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Registration No. 333-130549
The information in this prospectus supplement and the accompanying prospectus is not complete and may be changed. This prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
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Proceeds, before | ||||||||||||
Public | Underwriting | expenses, to | ||||||||||
Offering Price | Discounts | NRG Energy, Inc. | ||||||||||
Per 2014 floating rate note | ||||||||||||
Total | ||||||||||||
Per 2014 fixed rate note | ||||||||||||
Total | ||||||||||||
Per 2016 note | ||||||||||||
Total |
MORGAN STANLEY | CITIGROUP |
BANC OF AMERICA SECURITIES LLC |
DEUTSCHE BANK SECURITIES |
GOLDMAN, SACHS & CO. |
MERRILL LYNCH & CO. |
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Prospectus | |||||
Where You Can Find More Information | ii | ||||
Incorporation of Certain Documents by Reference | ii | ||||
Disclosure Regarding Forward-Looking Statements | iii | ||||
NRG Energy, Inc. | 1 | ||||
Description of Securities We May Offer | 2 | ||||
Debt Securities and Guarantees | 2 | ||||
Preferred Stock | 4 | ||||
Common Stock | 6 | ||||
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preference Dividends | 7 | ||||
Use of Proceeds | 8 | ||||
Validity of the Securities | 8 | ||||
Experts | 8 |
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1. | NRG’s annual report onForm 10-K for the year ended December 31, 2004 filed on March 30, 2005 as amended by the current report on Form 8-K filed on December 20, 2005. |
3. | NRG’s quarterly reports onForm 10-Q for the quarters ended March 31, 2005 (filed on May 10, 2005), June 30, 2005 (filed on August 9, 2005) and September 30, 2005 (filed on November 7, 2005). | |
4. | NRG’s current reports onForm 8-K filed on February 24, 2005, Form 8-K filed on March 3, 2005, twoForms 8-K filed on March 30, 2005 (which do not include information deemed “furnished”), |
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Form 8-K filed on May 24, 2005,Form 8-K/ A filed on May 24, 2005,Form 8-K/ A filed on May 25, 2005, Form 8-K filed on June 15, 2005,Form 8-K/ A filed on June 15, 2005,Form 8-K filed on June 17, 2005, Form 8-K filed on July 18, 2005,Form 8-K filed on August 1, 2005,Form 8-K filed on August 3, 2005,Form 8-K filed on August 9, 2005 (which does not include information deemed “furnished”),Form 8-K filed on August 11, 2005,Form 8-K filed on September 1, 2005,Form 8-K filed on September 7, 2005 (which does not include information deemed “furnished”),Form 8-K filed on October 3, 2005,Form 8-K filed on October 12, 2005,Form 8-K filed on November 7, 2005 (which does not include information deemed “furnished”),Form 8-K filed on December 20, 2005, Form8-K filed on December 21, 2005,Form 8-K filed on December 28, 2005 (which does not include information deemed “furnished”),Form 8-K filed on January 4, 2006, Form 8-K filed on January 5, 2006,Form 8-K/A filed on January 5, 2006,Form 8-K filed on January 13, 2006,Form 8-K filed on January 23, 2006 andForm 8-K/A filed on January 23, 2006. |
• | Risks and uncertainties related to the capital markets generally, including increases in interest rates and the availability of financing for the acquisition of Texas Genco LLC; | |
• | NRG’s indebtedness and the additional indebtedness that it will incur in connection with the acquisition of Texas Genco LLC; | |
• | NRG’s ability to successfully complete the acquisition of Texas Genco LLC, regulatory or other limitations that may be imposed as a result of the acquisition of Texas Genco LLC, and the success of the business following the acquisition of Texas Genco LLC; |
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• | General economic conditions, changes in the wholesale power markets and fluctuations in the cost of fuel or other raw materials; | |
• | Hazards customary to the power production industry and power generation operations such as fuel and electricity price volatility, unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fossil fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that we may not have adequate insurance to cover losses as a result of such hazards; | |
• | NRG’s potential inability to enter into contracts to sell power and procure fuel on terms and prices acceptable to it; | |
