Exelon brings exchange offer directly to NRG Energy shareholders, seeks relief in court

By Lisa Kerner

Charlotte, N.C., Nov. 11 - Exelon Corp. said it will begin an exchange offer for all of the outstanding shares of NRG Energy, Inc. at a fixed exchange ratio of 0.485 Exelon shares for each NRG share on Wednesday.

NRG's board of directors unanimously rejected an Oct. 19 unsolicited offer from Exelon to exchange each NRG share for 0.485 Exelon shares for a value of about $26.43 per share, it was previously reported.

In turning down the offer, NRG, a Princeton, N.J.-based power company, noted that Exelon does not have committed financing and the company's credit rating was downgraded a few days after it made the offer.

Exelon, a Chicago-based electric company, said the financing plan for its $6.2 billion unsolicited offer for NRG would require only $4 billion or so of refinancing and that the needed financing commitments are "well underway," according to an earlier 425 filing with the Securities and Exchange Commission.

"While we would have greatly preferred to enter into direct negotiations with NRG's board and management, their decision to reject our proposal, without any discussion with us as to the merits or structure of our proposal, has left us with no choice but to bring the offer directly to the NRG shareholders," Exelon chairman and chief executive officer John W. Rowe said in a company news release.

Rowe said he expects strong support for the offer from NRG shareholders, who will participate "in the future growth of the nation's largest and most diversified power company."

Exelon also filed a lawsuit in the Delaware Chancery Court against NRG and its directors alleging a breach of fiduciary duty by NRG's directors for reasons including the failure of the NRG directors to give appropriate consideration to, and take appropriate action on, the Oct. 19 proposal from Exelon.

In the lawsuit, Exelon seeks relief requiring the NRG board to exempt Exelon's exchange offer from the Delaware business combination statute and enjoining the board from taking any actions to frustrate the exchange offer.

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