The business landscape in Texas is about to witness a significant transformation as Oncor Electric Delivery (Oncor) finalizes its acquisition of InfraREIT, and Sempra Energy acquires a 50% stake in Sharyland Utilities. With these deals now closed, the energy market in Texas is set to thrive like never before.
A New Era for Texas Energy Market
As a result of the acquisition, InfraREIT merged with and became a wholly owned subsidiary of Oncor, ceasing to exist as an independent entity. The subsidiaries of InfraREIT are now wholly owned indirect subsidiaries of Oncor. This move allows Oncor to integrate high-quality transmission assets into its already impressive portfolio.
Oncor CEO Allen Nye expressed excitement over the successful completion of the acquisition, extending gratitude to stakeholders and the dedicated team at InfraREIT for their unwavering commitment throughout the process. Nye emphasized that this development is promising not only for Oncor but also for Texas and the ERCOT market.
Valuable Investments in Growth Markets
Sempra Energy, known for its disciplined investments in attractive growth markets, echoes the enthusiasm. Its Chairman and CEO, Jeffrey W. Martin, expressed that the investment in Texas underscores their commitment to the state. This strategic move creates a larger platform for Oncor to meet the ever-growing energy needs of Texans.
Strengthening the Energy Landscape
Oncor acquired 100% of the equity interests of InfraREIT for approximately $1.275 billion, excluding certain transaction costs. Additionally, InfraREIT's common stock, previously listed as "HIFR," has been delisted from the New York Stock Exchange. To finance the acquisition, Oncor received capital contributions from Sempra Energy and Texas Transmission Investment LLC.
In connection with the closing of the acquisition, Oncor also repaid InfraREIT's outstanding debt, extinguishing approximately $953.35 million in principal amount. Simultaneously, Sempra Energy acquired a 50% limited partnership interest in the holding company that owns Sharyland for $98 million, further fortifying the partnership.
Expanding Transmission Assets for Enhanced Services
One of the significant outcomes of the transaction is that Oncor now indirectly owns all electric transmission assets in Central, North, and West Texas that were previously held by InfraREIT and Sharyland. This strategic move empowers Oncor to better serve the region. The acquired assets include approximately 1,575 miles of transmission lines, serving over 50 transmission stations and substations, and connecting to around 20 operational generation facilities.
Regulatory Approvals and Advisors
The completion of these transactions required approvals from various regulatory bodies. The Public Utility Commission of Texas (PUCT) granted final approval for the transaction in May 2019. Additionally, approvals were obtained from the Federal Energy Regulatory Commission and the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Financial advisors for the transaction included Barclays for Oncor, Lazard for Sempra Energy, and Evercore for the InfraREIT Conflicts Committee. Legal advisors for the transaction were Vinson & Elkins LLP for Oncor, White & Case LLP for Sempra Energy, Hunton Andrews Kurth LLP for the InfraREIT Conflicts Committee, and Gibson, Dunn & Crutcher LLP for InfraREIT.
With the closure of these deals, the stage is set for an exciting future in the Texas energy market. Oncor's acquisition of InfraREIT and Sempra Energy's involvement with Sharyland mark a new chapter in the region's energy sector. Keep an eye on the evolving landscape as these companies pave the way for a brighter and more sustainable future.