• | The liquidity and competitiveness of wholesale markets for energy commodities; | |
• | Changes in government regulation, including possible changes of market rules, market structures and design, rates, tariffs, environmental laws and regulations and regulatory compliance requirements; | |
• | Price mitigation strategies and other market structures or designs employed by independent system operators, or ISOs, or regional transmission organizations, or RTOs, that result in a failure to adequately compensate our generation units for all of their costs; | |
• | NRG’s ability to realize its significant deferred tax assets, including loss carry forwards; | |
• | The effectiveness of NRG’s risk management policies and procedures, and the ability of NRG’s counterparties to satisfy their financial commitments; | |
• | Counterparties’ collateral demands and other factors affecting NRG’s liquidity position and financial condition; | |
• | NRG’s ability to operate its businesses efficiently, manage capital expenditures and costs tightly (including general and administrative expenses), and generate earnings and cash flow from its asset-based businesses in relation to its debt and other obligations; and | |
• | Significant operating and financial restrictions which may be placed on NRG as a result of the financing transactions described elsewhere in this prospectus supplement. |
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• | the term “NRG” refers to NRG Energy, Inc., together with its consolidated subsidiaries; | |
• | the term “Texas Genco” refers to Texas Genco LLC, together with its consolidated subsidiaries; | |
• | the term “2014 floating rate notes” refers to NRG’s Floating Rate Senior Notes due 2014 offered pursuant to this prospectus supplement; | |
• | the term “2014 fixed rate notes” refers to NRG’s % Senior Notes due 2014 offered pursuant to this prospectus supplement; | |
• | the term “2016 notes” refers to NRG’s % Senior Notes due 2016 offered pursuant to this prospectus supplement; | |
• | the term “2014 notes” refers to the 2014 floating rate notes and the 2014 fixed rate notes, collectively; | |
• | the term “notes” refers to the 2014 notes and the 2016 notes, collectively; | |
• | the term “2014 floating rate indenture” refers to the base indenture dated December 21, 2005, as supplemented by the 2014 floating rate supplemental indenture to be dated February , 2006 among NRG, the Guarantors and Law Debenture Trust Company, as trustee; | |
• | the term “2014 fixed rate indenture” refers to the base indenture dated December 21, 2005, as supplemented by the 2014 fixed rate supplemental indenture to be dated February , 2006 among NRG, the Guarantors and Law Debenture Trust Company, as trustee; | |
• | the term “2016 indenture” refers to the base indenture dated December 21, 2005, as supplemented by the 2016 notes supplemental indenture to be dated February , 2006 among NRG, the Guarantors and Law Debenture Trust Company, as trustee; | |
• | the term “indentures” refers to the 2014 floating rate indenture, the 2014 fixed rate indenture and the 2016 indenture, collectively; | |
• | the term “Acquisition” refers to the purchase by NRG of all the outstanding equity interests of Texas Genco, pursuant to the acquisition agreement, dated as of September 30, 2005, between NRG, Texas Genco and the sellers named therein; | |
• | the term “Financing Transactions” refers to this offering and the concurrent offerings by NRG of its common stock and mandatory convertible preferred stock and the application of the net proceeds therefrom, and the execution of NRG’s new senior secured credit facility and the application of the initial borrowings thereunder, each as described elsewhere in this prospectus supplement; | |
• | the term “Transactions” refers to the Acquisition, the Financing Transactions, the pending sale of Audrain Generating LLC, the pending acquisition of 50% interest in WCP (Generation) Holdings LLC and the pending sale of our 50% ownership interest in Rocky Road Power LLC, or Rocky Road; | |
• | the terms “we”, “our”, “us”, the “combined company” and the “Company” refer to NRG and Texas Genco on a combined basis, together with their consolidated subsidiaries, after giving pro forma effect to the completion of the Acquisition and the Financing Transactions; | |
