for the surrender by certain funds and accounts managed by the Exchange Holder of approximately $1.27 billion aggregate principal amount of the Issuer’s 10.25% Senior Notes due 2015 and 10.50%/11.25% Senior Toggle Notes due 2016. The notes received by the Issuer in the Exchange Transaction have been retired and canceled.

Item 1.01. Entry into a Material Definitive Agreement.

Issuance by TCEH and TCEH Finance of approximately $885 Million Aggregate Principal Amount of 15% Senior Secured Second Lien Notes Due 2021, Series B

Indenture

On November 15, 2010, the Issuer entered into a Second Supplemental Indenture (the “Second Supplemental Indenture”), to that certain Indenture, dated as of October 6, 2010 (the “Base Indenture” and, together with the First Supplemental Indenture thereto dated as of October 20, 2010 (the “First Supplemental Indenture”) and the Second Supplemental Indenture, the “Indenture”), in each case, among the Issuer, the Guarantors and The Bank of New York Mellon Trust Company, N.A., as trustee. Pursuant to the Indenture, the Issuer issued approximately $885 million aggregate principal amount of 15% Senior Secured Second Lien Notes due 2021, Series B (the “New Notes”). The New Notes will mature on April 1, 2021. Interest on the New Notes is payable in cash quarterly in arrears on January 1, April 1, July 1 and October 1 of each year at a fixed rate of 15% per annum, and the first interest payment is due on January 1, 2011.

The New Notes are initially unconditionally guaranteed (the “guarantees”) on a senior basis, jointly and severally, by the Guarantors, which are the same guarantors that guarantee the obligations arising under the Credit Agreement, dated as of October 10, 2007, as amended on August 7, 2009 (the “TCEH Senior Secured Credit Facilities”), by and among EFCH, as guarantor, TCEH, as borrower, the other guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Citibank, N.A., as administrative agent. The New Notes are secured, on a second-priority basis, by security interests in all of the assets of TCEH, and the guarantees from the Subsidiary Guarantors (the “Subsidiary Guarantees”) are secured on a second priority basis by all of the assets and equity interests of all of the Subsidiary Guarantors, in each case, to the extent such assets and equity interests secure obligations under the TCEH Senior Secured Credit Facilities on a first-priority basis (the “Collateral”), subject to certain exceptions and permitted liens; provided that the Collateral will not include the equity interests of any Subsidiary Guarantor from time to time to the extent that the pledge of such equity interests would result in separate financial statements of such Subsidiary Guarantor being required to be filed with the Securities and Exchange Commission (the “SEC”). The guarantee from EFCH is not secured.

The New Notes are senior obligations of the Issuer and rank equally in right of payment with all existing and future senior debt of the Issuer. The New Notes are effectively subordinated to TCEH’s obligations under the TCEH Senior Secured Credit Facilities and TCEH’s commodity and interest rate hedges that are secured by the Collateral on a first-priority basis and any future obligations secured by the Collateral on a first-priority basis, to the extent of the value of the Collateral, and to all secured obligations of TCEH that are secured by assets other than the Collateral, to the extent of the value of the assets securing such obligations. The New Notes are structurally subordinated to all existing and future debt and liabilities of TCEH’s non-guarantor subsidiaries. The New Notes are effectively senior in right of payment to all existing and future unsecured debt of the Issuer to the extent of the value


of the Collateral (after taking into account any first-priority liens on the Collateral). The New Notes are senior in right of payment to any future subordinated debt of the Issuer.

The Subsidiary Guarantees are effectively senior to any unsecured debt of the Subsidiary Guarantors to the extent of the value of the Collateral (after taking into account any first-priority liens on the Collateral). The Subsidiary Guarantees are effectively subordinated to all debt of the Subsidiary Guarantors secured by the Collateral on a first-priority basis or that is secured by assets that are not part of the Collateral, to the extent of the value of the collateral securing that debt. EFCH’s guarantee ranks equally with its unsecured debt (including debt it guarantees on an unsecured basis) and is effectively subordinated to any of its secured debt to the extent of the value of the collateral securing that debt.

The New Notes and the Indenture restrict TCEH’s and its restricted subsidiaries’ ability to, among other things, make restricted payments, including certain investments; incur debt and issue preferred stock; incur liens; permit dividend and other payment restrictions on restricted subsidiaries; merge, consolidate or sell assets; and engage in transactions with affiliates. These covenants are subject to a number of important limitations and exceptions. The New Notes and the Indenture also contain customary events of default, including, among others, failure to pay principal or interest on the New Notes or the Guarantees when due. In general, the New Notes will vote together as a single class with all other series of second lien senior secured notes issued under the Indenture, including the Original Second Lien Notes (as defined below). As a result, if an event of default occurs, the trustee or the holders of at least 30% of aggregate principal amount outstanding of all such notes issued under the Indenture may declare the principal amount on the New Notes to be due and payable immediately.

The Issuer may redeem the New Notes, in whole or in part, at any time on or after October 1, 2015, at specified redemption prices, plus accrued and unpaid interest, if any. In addition, before October 1, 2013, the Issuer may redeem up to 35% of the aggregate principal amount of the New Notes from time to time at a redemption price of 115.00% of the aggregate principal amount of the New Notes, plus accrued and unpaid interest, if any, with the net cash proceeds of certain equity offerings. The Issuer may also redeem the New Notes at any time prior to October 1, 2015 at a price equal to 100% of their principal amount, plus accrued and unpaid interest and a “make-whole” premium. Upon the occurrence of a change in control, the Issuer must offer to repurchase the New Notes at 101% of their principal amount, plus accrued and unpaid interest, if any.

