Borrowing Facilities And Debt | 3 Months Ended |
Mar. 31, 2014 |
Debt and Capital Lease Obligations [Abstract] | ' |
Borrowing Facilities and Debt | ' |
BORROWING FACILITIES AND DEBT |
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Debtor-In-Possession (DIP) Facilities |
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TCEH DIP Facility — In connection with the Bankruptcy Filing, TCEH received a binding commitment, subject to certain customary conditions, from certain financial institutions for a debtor-in-possession facility (the TCEH DIP Facility). The TCEH DIP Facility provides for up to $4.475 billion in financing upon entry of a final order consisting of (i) a senior secured, super-priority revolving credit facility of up to $1.95 billion, (ii) a senior secured, super-priority delayed-draw term loan in the amount of up to $1.1 billion, and (iii) a senior secured, super-priority term loan in the amount of $1.425 billion. On May 2, 2014, the Bankruptcy Court entered an interim order with respect to the TCEH DIP Facility as described below, and on May 5, 2014, the TCEH Debtors and the other parties thereto entered into the TCEH DIP Credit Agreement, which became effective on that date. |
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The TCEH DIP Facility is a Senior Secured, Super-Priority Credit Agreement by and among EFCH, TCEH, and the subsidiaries of TCEH that are Debtors in the Chapter 11 Cases (the TCEH Debtors), the lenders that are party thereto from time to time and an administrative and collateral agent (the TCEH DIP Credit Agreement). |
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On May 2, 2014, the Bankruptcy Court entered an interim order authorizing the TCEH Debtors to enter into the TCEH DIP Credit Agreement to borrow $2.33 billion in financing (as defined in the TCEH DIP Credit Agreement) consisting of borrowings in an aggregate principal amount of up to (a) $533 million under the revolving credit facility, (b) $1.1 billion under the delayed-draw term facility, of which up to $1.1 billion may be used for letters of credit to support mining land reclamation requirements as discussed immediately below and (c) $700 million under the term loan facility to fund general letters of credit, of which $500 million has been funded to a collateral account at this time. The interim order also authorized the TCEH Debtors to pay certain fees related to the administration of the TCEH DIP Facility. We intend to seek approval of the Bankruptcy Court to borrow all amounts allowed by the terms of the facility. |
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The TCEH DIP Facility provides for a carve-out (the RCT Carve-Out) related to mining land reclamation requirements that TCEH's Luminant Mining subsidiary has with the RCT, which among other things, oversees lignite mining activity in Texas. The RCT Carve-Out will be used by Luminant Mining to secure up to $1.1 billion of its mining land reclamation obligations with the RCT. |
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The principal amounts outstanding under the TCEH DIP Facility bear interest based on applicable LIBOR or base rates plus applicable margins as set forth in the TCEH DIP Facility. The TCEH DIP Facility also provides for certain additional fees payable to the agents and lenders, as well as availability fees payable with respect to any unused portions of the available TCEH DIP Facility. |
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The TCEH DIP Facility will mature on the twenty-fourth month after the closing date of such facility. The maturity date may be extended to the thirtieth month after the closing date of the TCEH DIP Facility subject to the satisfaction of certain conditions, including the payment of a 25 basis points extension fee, a requirement that an acceptable plan of reorganization has been filed on or prior to such extension and the availability of certain metrics of liquidity applicable to the TCEH Debtors. |
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The TCEH Debtors' obligations under the TCEH DIP Facility are secured by a lien covering substantially all of the TCEH Debtors' assets, rights and properties, subject to certain exceptions set forth in the TCEH DIP Facility. The TCEH DIP Facility provides that all obligations thereunder constitute administrative expenses in the Chapter 11 Cases, with administrative priority and senior secured status under Section 364(c) and 364(d) of the Bankruptcy Code and, subject to certain exceptions set forth in the TCEH DIP Facility, have priority over any and all administrative expense claims, unsecured claims and costs and expenses in the Chapter 11 Cases. |
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The TCEH DIP Facility also permits certain hedging agreements to be secured on a pari-passu basis with the TCEH DIP Facility in the event those hedging agreements meet certain criteria set forth in the TCEH DIP Facility. |
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The TCEH DIP Facility provides for affirmative and negative covenants applicable to the TCEH Debtors, including affirmative covenants requiring the TCEH Debtors to provide financial information, budgets and other information to the agents under the TCEH DIP Facility, and negative covenants restricting the TCEH Debtors' ability to incur additional indebtedness, grant liens, dispose of assets, make investments, pay dividends or take certain other actions, in each case except as permitted in the TCEH DIP Facility. The TCEH Debtors' ability to borrow under the TCEH DIP Facility is subject to the satisfaction of certain customary conditions precedent set forth therein. |
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The TCEH DIP Facility provides for certain customary events of default, including events of default resulting from non-payment of principal, interest or other amounts when due, material breaches of representations and warranties, material breaches of covenants in the TCEH DIP Facility or ancillary loan documents, cross-defaults under other agreements or instruments and the entry of material judgments against the TCEH Debtors. The TCEH DIP Facility also includes an event of default that may arise from our failure to meet a consolidated super-priority leverage test. Upon the existence of an event of default, the TCEH DIP Facility provides that all principal, interest and other amounts due thereunder will become immediately due and payable, either automatically or at the election of specified lenders. |