• | the terms “MW” and “MWh” refer to megawatts and megawatt-hours. The megawatt figures provided represent nominal summer net megawatt capacity of power generated as adjusted for the combined company’s ownership position excluding capacity from inactive/mothballed units as of September 30, 2005. NRG has previously shown gross MWs when presenting its operations. Capacity is tested following standard industry practices. The combined company’s numbers denote saleable MWs net of internal/parasitic load. The MW and MWh figures and other operational figures related to the combined company only give pro forma effect to the Acquisition and the Financing Transactions; and | |
• | the term “expected annual baseload generation” refers to the net baseload capacity limited by economic factors (relationship between cost of generation and market price) and reliability factors (scheduled and unplanned outages). |
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Sources(1) | Amount | ||||||
(in millions) | |||||||
Gross proceeds of 2014 floating rate notes offered hereby | $ | 300 | |||||
Gross proceeds of 2014 fixed rate notes offered hereby | 1,100 | ||||||
Gross proceeds of 2016 notes offered hereby | 2,200 | ||||||
New senior secured term loan facility | 3,575 | ||||||
Cash released from canceling existing funded letter of credit facility(3) | 350 | ||||||
Gross proceeds of common stock offering | 1,000 | ||||||
Common stock consideration to be issued to Sellers | 1,606 | (2) | |||||
Gross proceeds of mandatory convertible preferred stock offering | 500 | ||||||
NRG’s cash on hand | 383 | ||||||
Total | $ | 11,014 | |||||
Uses | Amount | |||||||
(in millions) | ||||||||
Purchase price less acquisition costs(2) | $ | 6,005 | ||||||
Texas Genco’s cash on hand to reduce consideration | (222 | ) | ||||||
Refinancing: | ||||||||
Repayment of NRG’s existing credit facilities(3) | 877 | |||||||
Repayment of Texas Genco’s existing credit facilities(4) | 1,614 | |||||||
Total repayment of existing credit facilities | 2,491 | |||||||
Repurchase of NRG’s Second Priority Notes(5) | 1,080 | |||||||
Repurchase of Texas Genco’s Unsecured Senior Notes(6) | 1,125 | |||||||
Accrued interest for NRG and Texas Genco outstanding debt | 52 | |||||||
Estimated underwriting commissions, tender offer premiums, fees and expenses | 483 | |||||||
Total | $ | 11,014 | ||||||
(1) | NRG has entered into the commitment letter with the bridge lenders pursuant to which the bridge lenders have committed to fund NRG’s new senior secured credit facility and to provide, subject to certain conditions, the additional financing required for the Acquisition through a $5.1 billion bridge loan facility in the event that this offering, the common stock offering and/or the mandatory convertible preferred stock offering are not consummated. In the event that NRG is unable to raise sufficient proceeds through the consummation of this offering, the common stock offering and/or the mandatory convertible preferred stock offering, NRG may draw down on the bridge loan facility, in whole or in part, in order to finance the Acquisition. In the event that NRG does not consummate the common stock and mandatory convertible stock offerings as currently contemplated and elects not to consummate the financing under the bridge loan facility, it could seek alternative sources of financing for the Acquisition, which may include, among other alternatives, the issuance in part of senior secured debt securities or borrowing in part on a senior secured basis. |
(2) | The common stock component of the consideration for the Acquisition is based on a fair value of $45.37 per share of NRG’s common stock and consideration with a fair value of $368 million, or the Other Consideration, which may be comprised of either an additional 9,038,125 shares of common stock, additional cash, shares of a new series of NRG’s Cumulative Preferred Stock or a combination of the foregoing. This fair value is based on an average stock price of $40.73, as prescribed by the Acquisition |
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Agreement. The Company has elected to pay this amount in cash. This is because the foregoing table is based on a pro forma closing date of the Acquisition of September 30, 2005. To the extent the fair value of NRG’s common stock price for purposes of the equity component, and Texas Genco’s cash on hand, is different at closing of the Acquisition, this amount and the purchase price for the Acquisition will be adjusted accordingly. |