The New Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable exemption from the Securities Act.

A copy of the Base Indenture was filed as Exhibit 4.1 to the Current Report on Form 8-K filed by Energy Future Holdings Corp. (“EFH”) and EFCH on October 8, 2010 and is incorporated herein by reference. A copy of the First Supplemental Indenture was filed as Exhibit 4.1 to the Current Report on Form 8-K filed by EFH and EFCH on October 26, 2010 and is incorporated herein by reference. A copy of the Second Supplemental Indenture is attached hereto as Exhibit 4.1 and is incorporated herein by reference. The above description of the Indenture is qualified in its entirety by reference to the Base Indenture, the First Supplemental Indenture and the Second Supplemental Indenture.

Registration Rights Agreement

On November 15, 2010, the Issuer and the Guarantors also entered into a letter agreement with the Exchange Holder pursuant to which the Exchange Holder became a party to that certain Registration Rights Agreement, dated October 20, 2010, among the Issuer, the Guarantors and certain institutional purchases named therein (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Issuer and the Guarantors have agreed to use their commercially reasonable efforts to register with the SEC notes having substantially identical terms as the New Notes (except for provisions relating to the transfer restrictions and payment of additional interest) as part of an offer to exchange such registered notes for the New Notes; provided that such exchange offer registration statement need not be filed (or declared effective) if the New Notes held by holders


eligible to participate in any such exchange offer (a) become freely transferable by such holders pursuant to Rule 144 under the Securities Act or any successor provision thereto or otherwise where no conditions of Rule 144 are then applicable (other than the holding period requirement in paragraph (d)(1)(ii) of Rule 144 so long as such holding period requirement is satisfied), (b) do not bear any restrictive legends and (c) do not bear a restrictive CUSIP number. If the exchange offer registration statement has not been filed and declared effective within 365 days after October 20, 2010 (if the Issuer and the Guarantors are then required to make an exchange offer) or such registration statement ceases to be effective at any time during the prescribed registration period (subject to certain exceptions) (a “Registration Default”), the annual interest rate on the New Notes will increase by 25 basis points for the first 90-day period during which a Registration Default continues, and thereafter the annual interest rate on the Notes will increase by 50 basis points over the original interest rate for the remaining period during which the Registration Default continues. If the Registration Default is corrected, the applicable interest rate on such notes will revert to the original level.

A copy of the Registration Rights Agreement was filed as Exhibit 4.2 to the Current Report on Form 8-K filed by EFH and EFCH on October 26, 2010 and is incorporated herein by reference. The above description of the Registration Rights Agreement is qualified in its entirety by reference to such Registration Rights Agreement.

Security Documents

In connection with the issuance by the Issuer of approximately $336 million aggregate principal amount of its 15% Senior Secured Second Lien Notes due 2021 (the “Original Second Lien Notes”), which were issued pursuant to the Base Indenture on October 6, 2010, (a) the Issuer and the Subsidiary Guarantors entered into a second lien pledge agreement (the “Second Lien Pledge Agreement”) and a second lien security agreement (the “Second Lien Security Agreement”), each dated as of October 6, 2010, to reflect the pledge by the Issuer and the Subsidiary Guarantors of the Collateral in favor of The Bank of New York Mellon Trust Company, N.A., in its capacity as collateral agent (the “Collateral Agent”), for the benefit of the holders of the Original Second Lien Notes and other senior secured second lien notes to be issued under the Base Indenture (as supplemented), including the New Notes and (b) the Issuer, the Guarantors, the Collateral Agent and Citibank, N.A., in its capacity as administrative agent under the TCEH Senior Secured Credit Facilities, entered into a second lien intercreditor agreement (the “Intercreditor Agreement”), dated as of October 6, 2010. The Intercreditor Agreement specifies the time and method by which the various secured parties may enforce their security interests in the Collateral.

Copies of the Second Lien Security Agreement, the Second Lien Pledge Agreement and the Intercreditor Agreement were filed as Exhibits 4.3, 4.4 and 4.5, respectively, to the Form 8-K filed by EFH and EFCH on October 8, 2010 and are incorporated herein by reference. The above description of the material terms of the Second Lien Pledge Agreement, the Second Lien Security Agreement and Intercreditor Agreement is qualified in its entirety by reference to such agreements.

This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the New Notes.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information relating to the Indenture and the New Notes set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.03.

 

Item 8.01. Other Events.

The information relating to the Exchange Transaction set forth in the second paragraph under “Introductory Note” in this Current Report on Form 8-K is incorporated by reference in this Item 8.01.


 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibit No.

  

Description

4.1    Second Supplemental Indenture, dated as of November 15, 2010, among the Issuer, the Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee.


 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

ENERGY FUTURE HOLDINGS CORP.
    /S/    STAN J. SZLAUDERBACH        
Name:   Stan J. Szlauderbach
Title:   Senior Vice President & Controller
ENERGY FUTURE COMPETITIVE HOLDINGS
COMPANY
    /S/    STAN J. SZLAUDERBACH        
Name:   Stan J. Szlauderbach
Title:   Senior Vice President & Controller

 

Dated: November 17, 2010