What is the current financial exposure of Sempra Energy to the RBS Sempra Commodities joint venture?

Sempra Energy is providing transitional back-up guarantees for approximately $1.1 billion in net trading liabilities and $844 million in credit facilities ($500 million + $344 million) related to the joint venture. However, RBS has agreed to fully indemnify Sempra Energy against any liabilities incurred under these guarantees.

When will Sempra Energy's financial obligations related to the joint venture cease?

The novation of the remaining trading obligations to RBS is expected to be fully completed, and Sempra Energy's guarantee of these obligations will terminate in the first half of 2009.

What is Sempra Energy's confidence level regarding RBS's financial stability and commitment to the joint venture?

Sempra Energy believes that RBS, one of the world's largest banks, will continue to provide all ongoing funding and credit support for the joint venture as stipulated in their agreement, especially in light of the UK government's support measures for British banks.

Does Sempra Energy have sufficient liquidity to manage its own operations during this period?

Yes, Sempra Energy has access to $4.3 billion in committed, three-year revolving credit lines expiring in August 2011 to support its commercial paper and general liquidity requirements. As of October 8, 2008, $1.8 billion was outstanding under these lines.

SRE/SREA 8-K SEC Disclosure

Summary

This Form 8-K filing by Sempra Energy (SRE) on October 8, 2008, addresses inquiries regarding its joint venture, RBS Sempra Commodities, with The Royal Bank of Scotland (RBS). The primary focus is on Sempra Energy's ongoing transitional guarantees for a portion of the joint venture's trading obligations and credit facilities, pending their full transfer to RBS. The company highlights that RBS has agreed to fully indemnify Sempra Energy against any liabilities arising from these guarantees, and the transfer is expected to conclude in the first half of 2009. Despite market volatility and the UK government's announcement of support for British banks, including RBS, Sempra Energy expresses confidence that RBS will continue to fulfill its funding and credit support obligations for the joint venture as per their agreement. The filing details the specific amounts of net trading liabilities and credit facilities currently supported by Sempra Energy's guarantees, providing transparency on the financial exposure during this transition period. Additionally, it notes the company's own significant credit facilities available for general liquidity purposes.

Key Highlights

1Sempra Energy (SRE) is clarifying its role in the RBS Sempra Commodities joint venture due to numerous investor inquiries.
2The company is providing transitional back-up guarantees for a portion of the joint venture's trading obligations and credit facilities, with full indemnity from RBS.
3The full novation of trading obligations to RBS and termination of Sempra Energy's guarantees are expected in the first half of 2009.
4Guaranteed net trading liabilities are approximately $1.1 billion, and credit facilities supported by Sempra Energy's guarantees total $500 million and $344 million under separate agreements.
5Sempra Energy expresses confidence in RBS's ability to provide ongoing funding and credit support, despite the UK government's support package for British banks.
6The joint venture, RBS Sempra Commodities, has $3.5 billion in net assets, with Sempra Energy's investment being $1.6 billion.
7Sempra Energy has access to $4.3 billion in committed revolving credit lines for its own liquidity needs.

SEMPRA 8-K Report, Corporate Update (Oct 9, 2008)

Summary

Key Highlights

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