(3) | Before giving effect to the Acquisition and the Financing Transactions, as of September 30, 2005, NRG had $876.6 million of outstanding indebtedness under its amended and restated credit facility, which consisted of (a) $446.6 million in term loans outstanding, which term loans provide for interest at a rate of LIBOR (4.02% at September 30, 2005) plus 187.5 basis points payable quarterly and mature on December 24, 2011, (b) $80.0 million in principal amount outstanding under the revolving credit facility, which provides for interest at a rate of LIBOR (3.83% at September 30, 2005) plus 2.5% and matures on December 24, 2007 and (c) $350.0 million outstanding under the funded letter of credit facility, which provide for a participation fee of 1.875%, a deposit fee of 0.10%, and an issuance fee of 0.25%, and matures on December 24, 2011. |
(4) | Before giving effect to the Acquisition and Financing Transactions, as of September 30, 2005, Texas Genco had $1,614 million in term loans outstanding under its existing senior secured credit facility, which term loans provide for interest at a rate of 5.94% (as of September 30, 2005) payable at least quarterly and mature in December 2011. |
(5) | Before giving effect to the Acquisition and Financing Transactions, as of September 30, 2005, NRG had $1.08 billion of Second Priority Notes outstanding, which provide for cash interest at 8.0% per annum payable semiannually. |
(6) | Before giving effect to the Acquisition and Financing Transactions, as of September 30, 2005, Texas Genco had $1.125 billion of Unsecured Senior Notes outstanding, which provide for cash interest at 6.875% per annum payable semiannually. |
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![CORPORATE STRUCTURE GRAPH](https://capedge.com/proxy/424B3/0000950123-06-000584/y16555by1655505.gif)
(1) | The combined company’s corporate structure also includes $246.2 million of our 3.625% Convertible Preferred Stock, which is reflected in the mezzanine section of NRG’s balance sheet as of September 30, 2005. |
(2) | $1.0 billion revolving credit facility is expected to be undrawn at closing of the Acquisition and the Financing Transactions. |
(3) | Includes Camas, Thermal and Peakers. Such subsidiaries had $368 million of outstanding debt as of September 30, 2005 on a pro forma basis. Although the Excluded Domestic Subsidiaries do not guarantee the notes, their results of operations will be counted when measuring certain financial ratios under the terms of the notes. See “Description of the Notes.” |
(4) | Includes SEG, Itiquira and Flinders. Such subsidiaries had $470 million of outstanding debt as of September 30, 2005 on a pro forma basis. Although the Excluded Foreign Subsidiaries do not guarantee the notes, their results of operations will be counted when measuring certain financial ratios under the terms of the notes. See “Description of the Notes.” |
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Issuer | NRG Energy, Inc. | |
Notes | $ in aggregate principal amount of Floating Rate Senior Notes due 2014. | |
$ in aggregate principal amount of % Senior Notes due 2014. | ||
$ in aggregate principal amount of % Senior Notes due 2016. | ||
Maturity Date | The 2014 notes will mature on February 1, 2014. | |
The 2016 notes will mature on February 1, 2016. | ||
Interest Rates | The 2014 floating rate notes will accrue interest from the date of their issuance at a floating rate per year equal to LIBOR (as defined) plus %, and will be reset and payable quarterly on each February 1, May 1, August 1 and November 1. | |
The 2014 fixed rate notes will accrue interest at a rate per year equal to %. | ||
The 2016 notes will accrue interest at a rate per year equal to %. | ||
Interest Payment Dates | We will pay interest on the 2014 fixed rate notes and 2016 notes on February 1 and August 1 of each year, commencing August 1, 2006. | |
We will pay interest on the 2014 floating rate notes on February 1, May 1, August 1 and November 1, commencing May 1, 2006. | ||
