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TXU Shares Fall on New Stock Plan

November 25, 2002

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DALLAS (AP) _ Shares of TXU Corp. fell Monday after the utility said it would sell 28 million new shares and had completed selling $750 million in notes that could be converted into stock.

TXU declined to give an outlook for fourth-quarter profit, but it said the sale of new stock and the issuance of the convertible notes made the company comfortable with estimates of 2003 earnings ``nearer (to) $2 per share.″

That level of profit would fall below the forecasts of analysts surveyed by Thomson First Call, which ranged from $2.04 to $3.25 per share, with a consensus pick of $2.98.

In trading on the New York Stock Exchange, TXU shares fell $1.18, or 7.3 percent, to close Monday at $14.96. They have fallen more than 60 percent since Oct. 1.

TXU hopes that the new stock and convertible notes, which are due in 2012, will improve its liquidity.

The company said last month that if the notes are converted into stock, it would boost the number of outstanding common shares by about 17 percent. The 28 million of new shares would increase the current stock pool by about 10 percent.

TXU said Merrill Lynch & Co. and Credit Suisse First Boston would manage the offering of new stock.

TXU’s stock has been hammered since the company disclosed serious problems in its European subsidiary in September, which contributed to a 38 percent decline in third-quarter profit and threatened to trigger ratings downgrades for debt issued by the Dallas-based parent company.

TXU has since agreed to sell most of its European assets. It expects to take a $4.24 billion charge for exiting Europe.

The company also cut its dividend by 80 percent just days after chairman Erle Nye insisted that the $2.40 per share dividend was safe.

The Securities and Exchange Commission is looking into events leading to the dividend cut.

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