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EFIH First Lien DIP Facility — EFIH has received a binding commitment and agreements to participate, subject to certain customary conditions, for a $5.4 billion first-lien DIP facility described below (the EFIH First Lien DIP Facility). EFIH filed a motion with the Bankruptcy Court for approval of certain fees related to the EFIH First Lien DIP Facility. |
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The proposed EFIH First Lien DIP Facility is a Senior Secured, Super-Priority Credit Agreement by and among the EFIH Debtors, the lenders that are party thereto from time to time and an administrative and collateral agent. |
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On May 1, 2014, the Bankruptcy Court approved an interim order authorizing the EFIH Debtors to pay certain fees related to the EFIH Debtors' proposed EFIH First Lien DIP Facility in accordance with the EFIH First Lien DIP commitment letter and the EFIH First Lien DIP fee letter. |
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See Note 2 for further discussion regarding the Restructuring Support and Lock-Up Agreement, the EFIH First Lien Settlement and the EFIH First Lien DIP Facility. |
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The principal amounts outstanding under the EFIH First Lien DIP Facility will bear interest based on applicable LIBOR or base rates plus applicable margins as set forth in the EFIH First Lien DIP Facility. The EFIH First Lien DIP Facility also will provide for certain additional fees payable to the agents and lenders, as well as availability fees payable with respect to any unused portions of the available EFIH First Lien DIP Facility. |
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The EFIH First Lien DIP Facility will mature on the twenty-fourth month after the closing date of the EFIH First Lien DIP Facility. The maturity date may be extended to the thirtieth month after the closing date of the EFIH First Lien DIP Facility subject to the satisfaction of certain conditions, including the payment of a 25 basis points extension fee, a requirement that an acceptable plan of reorganization has been filed on or prior to such extension and the availability of certain metrics of liquidity applicable to the EFIH Debtors. |
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EFIH's obligations under the EFIH First Lien DIP Facility will be secured by a first lien covering substantially all of EFIH's assets, rights and properties, subject to certain exceptions set forth in the EFIH First Lien DIP Facility. The EFIH First Lien DIP Facility provides that all obligations thereunder will constitute administrative expenses in the Chapter 11 Cases, with administrative priority and senior secured state under Section 364(c) and 364(d) of the Bankruptcy Code and, subject to certain exceptions set forth in the EFIH First Lien DIP Facility, will have priority over any and all administrative expense claims, unsecured claims and costs and expenses in the Chapter 11 Cases. |
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The EFIH First Lien DIP Facility will provide for affirmative and negative covenants applicable to the EFIH Debtors, including affirmative covenants requiring the EFIH Debtors to provide financial information, budgets and other information to the agents under the EFIH First Lien DIP Facility, and negative covenants restricting the EFIH Debtors' ability to incur additional indebtedness, grant liens, dispose of assets, pay dividends or take certain other actions, in each case except as permitted in the EFIH First Lien DIP Facility. EFIH's ability to borrow under the EFIH First Lien DIP Facility will be subject to the satisfaction of certain customary conditions precedent set forth therein. The Oncor Ring-Fenced Entities will not be restricted subsidiaries for purposes of the EFIH First Lien DIP Facility. |
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The EFIH First Lien DIP Facility will provide for certain customary events of default, including events of default resulting from non-payment of principal, interest or other amounts when due, material breaches of representations and warranties, material breaches of covenants in the EFIH First Lien DIP Facility or ancillary loan documents, cross-defaults under other agreements or instruments and the entry of material judgments against EFIH. The EFIH First Lien DIP Facility will also include an event of default that may arise from its failure to meet a minimum liquidity test. Upon the existence of an event of default, the EFIH First Lien DIP Facility will provide that all principal, interest and other amounts due thereunder will become immediately due and payable, either automatically or at the election of specified lenders. |
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EFIH Second Lien DIP Facility — The EFIH Second Lien DIP Facility will provide for a secured, super-priority term loan in the amount of $1.9 billion (with (a) an additional $95 million issued as a payment-in-kind closing fee and (b) additional amounts issued as payment-in-kind interest or a one-time fee if the Oncor TSA Amendment is not approved). The proposed EFIH Second Lien DIP Facility will be a Secured, Subordinated Super-Priority Note Purchase Agreement by and among the EFIH Debtors, the lenders that are party thereto from time to time and an administrative and collateral agent. On the Effective Date, the EFIH Second Lien DIP Notes will automatically convert (Equity Conversion) on a pro rata basis into approximately 64% of the equity interests of newly reorganized EFH Corp. (Reorganized EFH Corp.), subject to adjustment based on the principal amount of the EFIH Second Lien Notes. |
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See Note 2 for further discussion of the Restructuring Support and Lock-Up Agreement, the EFIH Second Lien DIP Notes Offering and the Backstop Commitment received from certain holders of the EFIH Unsecured Notes. |
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The principal amounts outstanding under the EFIH Second Lien DIP Facility will bear interest at a fixed rate of 8% per annum, subject to certain adjustments if the Bankruptcy Court has not approved the Oncor TSA Amendment within 90 days after the Petition Date. |
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The EFIH Second Lien DIP Facility will mature on the twenty-fourth month after the closing date of the EFIH Second Lien DIP Facility. |
