NRG Energy begins exchange offers, consent solicitations for 7¼%, 7 3/8% notes

By Angela McDaniels

Tacoma, Wash., Sept. 4 - NRG Energy, Inc. said it began private offers to exchange up to $2 billion of its 7¼% senior notes due 2014, 7 3/8% senior notes due 2016 and 7 3/8% senior notes due 2017 for new 8¼% senior notes due 2018.

The exchange offers will expire at 10 a.m. ET on Oct. 2, according to a company news release.

The company is also soliciting consents to proposed amendments that would eliminate many of the restrictive covenants in the notes' indentures and make the indentures consistent with the indenture for the new notes.

Noteholders may deliver consents before 5 p.m. ET on Sept. 17 without tendering their notes for a consent fee of $2.50 per $1,000 principal amount. All holders who tender their notes for exchange will be deemed to have delivered consents.

The consent payment will be made in new notes for holders who participate in the exchange offers and in cash for all other consenting noteholders.

Modified Dutch auction

The exchange offers are being conducted as a modified Dutch auction. Eligible holders must specify a bid price. The total amount payable for each series of notes will be determined based on a formula consisting of a base price for that series plus a to-be-determined clearing premium applicable to all series of notes.

The total consideration will be payable in the form of new notes.

Holders must tender their notes by the consent date in order to receive the total consideration. Holders tendering after that date will receive the total consideration less an early participation payment equal to $17.50 for each $1,000 principal amount and less the $2.50 consent fee.

The bid price must be made in increments of $2.50 and may not be more than $20.00 greater than the base price for that series of notes. The base price is $1,005 for the 7¼% notes and $1,000 for the 7 3/8% notes.

The clearing premium for all series of notes will be determined by consideration of the bid premiums - the amount by which the bid price exceeds the base price - of all tendered notes. The clearing premium will be the lowest single premium such that for all tendered notes whose bid price resulted in a bid premium equal to or less than this lowest single premium, the total principal amount of all such tenders is not less than $2 billion principal amount of notes.

If less than the maximum amount is tendered but NRG still elects to proceed with the exchange offers, the clearing premium will be the highest bid premium received.

If all notes tendered at a bid price that resulted in a bid premium equal to or less than the clearing premium have a total principal amount that exceeds the maximum amount, all holders who tendered with a bid premium at or below the clearing premium will be accepted on a prorated basis using a single proration rate across all series of notes accepted.

Holders who exchange will also receive, in cash, accrued interest up to but excluding the settlement date.

The exchange offers and the consent solicitations are subject to the receipt of consents from a majority of all three series of notes and are being made only to qualified institutional buyers and to some non-U.S. investors located outside the United States.

Global Bondholder Services Corp. (866 387-1500 or 212 430-3774) is the information agent.

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

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