Princeton, NJ, March 2, 2009 — NRG Energy Inc. announced a definitive agreement to acquire Reliant Energy Inc.’s Texas retail business. NRG will use cash on hand to fund the $287.5 million acquisition price. NRG also has arranged with Merrill Lynch to provide continuing credit support to the retail business subsequent to closing.
According to the companies, the combination of Reliant’s retail business and NRG’s generation will create a stronger player in the competitive Texas market. NRG entered the Texas market in early 2006 when it bought nearly 11,000 MW of assets from Texas Genco and formed NRG Texas which employs 1,100 people in Texas, primarily in the Houston area.
Supplemental to this acquisition, NRG negotiated a transitional credit sleeve facility with Merrill Lynch, the current credit provider for Reliant, under which NRG will inject $200 million of cash into the retail entity. The credit sleeve will provide collateral support at the retail enterprise for up to 18 months while an orderly transition to NRG supplying the retail entity’s power requirements occurs, with limited ongoing collateral requirements.
NRG will acquire Reliant for $287.5 million in cash, and remit acquired net working capital to Reliant over the six months following the closing date. As of December 31, 2008, the net working capital was approximately $111 million.
NRG expects to close the transaction late in the second quarter of 2009. The transaction is subject to customary closing conditions and regulatory approvals, including pre-merger notification under the Hart-Scott-Rodino Act.
Want to stay Current? Listen to Currents: The Energy News Podcast brought to you by Utility Automation & Engineering T&D and Electric Light & Power online. For a list of all available episodes, click here and start listening today. And for more news and exclusive features from Utility Automation & Engineering T&D and Electric Light & Power online, please click here.