TXU shareholders approve 32-bln-dlr buyout
WASHINGTON (AFP) — TXU Corp. shareholders overwhelmingly endorsed a 32-billion-dollar buyout of the Texas energy group Friday by two big private equity firms and other investors.
The Dallas-based utility and energy group said shareholders holding over 74 percent of TXU stock voted in favor of the blockbuster deal.
The buyout still needs to be approved by the Nuclear Regulatory Commission, but TXU hopes to finalize the change of ownership later this year.
If the NRC gives a green light to the buyout it would mark a record takeover by private equity groups totalling around 45 billion dollars including TXU's debt.
The shareholder approval will ratchet up pressure on big banks including Citigroup, Goldman Sachs and Morgan Stanley that agreed to stump up billions of dollars in debt financing to facilitate the deal.
Many banks have tightened their lending standards in recent weeks amid a credit crunch triggered by hefty losses in mortgage-backed securities which have been exacerbated by the US housing slump.
The credit crunch has depressed US stock markets and forced home products retailer Home Depot back to the negotiating table with three private equity firms in late August over a deal to sell its wholesale supply division.
Home Depot eventually agreed to sell the supply unit for 1.8 billion dollars less than it had hoped after banks providing credit to support the deal balked at its original 10.3 billion dollar price tag.
Kohlberg Kravis Roberts and Texas Pacific Group, veteran private equity firms, launched their buyout bid for TXU in February.
Few such deals have been inked since early August when credit jitters jolted global financial markets.
Private equity firms usually buyout public firms by taking on hefty amounts of debt financing. They then seek to take a targeted company public again within five years after restructuring its operations, hoping to sell it on for a handsome profit while paying off accrued debt.
Under the terms of the TXU deal, upon close of the buyout, shareholders will be entitled to 69.25 dollars in cash for each share of company stock.
TXU is one of America's largest power firms and Texas' biggest electricity producer.