Guarantees | The notes will be guaranteed jointly and severally by each of our current and future restricted subsidiaries, excluding certain foreign, project and immaterial subsidiaries. Significant guarantors will include NRG Power Marketing, Inc., NRG South Central Generating LLC and certain of its subsidiaries, and the subsidiaries owning NRG’s assets in the MidAtlantic region and in the Northeast region. Each guarantee will rankpari passuwith all existing and future senior indebtedness of that guarantor and will be senior in right of payment to all existing and future subordinated indebtedness of that guarantor. | |
Ranking | The notes will be our general unsecured obligations and will rank: | |
•pari passuin right of payment with all existing and future unsecured senior indebtedness of NRG; and | ||
• senior in right of payment to any future subordinated indebtedness of NRG. | ||
Because the notes will be guaranteed by only certain of our subsidiaries, they will be structurally subordinated to all indebtedness and other liabilities, including trade payables, of those subsidiaries that do not guarantee the notes. After giving pro forma effect to the Transactions, (i) our guarantor subsidiaries accounted for approximately 90% of our revenues from wholly-owned operations for the nine months ended September 30, 2005 and held approxi- |
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mately 90% of our consolidated assets as of September 30, 2005, and (ii) our non-guarantor subsidiaries had approximately $781 million in aggregate principal amount of external funded indebtedness as of September 30, 2005, and our outstanding consolidated trade payables were $339 million as of September 30, 2005. Approximately 77% of these trade payables constituted obligations of NRG and its guarantor subsidiaries. See “Risk Factors—Risks Related to the Offering—We may not have access to the cash flow and other assets of our subsidiaries that may be needed to make payment on the notes.” | ||
Optional Redemption | On or after February 1, 2008, we can redeem some or all of the 2014 floating rate notes at the redemption prices listed in the “Description of the Notes—Optional Redemption—2014 Floating Rate Notes” section of this prospectus supplement, plus accrued and unpaid interest. | |
We may redeem some or all of the 2014 fixed rate notes at any time prior to February 1, 2010 at a price equal to 100% of the principal amount of the 2014 fixed rate notes redeemed plus a “make-whole” premium and accrued and unpaid interest. On or after February 1, 2010, we can redeem some or all of the 2014 fixed rate notes at the redemption prices listed in the “Description of the Notes—Optional Redemption—2014 Fixed Rate Notes” section of this prospectus supplement, plus accrued and unpaid interest. | ||
We may redeem some or all of the 2016 notes at any time prior to February 1, 2011 at a price equal to 100% of the principal amount of the 2016 notes redeemed plus a “make-whole”’ premium and accrued and unpaid interest. On or after February 1, 2011, we can redeem some or all of the 2016 notes at the redemption prices listed in the “Description of the Notes—Optional Redemption—2016 Notes” section of this prospectus supplement, plus accrued and unpaid interest. | ||
Prior to February 1, 2008, we may redeem up to 35% of the 2014 floating rate notes issued under the 2014 floating rate indenture with the net cash proceeds of certain equity offerings, provided at least 65% of the aggregate principal amount of the 2014 floating rate notes issued in this offering remains outstanding after the redemption. | ||
Prior to February 1, 2009, we may redeem up to 35% of the 2014 fixed rate notes issued under the 2014 fixed rate indenture with the net cash proceeds of certain equity offerings, provided at least 65% of the aggregate principal amount of the 2014 fixed rate notes issued in this offering remains outstanding after the redemption. | ||
Prior to February 1, 2009, we may redeem up to 35% of the 2016 notes issued under the 2016 indenture with the net cash proceeds of certain equity offerings, provided at least 65% of the aggregate principal amount of the 2016 notes issued in this offering remains outstanding after the redemption. | ||
NRG may redeem the notes, at its option, in whole but not in part, at any time prior to September 30, 2006 at a redemption price |
