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About That “Environmentally Sensitive” TXU Buyout

I want to share with you an exchange that took place this morning on’s message board, The Stool Pigeons Wire, about the TXU leveraged buyout. There’s a lot more truth to these observations than you will ever see in the mainstream financial infomercial media. Poster potatohead pointed out a:

New form of monetization….. pigmen will own everything not the FED

*DJ TXU Corp. To Be Acquired For $69.25 A Share >TXU
*DJ Goldman, Lehman, Citi, Morgan Stanley To Be Equity Investors
*DJ Former Secy State Baker To Be TXU Invest Group Advisory Chmn

this is being done by the old boys network

Poster crazy_ate responded, (and herein your editor thinks lies the crux of the issue):

The part I like is the spin that pulling the permits on 8 of the 11 planned coal burning plants was done to appease the environmentalists. Seems to me this is only being done to [1] remove a huge CapEx expense from the near-term that they will probably never see a return on unless they hold the company for 20 years, and [2] reduce future capacity from the market which should allow for higher rates down the road.

WSE Contributor Lee Wheeler added this:

Funny how the two utility ETFs (UTH, XLU) are rising 4%+ on the “news” of a 12% premium buyout on TXU.

TXU is a 10% weight in UTH and a 6% weight in XLU. It was one of the few utes not already at its ATHs. It was 10% below the highs.

Did “news” come out that ALL utilities were being LBO’ed? wink.gif

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Finally, poster cwd related a conversation he had with a local politician in Texas, TXU’s home state.

I was talking to one of our local politicians Sat and she commented she was not sure about TXU our local power house.

I told I knew what was going to happen. After the deal is complete Henry Kravis is going to pull his 10% off the top and The company is not going to spend any money until there is a power shortage in a couple of years and then you can guess what is going to happen to rates. She looked at me and said that was probably correct. laugh.gif

It is nice to see they have become environmentalists. laugh.gif

If you want the real “read between the lines story” behind the “news” headlines, you certainly aren’t going to get it by reading the fluff from the so-called “journalists” in the mainstream infomercial media. They are nothing more than paid shills for the Street establishment, writing what their masters want them to write. They may not get direct orders, but they know which side their bread is buttered on. The real journalists are on the message boards like’s Stool Pigeons Wire. I will keep you posted on their insights from time to time.

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  1. Joe B

    The fact is conspiracy theory message board comments like these are usually wrong. They are correct just as often as psychics are. So much scatter shot BS is stated that some of it has to be correct.

    As someone who has been involved with the issue including being in the state capital at times, I can say that much of the comments given here are speculative bulls*** and show a lack of understanding of the terrain be it the market or the political terrain.

    The issue never was environmentalism vs business. The so called “environmentalists” involved are not hippy tree huggers but had much deeper understanding of economic concerns. Building 11 plants within a short period only made sense if costs brought about economies of scale and if the legislature remained permissively docile as it has for the energy industry in Texas. However, that gamble was appearing to falter.

    The private equity firms saw an opportunity to make a profit and saw that mitigating risk included simply agreeing with what the “environmentalists” were saying all along regarding that risk.

    Some of the so called “environmentalists” leading the opposition are not hippies driving VW microbuses in Austin but millionaires and a few billionaires who have worked on leverage buyouts and have run 8 and 9 figure companies. The strongest arguments were always economic ones and almost all the opposition from tree huggers to mayors to business leaders knew it.

  2. Lee Adler

    Before you call “a conspiracy theory message board”, “correct as often as psychics are”, “full of scattershot BS” I suggest that you spend some time reading it.

    Otherwise you are nothing more than an ill-informed, loudmouthed, bloviating apologist for the corrupt institutions that make these asinine deals that so grossly misallocate capital and hollow out our economy.

    I refuse to allow ignorant, moronic, pointless comments like yours without responding. The people posting on are some of the most intelligent, well-informed, savvy investors, traders, and posters in this business.

    You, on the other hand are only here to vent your anger and spew.

    This stuff is a non starter with me.

  3. Joe B

    I didn’t say is a “a conspiracy theory message board.” I said specifically “conspiracy theory message board comments like these” where the operative word is “like” modifying the word “comments.” The dictionary definition of “like” being stated as “corresponding or agreeing in general or in some noticeable respect.”

    I am not here to “vent anger and spew” as no anger exists in my comments but plenty of name calling exists in yours while they lack substance. Let’s review “ignorant, moronic, pointless” and “ill-informed, loudmouthed, bloviating.”

    Likewise, regarding “ignorance” the point was to point out the ignorance of posted comments. They are literally “lacking knowledge or information as to a particular subject or fact.”

    Being someone who has been in the state house having the ear of legislators, has had discussions with other regional officials, and scientific professionals on the subject at hand, I can say with authority that the above comments do not at all approach any reasonable approximation of the facts of the situation.

    As I will restate because it was conveniently ignored by yourself, the main arguments on the forefront have always been economic and everyone who is someone involved knows it including the so called environmentalists. The buyout agreement points, assuming they are accurate, simply reflect the common wisdom that was coming from most all fronts including in the know legislators, business leaders, environmentalists and so on.

    So in the end it seems these people are not “hollow[ing] out our economy” but are rather responding to the real risks and realities of the market and the world in the scale they operate.

    If facts presented by someone who was closer to the events doesn’t mean anything but instead people who merely watch from afar means more to you, then it stands to reason that facts won’t convince you anyway. You may now vent, attack and me and continue your name calling.

  4. Lee Adler

    OK, Mr. Inside Man, since you know so much, why not inform us as to just how this $35 billion deal that will saddle your state’s largest utility with this enormous debt, makes economic sense.

    This company was valued by the market at $5 billion 5 years ago.

    So, let’s hear “the facts”.

  5. Jorma

    Joe B was polite and reasonable but he didn’t make a point, beyond the one he planted in his first sentence about “conspiracy”.

    It’s not a conspiracy theory to suggest the players in a bussiness deal are acting in their own self interest. It should be the job of journalists and observers of the scene to look into how everyones interest is served. Obviously the bussiness info industry isn’t going to do that.

    The inclusion of the environmental angle into the story was such obvious PR stool that it screamed out for abuse.

    That isn’t the real issue either of course. The issue is how will all the debt effect the company going forward vs their regulated duty to supply power to customers in their monopoly area. It goes without saying that several billion dollars will be extracted by the principals and their agents in this deal within a couple of years. It’s just calling a spade a spade.

  6. Jorma

    As to the state of the state house in Texas, it’s argueably one of the leading legislative sewers in the nation. The state house in any state in any case is hardly the place to measure the merits of a bussiness deal, unless you represent the deal makers.

    It is a good place to view the parade of human folly as was domonstrated just last week when a Texas legislator linked to and spoke glowingly of the theory that evolutionary theory is an ancient Jewish Kabbalistic Conspiracy and that the Copernican view of the universe is wrong.

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