NRG Energy greenshoe ups 2.75% convertibles due 2048 to $575 million

By Marisa Wong

Morgantown, W.Va., May 25 – The initial purchasers of NRG Energy Inc.’s 2.75% convertible senior notes due 2048 exercised their $75 million over-allotment option in full, bringing the total size of the issuance to $575 million, according to an 8-K filing with the Securities and Exchange Commission.

NRG priced $500 million of the 30-year convertible notes after the market close on May 21 with a coupon of 2.75% and an initial conversion premium of 42.5%.

Pricing came at the cheap end of talk for a coupon of 2.25% to 2.75% and at the midpoint of talk for an initial conversion premium of 40% to 45%, according to a market source.

BofA Merrill Lynch, Credit Agricole, Credit Suisse Securities (USA) LLC and BNP Paribas Securities Corp. are the bookrunners for the Rule 144A deal.

The notes are contingently convertible. They may be freely converted from Dec. 1, 2024 until the second trading day preceding June 1, 2025 and on or after Dec. 1, 2047.

The notes are non-callable until June 1, 2025 at which point they become freely callable. There are investor puts on Sept. 1, 2025, June 1, 2033 and June 1, 2040.

Holders may require the company to redeem the notes upon a fundamental change, according to a prior news release.

The notes are convertible into cash, shares or a combination of both at the company’s option.

In connection with the offering, NRG intends to use cash on hand to complete its previously announced $500 million share repurchase program with shares repurchased from the initial purchasers of the notes and through accelerated share repurchase transactions, according to the news release.

The repurchase price will be $33.50, which is equal to the closing price of common stock on May 21, when the notes priced.

Proceeds will be used to repay outstanding debt and to pay fees and expenses related to the offering. The offering is expected to be leverage neutral, according to the news release.

NRG Energy is a Princeton, N.J.-based integrated power company.

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