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equal to 100% of the aggregate principal amount of the notes plus accrued interest to, but not including, the redemption date if, in its judgment, any of the conditions to the release of funds from the escrow account to NRG to fund the Acquisition will not be satisfied on or prior to September 30, 2006. | ||
Change of control | Upon the occurrence of a change of control, holders of the notes will have the right, subject to certain conditions, to require us to repurchase their notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase. See “Description of the Notes—Repurchase at the Option of Holders—Change of Control.” | |
Certain Covenants | The indentures governing the notes will contain certain covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to: | |
• incur additional debt; | ||
• declare or pay dividends, redeem stock or make other distributions to stockholders; | ||
• create liens; | ||
• make certain restricted investments; | ||
• enter into transactions with affiliates; | ||
• sell or transfer assets; and | ||
• consolidate or merge. | ||
These covenants are subject to a number of important qualifications and limitations. See “Description of the Notes—Certain Covenants.” | ||
Escrow of Proceeds; Redemption | The underwriters will deposit the net proceeds of this offering (after payment of underwriting discounts and commissions) into an escrow account held by the escrow agent, and these proceeds will be used to pay the special mandatory redemption price for the notes described below, when and if due. | |
The notes are subject to a special mandatory redemption at a redemption price equal to 100% of the aggregate principal amount of the notes plus accrued interest to, but not including, the redemption date if the Acquisition is not consummated by September 30, 2006 on substantially the terms described in this prospectus supplement. NRG has received consents from the lenders under its existing credit facility to permit the funding of the escrow, the granting of a lien on the escrow account and the making of the special mandatory redemption in connection with this offering and the Acquisition. | ||
The funds held in the escrow account, including the net proceeds from this offering, will be released from escrow to NRG upon consummation of the Acquisition on substantially the terms described in this prospectus supplement on or prior to September 30, 2006. See “Description of the Notes—Escrow of Proceeds; Special Mandatory Redemption.” |
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Use of Proceeds | We estimate that the net proceeds of this offering, after giving effect to underwriting discounts and commissions, will be approximately $ million. We intend to use the net proceeds from this offering and the offerings of common stock and the mandatory convertible preferred stock, together with initial borrowings under our new senior secured credit facility and cash on hand, (i) to finance the Acquisition, (ii) to repurchase NRG’s outstanding Second Priority Notes, (iii) to repurchase Texas Genco’s outstanding Unsecured Senior Notes, (iv) to repay amounts outstanding under NRG’s existing senior secured credit facility and Texas Genco’s existing senior secured credit facility, (v) for ongoing credit needs of the combined company, including replacement of existing letters of credit and (vi) to pay related fees, premiums and expenses. See “Use of Proceeds.” |
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NRG Energy, | Texas Genco | NRG Energy, | Texas Genco | Pro Forma Combined | ||||||||||||||||||||
Inc.(1) | LLC | Inc.(1) | LLC | Company(1)(2) | ||||||||||||||||||||
For the | ||||||||||||||||||||||||
Period from | ||||||||||||||||||||||||
July 19, | For the | For the | For the | |||||||||||||||||||||
For the Year | 2004 | Nine Months | Nine Months | For the Year | Nine Months | |||||||||||||||||||
Ended | through | Ended | Ended | Ended | Ended | |||||||||||||||||||
December 31, | December 31, | September 30, | September 30, | December 31, | September 30, | |||||||||||||||||||
2004 | 2004 | 2005 | 2005 | 2004 | 2005 | |||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||
($ in thousands, except per share data) | ||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||
Total operating revenues | $ | 2,347,882 | $ | 95,847 | $ | 1,942,828 | $ | 1,999,827 | $ | 5,394,910 | $ | 5,180,190 | ||||||||||||
