Entergy 2009 Annual Report Download - page 10

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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
6
In connection with the spin-off, Enexus is currently expected to incur up to $4.0 billion of debt prior to
completion of the spin-off. Currently, the debt is expected to be incurred in the following transactions:
Enexus is expected to issue up to $2.0 billion of debt securities in partial consideration of Entergy's
transfer to it of the Non-Utility Nuclear business.
These debt securities are expected to be exchanged for up to $2.0 billion of debt securities that Entergy
plans to issue prior to the spin-off. If the exchange occurs, the holders of the debt securities that Entergy
plans to issue prior to the spin-off would become holders of up to $2.0 billion of Enexus debt securities.
Enexus is expected to issue up to $2.0 billion of debt securities directly to third party investors.
Out of existing cash on hand and the proceeds Enexus would receive from the issuance of debt securities directly to
third party investors, it expects to retain approximately $750 million, which it intends to use for working capital and
other general corporate purposes. In addition, Enexus is expected to apply up to $500 million of the proceeds from
the issuance of these debt securities to provide cash collateral as credit support for reimbursement obligations in
respect of letters of credit. All of the remaining proceeds, plus any remaining cash on hand, are expected to be
transferred to Entergy to settle Enexus' intercompany indebtedness owed to Entergy, including indebtedness that
Entergy will transfer to Enexus in the spin-off, and to purchase certain assets from Entergy. Enexus will not receive
any proceeds from either the issuance of the up to $2.0 billion of its debt securities or the exchange of its debt
securities for Entergy debt securities. Entergy expects to use the proceeds that it receives from the issuance of its
debt securities to reduce outstanding Entergy debt. The amount to be paid to Entergy, the amount and term of the
debt Enexus would incur, and the type of debt and entity that would incur the debt have not been finally determined,
but would be determined prior to the spin-off. A number of factors could affect this final determination, and the
amount of debt ultimately incurred could be different from the amount disclosed.
Enexus executed a $1.175 billion credit facility in December 2008. In October 2009, Enexus executed
Amendment No. 1 to its credit facility, increasing the total credit facility amount to $1.2 billion from $1.175 billion.
Enexus is not permitted to draw down the facility until certain customary and transactional conditions related to the
spin-off are met on or prior to July 1, 2010. Enexus may enter into other financing arrangements meant to support
Enexus' working capital and general corporate needs and credit support obligations arising from hedging and normal
course of business requirements.
Entergy and Enexus intend to launch the financing relating to the spin-off after requisite regulatory approvals
are received and when market conditions are favorable for such an issuance. Entergy expects the transaction to
qualify for tax-free treatment for U.S. federal income tax purposes for both Entergy and its shareholders. Entergy
received a private letter ruling from the IRS regarding certain requirements for tax-free treatment. In addition, a
supplemental ruling request has been filed with the IRS to reflect changes to the initial spin-off plan. Final terms of
the transaction and spin-off completion are subject to several conditions, including the final approval of the Board.
Regulatory Proceedings Regarding the Spin-Off
NRC
Entergy Nuclear Operations, Inc., the current NRC-licensed operator of the Non-Utility Nuclear plants, filed
an application in July 2007 with the NRC seeking indirect transfer of control of the operating licenses for the six
Non-Utility Nuclear power plants, and supplemented that application in December 2007 to incorporate the planned
business separation. Entergy Nuclear Operations, Inc., which is expected to be wholly-owned by EquaGen, would
remain the operator of the plants after the spin-off. Entergy Operations, Inc., the current NRC-licensed operator of
Entergy's five Utility nuclear plants, would remain a wholly-owned subsidiary of Entergy and would continue to be
the operator of the Utility nuclear plants. In the December 2007 supplement to the NRC application, Entergy
Nuclear Operations, Inc. provided additional information regarding the spin-off transaction, organizational structure,
technical and financial qualifications, and general corporate information. On July 28, 2008, the NRC staff approved
the license transfers associated with the proposed new ownership structure of EquaGen, the proposed licensed
8