June 18, 2019

June 17, 2019

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Upcoming/New CFIUS Filing: Oncor Electric Delivery Company/Sempra Energy and InfraREIT

Status: Upcoming/New Filing

Acquirer:  Oncor Electric Delivery Company LLC (US); Sempra Energy (US)

Acquired:  InfraREIT, Inc. (US)

Value:  Approx. US$1.275 billion

Industry:  Energy; Regulated Utilities

On October 18, 2018, InfraREIT, Inc., a Maryland corporation engaged in owning and leasing rate-regulated electric transmission assets in the state of Texas and is structured as a real estate investment trust, entered into a merger agreement with Oncor Electric Delivery Company LLC, a Delaware limited liability company that “operates the largest transmission and distribution system in Texas,” whereby InfraREIT will be acquired by Oncor Electric Delivery Company by way of merging with and into a subsidiary of Oncor Electric Delivery Company LLC.  (See InfraREIT, Inc., Form 8-K, SEC Filing, Oct. 18, 2018.)  Sempra Energy, a California based company “whose businesses invest in energy infrastructure, develop and operate energy infrastructure and provide gas and electricity services . . . indirectly owns an 80.25% interest in Oncor.”  (See InfraREIT, Inc., Schedule 14A, SEC Filing, Jan. 4, 2019.) Concurrently, Sempra Energy will acquire 50% of Sharyland Utilities, L.P., a Texas based private company that “leases all of InfraREIT Entities’ regulated assets pursuant to leases,” for approximately $98 million.  See id.; Sempra Energy Press Release, Sempra Energy, Oncor To Acquire InfraREIT; Sempra Energy To Acquire 50% Stake In Sharyland Utilities, Oct. 18, 2018.)  Review and clearance from CFIUS is a condition to closing the merger agreement.  (See Agreement and Plan of Merger, InfraREIT, Inc., Form 8-K, Ex-2.1, SEC Filing, Oct. 18, 2018.)  “On November 2, 2018, InfraREIT and Oncor pre-filed a draft joint voluntary notice of the mergers with CFIUS . . . . and after receiving feedback from CFIUS, filed the formal joint voluntary notice of the mergers with CFIUS on December 7, 2018 . . .”  (See InfraREIT, Inc., Schedule 14A, SEC Filing, Jan. 4, 2019.)   “CFIUS accepted the filing on December 18, 2018. As per the acknowledgement letter from CFIUS, the formal 45-day initial review period commenced on December 19, 2019 and was to conclude no later than February 1, 2019. However, on December 22, 2018, CFIUS indicated that due to a lapse in appropriations caused by the U.S. federal government shutdown, all deadlines for declarations and transactions under CFIUS review or investigation have been tolled.”  Id.

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