Hunt Consolidated Inc. and its affiliates jointly applied along with Oncor Electric Delivery Co. to the Public Utility Commission of Texas.
This application seeks regulatory approval for the sale of Energy Future Holdings' current ownership stake in Oncor as part of EFH's ongoing bankruptcy proceeding. By statute, the PUCT will have 180 days to review and take action on the proposed transaction.
If approved, Hunt and its consortium of investors would acquire EFH's current stake in Oncor and restructure it into a Real Estate Investment Trust, and Hunt would assume full operational control of Oncor by mid-2016.
"We believe our proposed plan represents the best path forward for Oncor, its employees and the communities they serve," said Hunter L. Hunt, co-chief executive officer for Hunt Consolidated Inc., and CEO of Hunt Consolidated Energy. "We are fully committed to working closely with the PUCT commissioners and their staff, as well as with all interested stakeholders, to ensure our proposed transaction receives a thorough, open and transparent review over the next six months."
Under the plan filed today with the PUCT, Oncor would be split into two companies — an asset company and an operating company — for the purposes of reorganizing it into a Real Estate Investment Trust structure.
First, Hunt and its consortium of investors would acquire EFH's 80 percent stake in Oncor and restructure it into an asset company, which would be a unit of a REIT currently known as Ovation Acquisition I, (Ovation). This asset company would continue to own the physical transmission and distribution assets currently owned by Oncor, including substations, transmission and distribution towers and poles, wire conductors, and other assorted components and equipment. The newly restructured asset company would be owned by the consortium of investors and managed by Hunt.
Second, a new operating company would be created and would keep the Oncor name, with its headquarters remaining in Oncor's existing office in Dallas, Texas. It would be responsible for the day-to-day operation, maintenance, and construction of Oncor's existing system. Oncor's existing management team, its employees, and its operating assets would transfer to this operating company, which would be owned and controlled by the Hunt family through Shary Holdings, the same entity that owns Sharyland Utilities (the Hunt family's other regulated electric utility in Texas).
The newly restructured asset company would lease the transmission and distribution assets to Oncor, who would operate the system on the REIT's behalf. Hunt has successfully operated this REIT structure in the Texas electric utility market since December 2009.