Best Option for Oncor: Go Public?

Best Option for Oncor: Go Public?

June 12, 2017

by Margarita Fournier, Copyright 2016 by Competitive Assets, LLC.  All rights reserved

That is a question increasingly being asked by the investment community. According to S&P Global, the PUCT rejection of the NextEra-Oncor transaction still leaves several paths forward. But given the Commission’s tough conditions, a new suitor will not be easy to find. “’Obviously we can’t pay $18.7 billion for a utility that we can’t run and we can’t control the board, and we can’t have access to dividends,’ NextEra Chairman, President, and CEO Jim Robo said on an April 21 earnings call…. Perhaps the most likely possibility for Oncor’s future is for the company to go public, according to some analysts. This would allow EFH to finance its debt through an initial public offering, or what’s known in a bankruptcy case as a rights offering. Despite raising questions on management of the IPO and its impact on EFH’s bankruptcy case, along with who would pay the breakup fee to NextEra for a failed deal, Reaves Asset Management analyst John Bartlett said in an interview that a public offering is ‘the path of least resistance.’”

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