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EFIH's obligations under the EFIH Second Lien DIP Facility will be secured by a second lien covering substantially all of EFIH's assets, rights and properties, subject to certain exceptions set forth in the EFIH Second Lien DIP Facility. The EFIH Second Lien DIP Facility will provide that all obligations thereunder will constitute administrative expenses in the Chapter 11 Cases, with administrative priority and senior secured state under Section 364(c) and 364(d) of the Bankruptcy Code and, subject to certain exceptions set forth in the EFIH Second Lien DIP Facility (including with respect to the EFIH First Lien DIP Facility), will have priority over any and all administrative expense claims, unsecured claims and costs and expenses in the Chapter 11 Cases. |
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The EFIH Second Lien DIP Facility will provide for affirmative and negative covenants applicable to the EFIH Debtors, including affirmative covenants requiring the EFIH Debtors to provide financial information, budgets and other information to the agents under the EFIH Second Lien DIP Facility, and negative covenants restricting the EFIH Debtors' ability to incur additional indebtedness, grant liens, dispose of assets, pay dividends or take certain other actions, in each case except as permitted in the EFIH Second Lien DIP Facility. EFIH's ability to borrow under the EFIH Second Lien DIP Facility will be subject to the satisfaction of certain customary conditions precedent set forth therein. The Oncor Ring-Fenced Entities will not be restricted subsidiaries for purposes of the EFIH Second Lien DIP Facility. |
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The EFIH Second Lien DIP Facility will provide for certain customary events of default, including events of default resulting from non-payment of principal, interest or other amounts when due, material breaches of representations and warranties, material breaches of covenants in the EFIH Second Lien DIP Facility or ancillary loan documents, cross-defaults under other agreements or instruments and the entry of material judgments against EFIH. Upon the existence of an event of default, the EFIH Second Lien DIP Facility will provide that all principal, interest and other amounts due thereunder will become immediately due and payable, either automatically or at the election of specified lenders. |
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Borrowings Under Pre-Petition Credit Facilities |
At March 31, 2014 and December 31, 2013, outstanding borrowings totaled $2.054 billion under the TCEH Revolving Credit Facility at weighted average interest rates of 4.74% and 4.67%, respectively, excluding customary fees. |
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Pre-Petition Credit Facilities at March 31, 2014 |
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The Bankruptcy Filing constituted an event of default under the TCEH credit facilities. Under the Bankruptcy Code, the creditors under such facilities are stayed from taking any action against the Debtors as a result of the default. |
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Credit facilities and related cash borrowings at March 31, 2014 are presented below. The facilities are all senior secured facilities of TCEH. |
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Facility | Maturity | | Facility | | Cash | | Available L/C Capacity |
Date | Limit | Borrowings |
TCEH Revolving Credit Facility (a) | Oct-16 | | $ | 2,054 | | | $ | 2,054 | | | $ | — | |
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TCEH Letter of Credit (L/C) Facility (b) | October 2017 (b) | | 1,062 | | | 1,062 | | | — | |
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Total TCEH | | | $ | 3,116 | | | $ | 3,116 | | | $ | — | |
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(a) | Facility used for borrowings for general corporate purposes. Borrowings are classified as borrowings under credit facilities. Borrowings under the facility bore interest at LIBOR plus 4.50%, and a commitment fee was payable quarterly in arrears at a rate per annum equal to 1.00% of the average daily unused portion of the facility. | | | | | | | | | | | | |
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(b) | Facility, $42 million of which has a maturity date of October 2014, used for issuing letters of credit for general corporate purposes, including, but not limited to, providing collateral support under hedging arrangements and other commodity transactions that are not secured by a first-lien interest in the assets of TCEH. | | | | | | | | | | | | |
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The borrowings under the TCEH L/C Facility have been recorded by TCEH as restricted cash that supports issuances of letters of credit. |
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In the first quarter 2014, pollution control revenue bonds totaling $185 million in principal amount were tendered and the related letters of credit were drawn upon. Also in the first quarter 2014, TCEH issued a $157 million letter of credit to a subsidiary of EFH Corp. to secure its current and future amounts payable to the subsidiary arising from recurring transactions in the normal course of business, and the subsidiary drew on the letter of credit in the amount of $100 million to settle amounts receivable from TCEH. At March 31, 2014, the restricted cash totaled $660 million, a $285 million decrease from the balance at December 31, 2013 reflecting letters of credit drawn. At March 31, 2014, the restricted cash supports $656 million in letters of credit outstanding, leaving $4 million of available capacity. As a result of the Bankruptcy Filing, the available letter of credit capacity cannot be utilized. Letter of credit draws since March 31, 2014 have not been significant. |
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Subsequent to the Bankruptcy Filing, $5 million of letters of credit were drawn upon by counterparties to settle amounts receivable from TCEH at the Petition Date. |
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Debt |
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The Bankruptcy Filing constituted an event of default under the Credit Agreement governing the TCEH Senior Secured Facilities and the indentures governing the company's other debt instruments listed below as well as capital lease obligations, and those debt obligations became immediately due and payable. As a result, the accompanying consolidated balance sheets as of March 31, 2014 and December 31, 2013 present all debt classified as current. Under the Bankruptcy Code, the creditors under these debt agreements are stayed from taking any action against the Debtors as a result of the default. |
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At March 31, 2014 and December 31, 2013, notes, loans and other debt consisted of the following: |
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| March 31, | | December 31, | | | | | | |
