8-KMaterial AgreementsExhibits & Filings

Duke Energy CORP 8-K Report, Material Agreement (Sep 13, 2006)

Filed September 13, 2006For Securities:DUKDUKBDUK-PA

Summary

Duke Energy Corporation, through its indirect wholly-owned subsidiary Duke Ventures, LLC, has entered into a material definitive agreement to form a joint venture for its real estate development and management subsidiary, Crescent Resources, LLC. This transaction involves Morgan Stanley Real Estate Fund V, L.P. and affiliated funds (MS Members) acquiring a 49% interest in Crescent Holdings, LLC, a newly formed entity that will hold Crescent Resources. Additionally, Arthur W. Fields, President and CEO of Crescent Holdings, will acquire a 2% interest. The joint venture structure provides Duke Energy with immediate cash proceeds of approximately $415 million from the sale of the 49% stake to the MS Members, following a significant debt financing of $1.2 billion by Crescent. The total enterprise value ascribed to Crescent Resources was approximately $2.1 billion. Duke Energy will retain a 49% ownership interest in Crescent Holdings, indicating a strategic shift to monetize a portion of its real estate assets while retaining significant participation in future growth.

Key Highlights

  • 1Duke Energy formed a joint venture for its real estate subsidiary, Crescent Resources, LLC, by creating Crescent Holdings, LLC.
  • 2Morgan Stanley Real Estate Fund V, L.P. and affiliated funds (MS Members) acquired a 49% membership interest in Crescent Holdings for approximately $415 million.
  • 3Arthur W. Fields, President and CEO of Crescent Holdings, acquired a 2% membership interest.
  • 4Duke Energy retains a 49% membership interest in Crescent Holdings.
  • 5Crescent Resources was valued at approximately $2.1 billion on an enterprise basis.
  • 6Crescent Holdings secured approximately $1.2 billion in debt financing, with net proceeds distributed to Duke Ventures.
  • 7Governance of Crescent Holdings requires joint approval from Duke Ventures and MS Members representatives on its Executive Committee.

Frequently Asked Questions

The primary purpose of this transaction is for Duke Energy to monetize a portion of its real estate assets by forming a joint venture for Crescent Resources, LLC. This allows the company to receive immediate cash proceeds and share future growth and risks with its joint venture partners.

Duke Energy received approximately $415 million in cash from the sale of a 49% stake in Crescent Holdings to the MS Members.

Following the transactions, Crescent Holdings is owned 49% by Duke Ventures (a Duke Energy subsidiary), 49% by the MS Members, and 2% by Arthur W. Fields, the CEO of Crescent Holdings.

Decisions regarding material matters for Crescent Holdings will be made by its Executive Committee. This committee consists of five members: two from Duke Ventures, two from the MS Members, and the CEO. Approval requires a majority vote that must include at least one representative from Duke Ventures and one from the MS Members, ensuring shared control.