Reliant Energy fighting with Merrill over right to terminate working capital facility

By Sara Rosenberg

New York, Dec. 29 - Reliant Energy Inc. is now entangled in a court battle with Merrill Lynch Capital Corp. over the termination of the company's working capital facility, according to an 8-K filed with the Securities and Exchange Commission.

As was previously disclosed, Reliant terminated the $300 million working capital facility on Dec. 5 to avoid any issue with the minimum adjusted retail EBITDA covenant.

Merrill Lynch decided that it was going to dispute the termination of the facility and, on Dec. 24, filed an action for declaratory judgment in the Supreme Court of the State of New York.

In the court filing, Merrill Lynch alleges that Reliant did not have the right to terminate the working capital facility under a credit sleeve and reimbursement agreement.

However, Reliant believes that the termination of the facility does not constitute an event of default under the credit sleeve and reimbursement agreement.

Reliant is a Houston-based electricity and energy services provider.

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