Oncor Electric Delivery, the largest regulated transmission and distribution company in Texas, is worth more than similar operations because it’s “well-run” and has no “commodity or customer exposure,” CEO Robert Shapard said.
Potential bidders in a sale being handled through the bankruptcy case of parent Energy Future Holdings agree with that assessment, Shapard said in an interview Thursday.
The value exceeds $10 billion, he said, without disclosing a specific figure or a range. EFH said last year that Oncor was valued at $18 billion in a bid from NextEra Energy.
“Nobody is trying to get it on the cheap,” Shapard said in Houston, where he was attending the IHS CERAWeek conference. “I think everyone views this as a well-run business in an attractive market. It’s available because of the bankruptcy process.”
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Possible bidders range from strategic to financial investors to individual companies, he said.
Dallas-based EFH filed for bankruptcy protection a year ago with plans to split its stake in the profitable Oncor transmission company off from the money-losing electric-generating division, Luminant, and retail provider TXU Energy. Lower-ranking creditors forced EFH to hold an auction for Oncor instead of turning the company over to a favored group of more senior lenders.
The auction process has gone on since July after a group of investors, including NextEra, floated a reorganization plan.
EFH officials said in court that they have received a number of initial bids for Oncor without specifying how much the offers may be worth. From those offers the company plans to choose a “stalking horse” to make the opening bid. Should no other bids come in, the stalking horse would be required to complete the deal.
Shapard said in the interview that the auction should be concluded by the end of summer. The winner would proceed to the Texas Public Utility Commission for approval, a process that would probably take six months, Shapard said.
The sale would be completed before EFH’s emergence from bankruptcy, expected in the first half of next year, he said.
Shapard said EFH managers are keeping him in the dark about some details of the sale, including bid amounts.
“We’re not deemed to be a party,” Shapard said. “It’s interesting. I represent the company to them. We’re kind of the sellee, not the seller. EFH being the seller is handling all the negotiations.”
Shapard, who has been CEO for seven years, said that while he would like to keep his job after the sale, he doesn’t know what his future holds.
Some of the potential bidders have told him their “plan for the management for the company.” He declined to give details.
As for the company’s 3,400 employees, Shapard said that from his discussions with potential bidders, nothing indicates that major cuts will follow the sale.