Reliant Energy gets consents needed to amend 6¾%, 9¼%, 9½% notes

By Laura Lutz

Des Moines, Nov. 15 - Reliant Energy Inc. settled its solicitation of consents from holders of its 9¼% senior secured notes due 2010, 9½% senior secured notes due 2013 and 6¾% senior secured notes due 2014.

The solicitation, which expired at 5 p.m. ET on Nov. 14, also covers five series of Pennsylvania Economic Development Financing Authority's outstanding tax-exempt facilities revenue bonds (Reliant Energy Seward, LLC Project).

The company received consents from holders of a majority of each series of notes and bonds.

The expiration deadline was previously set for Nov. 7. Before that, it was set for Aug. 3, Aug. 30, Sept. 1, Sept. 13, Sept. 26, Oct. 4, Oct. 18 and Oct. 27.

The company paid consenting noteholders $2.50 for each $1,000 principal amount of notes. Under the terms of the solicitation as revised on Nov. 9, no fee was paid to holders of the revenue bonds.

As announced on July 26, the primary purpose of the consent solicitation was to amend the indentures governing the bonds to permit Reliant Energy to enter into a new retail credit structure, which is intended to substantially eliminate collateral postings and reduce liquidity requirements associated with procuring supply for the company's retail energy business.

The proposed amendments will permit the debt associated with a new working capital credit facility, permit the liens contemplated by the facility, permit restrictions on the ability of the retail energy business to upstream money to Reliant Energy and make certain other technical amendments to permit the new retail credit structure.

As previously reported, the company modified the terms of the consent solicitation on Nov. 9 in response to concerns raised by bondholders.

Under the amended terms, the company waived its right to call the Pennsylvania Economic Development Financing Authority bonds for 18 months.

The company also modified the solicitation on Oct. 27 in response to bondholder concerns.

Those changes include refinancing the $450 million receivables securitization at Reliant Energy instead of at the retail group, adding a covenant to require the retail group to distribute cash to Reliant in certain circumstances, reducing the amount of permitted debt at the retail group and reducing the size of the working capital facility and limiting its use to working capital purposes.

The company also said it would offer to provide consent rights to the high-yield notes and Pennsylvania Economic Development Financing Authority bonds for the release of liens - other than in connection with a sale or upon obtaining certain credit metrics - in all or substantially all of the retail group or wholesale business. In the event of a sale of all or substantially all of the retail group or wholesale business, certain rights to exclude net sale proceeds from redemption offers would no longer apply and the revenue bonds would join the notes in being eligible for the offers.

The consent fee was increased from $1.25 per $1,000 principal amount of notes on Aug. 29.

Global Bondholder Services Corp. (212 430-3774 for banks and brokers, 866 873-6300 for others) is the information agent, and Goldman, Sachs & Co. (212 902-0041 or 800 828-3182) is solicitation agent.

The Houston-based energy company said it must receive consents from holders of a majority of the notes to approve the amendments.

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