NRG Energy adds alternative consent option in offer for $4.7 billion of notes

By Jennifer Chiou

New York, Nov. 26 - NRG Energy, Inc. announced a new consent alternative in its offer for any of its 7¼% senior notes due 2014, 7 3/8% senior notes due 2016 and 7 3/8% senior notes due 2017.

NRG said it launched conditional cash tender offers to purchase any of the notes at 101% of par plus accrued interest and it also began an alternative consent solicitation on Nov. 2. Noteholders may tender their notes or deliver consents but not both.

Further, holders who deliver consents may elect to give original consents or new alternative consents.

Under the new alternative, investors may elect to receive a consent payment of $7.50 to $15.00 in cash per $1,000 principal amount of notes. For the alternative consent payment, consents will provide a new exception to the limitation on restricted payments in the indentures for the notes, which will permit restricted payments, including dividends and/or stock repurchases, of up to $300 million per year, with any of the additional restricted payment capacity not used during a year to be carried over to the next year on a cumulative basis and without reducing the amounts otherwise available to make restricted payments.

For each series of notes, if holders of a majority of notes deliver alternative consents, consenting noteholders will receive the new alternative consent payment per $1,000 principal amount of notes equal to $7.50 divided by the percentage of notes of that series for which consents were delivered.

Each noteholder that provides consent will forgo his/her right to require NRG Energy to make a change-of-control offer for the notes. In return, consenting noteholders under the original consent solicitation will receive a minimum consent fee of $1.25 per $1,000 principal amount of notes.

For each series of notes, if holders of a majority of notes deliver consents, consenting noteholders will receive a consent fee per $1,000 principal amount of notes equal to $1.25 divided by the percentage of notes of that series for which consents were delivered.

The tender offers and the consent solicitations expire at 9 a.m. ET on Dec. 4.

NRG Energy said it is holding the tender offers and consent solicitations in connection with its plan to create a new holding company structure via a merger agreement among NRG Energy and two newly formed subsidiaries, NRG Holdings, Inc. (Holdco) and NRG Merger Sub, Inc. The new structure is intended to facilitate the company's capital allocation plan.

The tender offers are conditioned on the consummation of the merger.

NRG Energy will remain the issuer of the notes following the merger but will become a wholly owned subsidiary of Holdco, which constitutes a change of control. The conditional cash tender offers will fulfill the company's obligation to hold a change-of-control tender offer for the notes.

The consent fees will be paid upon consummation of the merger.

The company said it received a $4.2 billion senior unsecured debt financing commitment from Bank of America to fund the tender offers. The offers will also be funded with cash on hand.

Banc of America Securities LLC (888 292-0070 or 212 847-5188) is the dealer manager and solicitation agent. MacKenzie Partners, Inc. (800 322-2885 or 212 929-5500) is the information agent.

NRG Energy owns and operates a portfolio of power-generating facilities and is based in Princeton, N.J.

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