2014 | 2013 | | | | | | |
EFH Corp. (parent entity) | | | | | | | | | |
9.75% Fixed Senior Notes due October 15, 2019 | $ | 2 | | | $ | 2 | | | | | | | |
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10% Fixed Senior Notes due January 15, 2020 | 3 | | | 3 | | | | | | | |
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10.875% Fixed Senior Notes due November 1, 2017 | 33 | | | 33 | | | | | | | |
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11.25% / 12.00% Senior Toggle Notes due November 1, 2017 | 27 | | | 27 | | | | | | | |
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5.55% Fixed Series P Senior Notes due November 15, 2014 (a) | 90 | | | 90 | | | | | | | |
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6.50% Fixed Series Q Senior Notes due November 15, 2024 (a) | 201 | | | 201 | | | | | | | |
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6.55% Fixed Series R Senior Notes due November 15, 2034 (a) | 291 | | | 291 | | | | | | | |
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8.82% Building Financing due semiannually through February 11, 2022 (b) | 42 | | | 46 | | | | | | | |
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Unamortized fair value premium related to Building Financing (b)(c) | 8 | | | 9 | | | | | | | |
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Unamortized fair value discount (c) | (118 | ) | | (121 | ) | | | | | | |
Total EFH Corp. | 579 | | | 581 | | | | | | | |
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EFIH | | | | | | | | | |
6.875% Fixed Senior Secured First Lien Notes due August 15, 2017 | 503 | | | 503 | | | | | | | |
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10% Fixed Senior Secured First Lien Notes due December 1, 2020 | 3,482 | | | 3,482 | | | | | | | |
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11% Fixed Senior Secured Second Lien Notes due October 1, 2021 | 406 | | | 406 | | | | | | | |
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11.75% Fixed Senior Secured Second Lien Notes due March 1, 2022 | 1,750 | | | 1,750 | | | | | | | |
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11.25% / 12.25% Senior Toggle Notes due December 1, 2018 | 1,566 | | | 1,566 | | | | | | | |
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9.75% Fixed Senior Notes due October 15, 2019 | 2 | | | 2 | | | | | | | |
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Unamortized premium | 265 | | | 284 | | | | | | | |
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Unamortized discount | (142 | ) | | (146 | ) | | | | | | |
Total EFIH | 7,832 | | | 7,847 | | | | | | | |
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EFCH | | | | | | | | | |
9.58% Fixed Notes due in annual installments through December 4, 2019 (d) | 29 | | | 29 | | | | | | | |
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8.254% Fixed Notes due in quarterly installments through December 31, 2021 (d) | 32 | | | 34 | | | | | | | |
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1.038% Floating Rate Junior Subordinated Debentures, Series D due January 30, 2037 (e) | 1 | | | 1 | | | | | | | |
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8.175% Fixed Junior Subordinated Debentures, Series E due January 30, 2037 | 8 | | | 8 | | | | | | | |
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Unamortized fair value discount (c) | (5 | ) | | (6 | ) | | | | | | |
Total EFCH | 65 | | | 66 | | | | | | | |
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TCEH | | | | | | | | | |
Senior Secured Facilities: | | | | | | | | | |
3.737% TCEH Term Loan Facilities with maturity date of October 10, 2014 (e)(f) | 3,809 | | | 3,809 | | | | | | | |
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3.736% TCEH Letter of Credit Facility with maturity date of October 10, 2014 (e) | 42 | | | 42 | | | | | | | |
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4.737% TCEH Term Loan Facilities with maturity date of October 10, 2017 (a)(e)(f) | 15,691 | | | 15,691 | | | | | | | |
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4.736% TCEH Letter of Credit Facility with maturity date of October 10, 2017 (e) | 1,020 | | | 1,020 | | | | | | | |
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11.5% Fixed Senior Secured Notes due October 1, 2020 | 1,750 | | | 1,750 | | | | | | | |
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15% Fixed Senior Secured Second Lien Notes due April 1, 2021 | 336 | | | 336 | | | | | | | |
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15% Fixed Senior Secured Second Lien Notes due April 1, 2021, Series B | 1,235 | | | 1,235 | | | | | | | |
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10.25% Fixed Senior Notes due November 1, 2015 (a) | 1,833 | | | 1,833 | | | | | | | |
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10.25% Fixed Senior Notes due November 1, 2015, Series B (a) | 1,292 | | | 1,292 | | | | | | | |
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| March 31, | | December 31, | | | | | | |
2014 | 2013 | | | | | | |
10.50% / 11.25% Senior Toggle Notes due November 1, 2016 | $ | 1,749 | | | $ | 1,749 | | | | | | | |
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Pollution Control Revenue Bonds: | | | | | | | | | |
Brazos River Authority: | | | | | | | | | |
5.40% Fixed Series 1994A due May 1, 2029 | 39 | | | 39 | | | | | | | |
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7.70% Fixed Series 1999A due April 1, 2033 | 111 | | | 111 | | | | | | | |
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7.70% Fixed Series 1999C due March 1, 2032 | 50 | | | 50 | | | | | | | |
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8.25% Fixed Series 2001A due October 1, 2030 | 71 | | | 71 | | | | | | | |
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8.25% Fixed Series 2001D-1 due May 1, 2033 | 171 | | | 171 | | | | | | | |
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0.290% Floating Series 2001D-2 due May 1, 2033 (g) | 17 | | | 97 | | | | | | | |
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0.393% Floating Taxable Series 2001I due December 1, 2036 (h) | 2 | | | 62 | | | | | | | |
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—% Floating Series 2002A due May 1, 2037 | — | | | 45 | | | | | | | |
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6.30% Fixed Series 2003B due July 1, 2032 | 39 | | | 39 | | | | | | | |
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6.75% Fixed Series 2003C due October 1, 2038 | 52 | | | 52 | | | | | | | |
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5.40% Fixed Series 2003D due October 1, 2029, remarketing date October 1, 2014 (i) | 31 | | | 31 | | | | | | | |
