SEC alleges illegal insider trading in TXU deal

“The bigger the debt position, the more uncertain the situation becomes,” Williams said. “There’s still room for a white knight” — a large utility or even hedge funds to make a bid with less debt.

TXU has until April 16 to solicit other bids, and the financing of the KKR-Texas Pacific offer could change.

Some analysts believe KKR and Texas Pacific would sell one of the three TXU businesses to pay down debt. That’s a time-honored strategy in leveraged buyouts. But a KKR official told state lawmakers that the buyers won’t sell any of the TXU divisions for at least five years.

TXU also disclosed a few other details about the sale in the SEC filing. If TXU finds and accepts a better offer, it must pay a $375 million break-up fee to the KKR-Texas Pacific buyers. The fee is $1 billion if TXU backs out for any other reason.

TXU hopes to close the sale to KKR, Texas Pacific, Goldman Sachs, Lehman Brothers, Citigroup and Morgan Stanley in the second half of this year.

The sale would need the approval of holders of two-thirds of TXU shares. Also, TXU officials say they need approval from the Federal Energy Regulatory Commission, the Federal Communications Commission and the Securities and Exchange Commission.

A bill introduced in the state Senate after the sale was announced would also give review power to the Texas Public Utility Commission. A KKR official hinted this week that the imposition of new regulatory hurdles could cause the buyers to consider reselling TXU in less than five years.

TXU also said late Friday that E. Gail de Planque, a former member of the Nuclear Regulatory Commission, resigned from its board to avoid any appearance of conflict of interest due to “her historical professional relationships within the industry.” The company did not elaborate, and it said she had not taken part in discussions about the proposed sale of TXU.

Shares of TXU closed unchanged at $66.50 in trading Friday on the New York Stock Exchange.

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