Fitch Comments on Energy Future Holdings Exchange Offer

NEW YORK--(Business Wire)--
Energy Future Holdings Corp. (EFH; IDR 'B', Outlook Negative by Fitch) and
Energy Future Intermediate Holdings (EFIH) today launched an exchange offer that
solicits the tender of unguaranteed legacy TXU unsecured notes, EFH cash pay and
payment-in-kind (PIK) toggle guaranteed unsecured leveraged buyout (LBO) notes,
and Texas Competitive Electric Holdings (TCEH; IDR 'B' by Fitch) cash pay
guaranteed unsecured LBO notes in exchange for up to $4 billion of new secured
notes to be issued by EFIH and/or EFH. Security for the new secured notes that
mature in 2019 will be a pledge of 100% of EFIH's membership interests in Oncor
Electric Delivery Holdings (Oncor Holdings). EFH management's impetus for the
exchange offer is to reduce debt and extend the average life of debt.

Issuance of the new secured notes pursuant to the exchange offer would change
the relative seniority of debt in the EFH (parent) capital structure. Fitch
expects that the outcome will be to lower the relative recovery prospects and
ratings of certain of EFH's remaining unexchanged debt instruments as explained
below.

The exchange offer does not conform to Fitch's definition of a coercive debt
exchange, since in Fitch's view there is not a high probability of the issuer's
near-term bankruptcy or insolvency absent the exchange, and EFH does not intend
to represent to holders that bankruptcy is likely if holders reject the exchange
offer. Also, holders who accept the exchange offer will obtain a direct security
pledge of EFIH's stock in Oncor Holdings, which is an improvement to their
current unsecured position, offsetting to some extent the discount they will
receive on the par value of the notes.

Fitch expects to assign a rating to the new secured notes once the result of the
exchange offer is known and at the same time will update the EFH debt issue
ratings for the non-exchanged portions of EFH legacy notes and EFH cash pay and
PIK toggle LBO notes based on their new relative rankings in the capital
structure and an updated recovery analysis valuation. The offer expires on Nov.
3, 2009. While the outcome of the exchange offer is uncertain, Fitch expects to
downgrade the 'B+' ratings of the non-exchanged EFH cash pay and PIK toggle LBO
notes because of reduced recovery prospects in a default scenario as a result of
becoming subordinated to the new secured notes with regard to EFIH's pledge of
its ownership interest in Oncor Holdings. The 'CCC' rating of any non-exchanged
EFH unguaranteed legacy notes is unlikely to change, as these notes are already
subordinated within the EFH capital structure and their recovery prospects will
remain extremely low.

In Fitch's view, the Issuer Default Ratings (IDR) and Negative Rating Outlook of
EFH and TCEH will be unaffected pro forma for the exchange because combined debt
of EFH and TCEH of approximately $38.1 billion (excluding Oncor Electric
Delivery LLC debt) will be reduced by only approximately 5% as a result of the
exchange. The credit profile of EFH will remain closely tied to that of TCEH.
While the proposed exchange would slightly lower interest expense and could
lower consolidated debt by approximately $2 billion, depending on the issues
tendered and outcome of the offer, the debt reduction relating to the exchange
is considered insufficient to move the 'B' IDR/Negative Outlook in light of the
still high leverage, thin interest coverage and challenging wholesale power
market conditions. While the exchange transaction alone would not change EFH's
IDR, Fitch notes that other factors such as the reduced industrial demand, weak
Electric Reliability Council of Texas (ERCOT) power market conditions and thin
coverage and high leverage could lead to lower ratings.

No changes to TCEH and Oncor's IDR and issue ratings are expected as a result of
the proposed exchange offer. The capital structure and recovery prospects at
TCEH would be at most nominally affected even if the entire $1.5 billion amount
of TCEH notes permitted to be exchanged in the offer were exchanged, and there
would be no change to Oncor's capital structure or ring-fencing.

Additional information is available at www.fitchratings.com.

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Fitch Ratings, New York
Sharon Bonelli, 212-908-0581
Ellen Lapson, CFA, 212-908-0504
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

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