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5.00% Fixed Series 2006 due March 1, 2041 | 100 | | | 100 | | | | | | | |
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Sabine River Authority of Texas: | | | | | | | | | |
6.45% Fixed Series 2000A due June 1, 2021 | 51 | | | 51 | | | | | | | |
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5.20% Fixed Series 2001C due May 1, 2028 | 70 | | | 70 | | | | | | | |
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5.80% Fixed Series 2003A due July 1, 2022 | 12 | | | 12 | | | | | | | |
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6.15% Fixed Series 2003B due August 1, 2022 | 45 | | | 45 | | | | | | | |
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Trinity River Authority of Texas: | | | | | | | | | |
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6.25% Fixed Series 2000A due May 1, 2028 | 14 | | | 14 | | | | | | | |
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Unamortized fair value discount related to pollution control revenue bonds (c) | (103 | ) | | (105 | ) | | | | | | |
Other: | | | | | | | | | |
7.48% Fixed Secured Facility Bonds with amortizing payments through January 2017 | 35 | | | 36 | | | | | | | |
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7.46% Fixed Secured Facility Bonds with amortizing payments through January 2015 | 4 | | | 4 | | | | | | | |
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Capital leases | 49 | | | 52 | | | | | | | |
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Other | 3 | | | 3 | | | | | | | |
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Unamortized discount | (96 | ) | | (103 | ) | | | | | | |
Total TCEH | 29,524 | | | 29,704 | | | | | | | |
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Total EFH Corp. consolidated | $ | 38,000 | | | $ | 38,198 | | | | | | | |
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(a) | Excludes the following debt held by EFIH or EFH Corp. (parent entity) and eliminated in consolidation. Pursuant to the terms of the Restructuring Support and Lock-Up Agreement, the debt is expected to be cancelled in connection with the Restructuring Plan, except for the TCEH 4.737% Term Loan Facilities. | | | | | | | | | | | | |
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| March 31, | | December 31, | | | | | | |
2014 | 2013 | | | | | | |
EFH Corp. 5.55% Fixed Series P Senior Notes due November 15, 2014 | $ | 281 | | | $ | 281 | | | | | | | |
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EFH Corp. 6.50% Fixed Series Q Senior Notes due November 15, 2024 | 545 | | | 545 | | | | | | | |
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EFH Corp. 6.55% Fixed Series R Senior Notes due November 15, 2034 | 456 | | | 456 | | | | | | | |
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TCEH 4.737% Term Loan Facilities maturing October 10, 2017 | 19 | | | 19 | | | | | | | |
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TCEH 10.25% Fixed Senior Notes due November 1, 2015 | 213 | | | 213 | | | | | | | |
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TCEH 10.25% Fixed Senior Notes due November 1, 2015, Series B | 150 | | | 150 | | | | | | | |
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Total | $ | 1,664 | | | $ | 1,664 | | | | | | | |
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(b) | This financing is the obligation of a subsidiary of EFH Corp. and will be serviced with cash drawn by the beneficiary of a letter of credit that was previously issued to secure the obligation. | | | | | | | | | | | | |
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(c) | Amount represents unamortized fair value adjustments recorded under purchase accounting. | | | | | | | | | | | | |
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(d) | EFCH's obligations with respect to these financings are guaranteed by EFH Corp. and secured on a first-priority basis by, among other things, an undivided interest in the Comanche Peak nuclear generation facility. | | | | | | | | | | | | |
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(e) | Interest rates in effect at March 31, 2014. | | | | | | | | | | | | |
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(f) | At March 31, 2014, interest rate was swapped to fixed on $18.077 billion principal amount of maturities through October 2014 and up to an aggregate $12.6 billion principal amount from October 2014 through October 2017. See discussion below regarding termination of the agreements following the Bankruptcy Filing. | | | | | | | | | | | | |
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(g) | Interest rates in effect at March 31, 2014. This series is in a daily interest rate mode and is supported by long-term irrevocable letters of credit. | | | | | | | | | | | | |
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(h) | Interest rate in effect at March 31, 2014. This series is in a weekly interest rate mode and is supported by long-term irrevocable letters of credit. | | | | | | | | | | | | |
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(i) | This series is in the multiannual interest rate mode and is subject to mandatory tender prior to maturity on the mandatory remarketing date. On such date, the interest rate and interest rate period will be reset for the bonds. | | | | | | | | | | | | |
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Repayment of Debt in 2014 |
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Repayments of debt in the three months ended March 31, 2014 totaled $191 million and consisted of $185 million of pollution control revenue bonds tendered, $3 million of payments of principal at scheduled maturity dates and $3 million of contractual payments under capital leases. |
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Information Regarding Other Significant Pre-Petition Debt |
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TCEH elected not to make interest payments due in April 2014 totaling $123 million on certain debt obligations. |
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TCEH Senior Secured Facilities — Borrowings under the TCEH Senior Secured Facilities totaled $22.616 billion at March 31, 2014 and consisted of: |
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• | $3.809 billion of TCEH Term Loan Facilities that have a maturity date in October 2014 with interest payable at LIBOR plus 3.50%; | | | | | | | | | | | | |
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• | $15.691 billion of TCEH Term Loan Facilities that have a maturity date in October 2017 with interest payable at LIBOR plus 4.50%, excluding $19 million aggregate principal amount held by EFH Corp.; | | | | | | | | | | | | |
