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Article

26 Feb 2007

Author:
Andrew Ross Sorkin, New York Times

A Buyout Deal That Has Many Shades of Green [USA]

[Before] the TXU Corporation...[agreed] to be sold to a group led by Kohlberg Kravis Roberts & Company and Texas Pacific Group, two large private equity firms...[the buyers offered to] commit themselves to scale back significantly on TXU’s plan to build 11 new coal plants and adhere to a strict set of environmental rules. In return, [they] wanted the support of [environmental groups such as Environmental Defense], who had spent the past several months waging a bitter and public war against TXU... The deal was noteworthy...for the confluence of business decisions and environmental concerns that drove the ultimate transaction. Because private equity firms are unregulated and historically have valued their privacy, neither Kohlberg Kravis nor Texas Pacific were eager to become an "enemy combatant" of the environmental groups... [Before offering to buy TXU] neither Kohlberg Kravis nor Texas Pacific told TXU about their ambition to scale back its controversial coal plants...[developed] with the help of Goldman Sachs, their lead adviser... Goldman Sachs, Morgan Stanley, Lehman Brothers and Citigroup will take small stakes in TXU as well as help finance the debt with J.P. Morgan Chase... TXU is not likely to lose money, at least initially, as a result of scaling back. Three of the plants are already in the works and the other eight that will be canceled would not have been built for years... Not all of TXU’s historical opponents are popping corks... In Dallas, Laura Miller, the mayor and leader of a coalition...that has...[fought] the TXU plants, said the agreement with the environmental groups might not get TXU as much help as it wanted.