TXU suspends $8.7 billion joint venture with InfrastruX

by PegNews wire

The partnership was never finalized, and could have created complications for the proposed buyout.

DALLAS — TXU Electric Delivery Company, a subsidiary of TXU Corp., and InfrastruX Group, a national provider of utility-related construction and maintenance services, announced today that they have mutually agreed to suspend their agreements relating to the InfrastruX Energy Services Group LP joint venture. The parties plan to terminate these agreements upon closing of the transaction in which Kohlberg Kravis Roberts & Co. and Texas Pacific Group will acquire TXU Corp.

"TXU Electric Delivery remains committed to delivering industry-leading reliability for our customers, and we will continue to improve our operations," said Tom Baker, chairman and CEO of TXU Electric Delivery. "Although we plan to terminate this joint venture, InfrastruX will continue providing utility support services to TXU Electric Delivery, allowing them to utilize their expertise and knowledge of our system. We look forward to continuing our long and successful working relationship with InfrastruX at a time of significant new investment in infrastructure."

On June 26, 2006, TXU Electric Delivery and InfrastruX Group announced that they had entered into a 10-year, $8.7 billion agreement for utility infrastructure and management services that would merge traditional utility practices with traditional contractor work. InfrastruX Group, which has worked with TXU Electric Delivery for over 40 years, will continue to be a key provider of utility support services to TXU Electric Delivery.

Closing of this transaction, originally scheduled for October 1, 2006, was delayed due to a pending review of the transaction by the Public Utility Commission of Texas (PUC). A hearing before the PUC was scheduled for May 1. However, after the announcement of TXU Corp.'s merger agreement with the investor group, the PUC postponed the review pending a further understanding of the effect of the merger on the IES transaction. This postponement would have almost certainly delayed the hearing.

While TXU and InfrastruX were contemplating the effects of these delays on their agreements, the investor group requested that the agreements be reconsidered. Considering all factors, TXU and InfrastruX decided to suspend their agreements with the intent to terminate them upon closing of TXU Corp.'s merger with the investor group.

Source: TXU