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• | $42 million of cash borrowed under the TCEH Letter of Credit Facility that have a maturity date in October 2014 with interest payable at LIBOR plus 3.50% (see discussion under "Credit Facilities" above); | | | | | | | | | | | | |
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• | $1.020 billion of cash borrowed under the TCEH Letter of Credit Facility that have a maturity date in October 2017 with interest payable at LIBOR plus 4.50% (see discussion under "Credit Facilities" above), and | | | | | | | | | | | | |
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• | Amounts borrowed under the TCEH Revolving Credit Facility, which represent the entire amount of commitments under the facility totaling $2.054 billion at March 31, 2014. | | | | | | | | | | | | |
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The TCEH Senior Secured Facilities are fully and unconditionally guaranteed jointly and severally on a senior secured basis by EFCH, and subject to certain exceptions, each existing and future direct or indirect wholly owned US subsidiary of TCEH. The TCEH Senior Secured Facilities, along with the TCEH Senior Secured Notes and certain commodity hedging transactions and the interest rate swaps described under "TCEH Interest Rate Swap Transactions" below, are secured on a first priority basis by (i) substantially all of the current and future assets of TCEH and TCEH's subsidiaries who are guarantors of such facilities and (ii) pledges of the capital stock of TCEH and certain current and future direct or indirect subsidiaries of TCEH. |
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TCEH 11.5% Senior Secured Notes — At March 31, 2014, the principal amount of the TCEH 11.5% Senior Secured Notes totaled $1.750 billion. The notes have a maturity date in October 2020, with interest payable in cash quarterly in arrears on January 1, April 1, July 1 and October 1, at a fixed rate of 11.5% per annum. The notes are fully and unconditionally guaranteed on a joint and several basis by EFCH and each subsidiary of TCEH that guarantees the TCEH Senior Secured Facilities (collectively, the Guarantors). The notes are secured, on a first-priority basis, by security interests in all of the assets of TCEH, and the guarantees are secured on a first-priority basis by all of the assets and equity interests held by the Guarantors, in each case, to the extent such assets and equity interests secure obligations under the TCEH Senior Secured Facilities (the TCEH Collateral), subject to certain exceptions and permitted liens. |
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The notes are (i) senior obligations and rank equally in right of payment with all senior indebtedness of TCEH, (ii) senior in right of payment to all existing or future unsecured and second-priority secured debt of TCEH to the extent of the value of the TCEH Collateral and (iii) senior in right of payment to any future subordinated debt of TCEH. These notes are effectively subordinated to all secured obligations of TCEH that are secured by assets other than the TCEH Collateral, to the extent of the value of the assets securing such obligations. |
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The guarantees of the TCEH Senior Secured Notes by the Guarantors are effectively senior to any unsecured and second-priority debt of the Guarantors to the extent of the value of the TCEH Collateral. The guarantees are effectively subordinated to all debt of the Guarantors secured by assets that are not part of the TCEH Collateral, to the extent of the value of the collateral securing that debt. |
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TCEH 15% Senior Secured Second Lien Notes (including Series B) — At March 31, 2014, the principal amount of the TCEH 15% Senior Secured Second Lien Notes totaled $1.571 billion. These notes have a maturity date in April 2021, with interest payable in cash quarterly in arrears on January 1, April 1, July 1 and October 1 at a fixed rate of 15% per annum. The notes are fully and unconditionally guaranteed on a joint and several basis by EFCH and, subject to certain exceptions, each subsidiary of TCEH that guarantees the TCEH Senior Secured Facilities. The notes are secured, on a second-priority basis, by security interests in all of the assets of TCEH, and the guarantees (other than the guarantee of EFCH) are secured on a second-priority basis by all of the assets and equity interests of all of the Guarantors other than EFCH (collectively, the Subsidiary Guarantors), in each case, to the extent such assets and security interests secure obligations under the TCEH Senior Secured Facilities on a first-priority basis, subject to certain exceptions (including the elimination of the pledge of equity interests of any Subsidiary Guarantor to the extent that separate financial statements would be required to be filed with the SEC for such Subsidiary Guarantor under Rule 3-16 of Regulation S-X) and permitted liens. The guarantee from EFCH is not secured. |
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The notes are senior obligations of the issuer and rank equally in right of payment with all senior indebtedness of TCEH, are senior in right of payment to all existing or future unsecured debt of TCEH to the extent of the value of the TCEH Collateral (after taking into account any first-priority liens on the TCEH Collateral) and are senior in right of payment to any future subordinated debt of TCEH. These notes are effectively subordinated to TCEH's obligations under the TCEH Senior Secured Facilities, the TCEH Senior Secured Notes and TCEH's commodity and interest rate hedges that are secured by a first-priority lien on the TCEH Collateral and any future obligations subject to first-priority liens on the TCEH Collateral, to the extent of the value of the TCEH Collateral, and to all secured obligations of TCEH that are secured by assets other than the TCEH Collateral, to the extent of the value of the assets securing such obligations. |
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The guarantees of the TCEH Senior Secured Second Lien Notes by the Subsidiary Guarantors are effectively senior to any unsecured debt of the Subsidiary Guarantors to the extent of the value of the TCEH Collateral (after taking into account any first-priority liens on the TCEH Collateral). These guarantees are effectively subordinated to all debt of the Subsidiary Guarantors secured by the TCEH Collateral on a first-priority basis or that is secured by assets that are not part of the TCEH 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. |
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TCEH 10.25% Senior Notes (including Series B) and 10.50%/11.25% Senior Toggle Notes (collectively, the TCEH Senior Notes) — At March 31, 2014, the principal amount of the TCEH Senior Notes totaled $4.874 billion, excluding $363 million aggregate principal amount held by EFH Corp. and EFIH, and the notes are fully and unconditionally guaranteed on a joint and several unsecured basis by TCEH's direct parent, EFCH (which owns 100% of TCEH), and by each subsidiary that guarantees the TCEH Senior Secured Facilities. The TCEH 10.25% Notes have a maturity date in November 2015, with interest payable in cash semi-annually in arrears on May 1 and November 1 at a fixed rate of 10.25% per annum. The TCEH Toggle Notes have a maturity date in November 2016, with interest payable semi-annually in arrears on May 1 and November 1 at a fixed rate of 10.50% per annum. |
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EFIH 6.875% Senior Secured Notes — At March 31, 2014, the principal amount of the EFIH 6.875% Notes totaled $503 million. These notes have a maturity date in August 2017, with interest payable in cash semiannually in arrears on February 15 and August 15 at a fixed rate of 6.875% per annum. The EFIH 6.875% Notes are secured on a first-priority basis by EFIH's pledge of its 100% ownership of the membership interests in Oncor Holdings (the EFIH Collateral) on an equal and ratable basis with the EFIH 10% Notes. |
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The EFIH 6.875% Notes are senior obligations of EFIH and rank equally in right of payment with all senior indebtedness of EFIH and are senior in right of payment to any future subordinated indebtedness of EFIH. The EFIH 6.875% Notes are effectively senior to all second lien and unsecured indebtedness of EFIH, to the extent of the value of the EFIH Collateral, and are effectively subordinated to any indebtedness of EFIH secured by assets of EFIH other than the EFIH Collateral, to the extent of the value of such assets. Furthermore, the EFIH 6.875% Notes are structurally subordinated to all indebtedness and other liabilities of EFIH's subsidiaries (other than EFIH Finance), including Oncor Holdings and its subsidiaries. The holders of the EFIH 6.875% Notes vote as a separate class from the holders of the EFIH 10% Notes. |
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There currently are no restricted subsidiaries under the indenture related to the EFIH 6.875% Notes (other than EFIH Finance, which has no assets). Oncor Holdings, the immediate parent of Oncor, and its subsidiaries are unrestricted subsidiaries under the indenture and, accordingly, are not subject to any of the restrictive covenants in the indenture. |
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The EFIH 6.875% Notes were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH 6.875% Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH 6.875% Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH 6.875% Notes increased by 25 basis points (to 7.125%) on August 15, 2013 and by an additional 25 basis points (to 7.375%) on November 15, 2013. |
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EFIH 10% Senior Secured Notes — At March 31, 2014, the principal amount of the EFIH 10% Notes totaled $3.482 billion. The notes have a maturity date in December 2020, with interest payable in cash semiannually in arrears on June 1 and December 1 at a fixed rate of 10% per annum. The notes are secured by the EFIH Collateral on an equal and ratable basis with the EFIH 6.875% Notes. |
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The EFIH 10% Notes are senior obligations of EFIH and rank equally in right of payment with all existing and future senior indebtedness of EFIH, including the EFIH 6.875% Notes. The EFIH 10% Notes have substantially the same terms as the EFIH 6.875% Notes. The holders of the EFIH 10% Notes vote as a separate class from the holders of the EFIH 6.875% Notes. |
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The $1.302 billion of EFIH 10% Notes issued in January 2013 were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH 10% Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH 10% Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH 10% Notes increased by 25 basis points (to 10.25%) on January 30, 2014 and by an additional 25 basis points (to 10.50%) on April 30, 2014. |
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EFIH 11% Senior Secured Second Lien Notes — At March 31, 2014, the principal amount of the EFIH 11% Notes totaled $406 million. The notes have a maturity date in October 2021, with interest payable in cash semiannually in arrears on May 15 and November 15 at a fixed rate of 11% per annum. The EFIH 11% Notes are secured on a second-priority basis by the EFIH Collateral on an equal and ratable basis with the EFIH 11.75% Notes. |
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The EFIH 11% Notes are senior obligations of EFIH and EFIH Finance and rank equally in right of payment with all senior indebtedness of EFIH and are effectively senior in right of payment to all existing or future unsecured debt of EFIH to the extent of the value of the EFIH Collateral. The notes have substantially the same terms as the EFIH 11.75% Notes discussed below, and the holders of the EFIH 11% Notes will generally vote as a single class with the holders of the EFIH 11.75% Notes. |
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EFIH 11.75% Senior Secured Second Lien Notes — At March 31, 2014, the principal amount of the EFIH 11.75% Notes totaled $1.750 billion. These notes have a maturity date in March 2022, with interest payable in cash semiannually in arrears on March 1 and September 1 at a fixed rate of 11.75% per annum. The EFIH 11.75% Notes are secured on a second-priority basis by the EFIH Collateral on an equal and ratable basis with the EFIH 11% Notes. The EFIH 11.75% Notes have substantially the same covenants as the EFIH 11% Notes, and the holders of the EFIH 11.75% Notes will generally vote as a single class with the holders of the EFIH 11% Notes. |
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The EFIH 11.75% Notes were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH 11.75% Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH 11.75% Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH 11.75% Notes increased by 25 basis points (to 12.00%) on February 6, 2013 and by an additional 25 basis points (to 12.25%) on May 6, 2013. |
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EFIH 11.25%/12.25% Senior Toggle Notes — At March 31, 2014, the principal amount of the EFIH Toggle Notes totaled $1.566 billion. These notes have a maturity date in December 2018, with interest payable semiannually in arrears on June 1 and December 1 at a fixed rate of 11.25% per annum for cash interest and 12.25% per annum for PIK Interest. The terms of the Toggle Notes include an election by EFIH, for any interest period until June 1, 2016, to pay interest on the Toggle Notes (i) entirely in cash; (ii) by increasing the principal amount of the notes or by issuing new EFIH Toggle Notes (PIK Interest); or (iii) 50% in cash and 50% in PIK Interest. EFIH made its 2013 interest payments on the EFIH Toggle Notes by using the PIK feature of those notes. |
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The EFIH Toggle Notes were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH Toggle Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH Toggle Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH Toggle Notes increased by 25 basis points (to 11.50%) on December 6, 2013 and by an additional 25 basis points (to 11.75%) on March 6, 2014. |
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EFH Corp. 10.875% Senior Notes and 11.25%/12.00% Senior Toggle Notes — At March 31, 2014, the collective principal amount of these notes totaled $60 million. The notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by EFCH and EFIH. The notes have a maturity date in November 2017, with interest payable in cash semi-annually in arrears on May 1 and November 1 at a fixed rate for the 10.875% Notes of 10.875% per annum and at a fixed rate for the Toggle Notes of 11.25% per annum. |
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Material Cross Default/Acceleration Provisions — Certain of our financing arrangements contain provisions that result in an event of default if there were a failure under other financing arrangements to meet payment terms or to observe other covenants that could or does result in an acceleration of payments due. Such provisions are referred to as "cross default" or "cross acceleration" provisions. The Bankruptcy Filing triggered defaults on our debt obligations, but pursuant to the Bankruptcy Code, the creditors are stayed from taking any actions against the Debtors as a result of such defaults. |
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Fair Value of Debt |
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At March 31, 2014 and December 31, 2013, the estimated fair value of our notes, loans and other debt (excluding capital leases) totaled $24.834 billion and $24.653 billion, respectively, and the carrying amount totaled $37.951 billion and $38.146 billion, respectively. At March 31, 2014 and December 31, 2013, the estimated fair value of our borrowings under the TCEH Revolving Credit Facilities totaled $1.458 billion and $1.397 billion, respectively, and the carrying amount totaled $2.054 billion. We determine fair value in accordance with accounting standards as discussed in Note 8, and at March 31, 2014, our debt fair value represents Level 2 valuations. We obtain security pricing from a vendor who uses broker quotes and third-party pricing services to determine fair values. Where relevant, these prices are validated through subscription services such as Bloomberg. |
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TCEH Interest Rate Swap Transactions |
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TCEH has employed interest rate swaps to hedge exposure to its variable rate debt. As reflected in the table below, at March 31, 2014, TCEH had entered into the following series of interest rate swap transactions that effectively fixed the interest rates at between 5.5% and 9.3%. |
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Fixed Rates | | Expiration Dates | | Notional Amount | |
5.5 | % | - | 9.30% | | Oct-14 | | | $ | 18.077 | | billion (a) | | |
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6.8 | % | - | 9.00% | | October 2015 through October 2017 | | | $ | 12.6 | | billion (b) | | |
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(a) | Swaps related to an aggregate $1.5 billion principal amount of debt expired in 2014. Per the terms of the transactions, the notional amount of swaps entered into in 2011 grew by $1.388 billion in 2014, substantially offsetting the expired swaps. | | | | | | | | | | | | |
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(b) | These swaps were effective from October 2014 through October 2017. The $12.6 billion notional amount of swaps included $3 billion that expire in October 2015 with the remainder expiring in October 2017. | | | | | | | | | | | | |
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TCEH had also entered into interest rate basis swap transactions that further reduced the fixed borrowing costs achieved through the interest rate swaps. Basis swaps in effect at March 31, 2014 totaled $1.05 billion notional amount. The remaining basis swaps had expiration dates in August 2014. |
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The interest rate swaps have resulted in realized and unrealized net gains (losses), reported in interest expense and related charges, as follows: |
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| Three Months Ended March 31, | | | | | | |
| 2014 | | 2013 | | | | | | |
Realized net loss | $ | (145 | ) | | $ | (151 | ) | | | | | | |
Unrealized net gain | 64 | | | 148 | | | | | | | |
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Total | $ | (81 | ) | | $ | (3 | ) | | | | | | |
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The cumulative unrealized mark-to-market net liability related to all TCEH interest rate swaps totaled $948 million and $1.012 billion at March 31, 2014 and December 31, 2013, respectively, of which $55 million and $56 million (both pretax), respectively, were reported in accumulated other comprehensive income. The net liability reflects a nonperformance risk adjustment as discussed in Note 8. |
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These instruments are deemed to be "forward contracts" under the Bankruptcy Code. The Bankruptcy Filing constituted an event of default under the interest rate swap agreements, and in accordance with the contractual terms, the counterparties terminated all the TCEH agreements shortly after the Bankruptcy Filing. All of the TCEH interest rate swaps were secured by a first-lien interest in the same assets of TCEH on a pari passu basis with the TCEH Senior Secured Facilities and the TCEH Senior Secured Notes. |
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See Note 9 for discussion of classification of the interest rate swap derivative liabilities as current and the estimated net settlement liability resulting from the terminations. |