Total operating costs and expenses | 1,955,887 | 82,105 | 1,861,569 | 1,502,170 | 4,559,583 | 3,820,967 | ||||||||||||||||||
Income/(loss) from continuing operations | 159,144 | (20,133 | ) | 6,991 | 345,928 | 183,286 | 617,507 | |||||||||||||||||
Income/(loss) on discontinued operations, net of income taxes | 26,473 | — | 12,612 | — | NA | NA | ||||||||||||||||||
Net income/(loss) | 185,617 | (20,133 | ) | 19,603 | 345,928 | NA | NA | |||||||||||||||||
Earnings per share-Basic | $ | 1.86 | $ | (0.13 | ) | $ | 0.07 | $ | 2.05 | $ | 0.96 | $ | 4.02 | |||||||||||
Earnings per share-Diluted | $ | 1.85 | $ | (0.13 | ) | $ | 0.07 | $ | 1.98 | $ | 0.96 | $ | 3.70 | |||||||||||
Other Financial Data: | ||||||||||||||||||||||||
Capital expenditures | $ | (114,360 | ) | $ | (5,744 | ) | $ | (45,518 | ) | (73,781 | ) | (120,104 | ) | (119,299 | ) | |||||||||
Cash flows from operating activities | 643,993 | 36,023 | (113,802 | ) | 408,821 | NA | NA | |||||||||||||||||
EBITDA(3)(4)(5) | 965,627 | 26,614 | 395,874 | 764,463 | 1,763,642 | 842,040 | ||||||||||||||||||
Ratio of earnings to fixed charges | 1.83 | x | 0.4 | x | 1.19 | x | 3.70 | x | 1.39 | x | 3.41 | x | ||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,103,678 | 85,939 | $ | 504,336 | 222,393 | NA | 153,967 | ||||||||||||||||
Restricted cash | 109,633 | — | 91,508 | — | NA | 91,508 | ||||||||||||||||||
Total Assets | 7,830,283 | 4,587,566 | 7,795,367 | 6,098,723 | NA | 20,818,402 | ||||||||||||||||||
Total long-term debt including current maturities | 3,723,854 | 2,280,105 | 3,042,398 | 2,742,910 | NA | 7,634,504 | ||||||||||||||||||
Stockholders’ equity/(deficit) | 2,692,164 | 771,516 | 2,019,168 | 773,112 | NA | 4,952,919 |
(1) | NRG’s results and our pro forma results include the following items that have had a significant impact on operations during the periods indicated below: |
Pro Forma | ||||||||||||||||
NRG Energy, Inc. | Combined Company | |||||||||||||||
For the | For the | |||||||||||||||
For the | Nine Months | For the | Nine Months | |||||||||||||
Year Ended | Ended | Year Ended | Ended | |||||||||||||
December 31, | September 30, | December 31, | September 30, | |||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||
($ in thousands) | ||||||||||||||||
(Income)/loss on discontinued operations, net of income taxes | $ | 26,473 | $ | 12,612 | —(a | ) | —(a | ) | ||||||||
Corporate relocation charges | 16,167 | 5,651 | 16,167 | 5,651 | ||||||||||||
Reorganization items | (13,390 | ) | — | (13,390 | ) | — | ||||||||||
Restructuring and impairment charges | 44,661 | 6,223 | 69,009 | 6,223 | ||||||||||||
Gain on sale of assets | — | — | (689 | ) | (28,358 | ) | ||||||||||
Write downs, gains and losses on sales of equity method investments | (16,270 | ) | 15,894 | (16,270 | ) | 15,894 | ||||||||||
FERC authorized settlement | (38,357 | ) | — | (38,357 | ) | — | ||||||||||
Write down of Note Receivable | 4,572 | — | 4,572 | — |
(a) | Our pro forma combined company reflects items from continuing operations only. |
(2) | On May 19, 2005, pursuant to the exercise of a right of first refusal, or the ROFR, by Texas Genco, subsequent to a third party offer to American Electric Power, or AEP, in early 2004, Texas Genco acquired from AEP an additional 13.2% undivided interest in South Texas Project Electric Generating Station, or STP. As a result, Texas Genco currently owns a 44.0% undivided interest in |
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STP. For pro forma purposes, NRG has accounted for the ROFR as a business acquisition and included the ROFR in its pro forma adjustments to the statements of operation. NRG has also accounted for the sale of Audrain, the acquisition of WCP and the sale of Rocky Road for purposes of these pro forma financial statements. | |
(3) | NRG and Texas Genco’s EBITDA represent net income before interest, taxes, depreciation and amortization. We present EBITDA because we consider it an important supplemental measure of our liquidity and our ability to service our debt and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies’ liquidity in our industry. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of NRG and Texas Genco’s operating results as reported under accounting principles generally accepted in the United States, or GAAP. Some of these limitations are: |
• | EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures, or contractual commitments; | |
• | EBITDA does not reflect changes in, or cash requirements for, our working capital needs; | |
• | EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; | |
• | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our EBITDA does not reflect any cash requirements for such replacements; and | |
• | Other companies may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. | |
The following table summarizes the calculation of NRG’s EBITDA and provides a reconciliation to NRG’s net income for the periods indicated: |
NRG Energy, Inc. | ||||||||
For the | ||||||||
For the Year | Nine Months | |||||||
Ended | Ended | |||||||
December 31, | September 30, | |||||||
2004 | 2005 | |||||||
(unaudited) | (unaudited) | |||||||
($ in thousands) | ||||||||
Net income/(loss) | $ | 185,617 | $ | 19,603 | ||||
Plus | ||||||||
Income tax expense/(benefit) | 65,364 | 21,201 | ||||||
Interest and refinancing expense | 337,714 | 194,634 | ||||||
Depreciation and amortization expense | 208,036 | 144,317 | ||||||
WCP CDWR Contract amortization | 115,751 | — | ||||||
Amortization of power contracts | 35,316 | 6,485 | ||||||
Amortization of emission credits | 17,829 | 9,634 | ||||||
NRG EBITDA | $ | 965,627 | $ | 395,874 |
(4) | The following table summarizes the calculation of Texas Genco’s EBITDA and provides a reconciliation to Texas Genco’s net income for the periods include: |
Predecessor | ||||||||||||||||
Texas Genco | Combined | |||||||||||||||
Holdings, | Texas Genco | Texas Genco | Texas Genco | |||||||||||||
Inc. | LLC | LLC(a) | LLC | |||||||||||||
For the Period | For the | |||||||||||||||
For the Year | from July 19, | For the Year | Nine Months | |||||||||||||
Ended | 2004 through | Ended | Ended | |||||||||||||
December 31, | December 31, | December 31, | September 30, | |||||||||||||
2004 | 2004 | 2004 | 2005 | |||||||||||||
($ in thousands) | (unaudited) | |||||||||||||||
Net income/(loss) | (99,118 | ) | $ | (20,133 | ) | (119,251 | ) | $ | 345,928 | |||||||
Depreciation and amortization | 88,928 | 12,607 | 101,535 | 253,399 | ||||||||||||
Fuel-related depreciation and amortization | 29,079 | — | 29,079 | 10,278 | ||||||||||||
Interest expense | 126 | 34,140 | 34,266 | 134,306 | ||||||||||||
Income taxes | (170,479 | ) | — | (170,479 | ) | 20,552 | ||||||||||
Texas Genco EBITDA | $ | (151,464 | ) | $ | 26,614 | $ | (124,850 | ) | $ | 764,463 |
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(a) | Reflects a combination of Texas Genco LLC and its predecessor, Texas Genco Holdings, Inc., results for the year ended December 31, 2004, combined for presentation purposes only. |
(5) | The following table sets forth a reconciliation of the combined company’s pro forma income from continuing operations to pro forma combined EBITDA: |
Pro Forma Combined Company | |||||||||
For the | |||||||||
For the Year | Nine Months | ||||||||
Ended | Ended | ||||||||
December 31, | September 30, | ||||||||
2004 | 2005 | ||||||||
(unaudited) | (unaudited) | ||||||||
($ in thousands) | |||||||||
Income/(loss) from continuing operations | $ | 183,286 | $ | 617,507 | |||||
Plus | |||||||||
Income tax expense | 51,418 | 394,319 | |||||||
Interest expense | 620,885 | 413,781 | |||||||
Refinancing expense | 71,569 | 44,036 | |||||||
Depreciation and amortization | 780,250 | 460,383 | |||||||
Fuel-related depreciation and amortization | 28,017 | 17,121 | |||||||
Amortization of power contracts | 35,316 | 6,485 | |||||||
Amortization of emission credits | 141,611 | 102,431 | |||||||
Amortization of out of market contracts for coal and power sales | (264,461 | ) | (1,214,023 | ) | |||||
WCP CDWR contract amortization | 115,751 | — | |||||||
Pro forma combined EBITDA | 1,763,642 | 842,040 |
(6) | Our pro forma results include the following items that have had a significant impact on operations during the periods indicated below: |
Pro Forma Combined Company | ||||||||
For the | ||||||||
For the Year | Nine Months | |||||||
Ended | Ended | |||||||
December 31, | September 30, | |||||||
2004 | 2005 | |||||||
(unaudited) | (unaudited) | |||||||
($ in thousands) | ||||||||
Corporate relocation charges | 16,167 | 5,651 | ||||||
Reorganization items | (13,390 | ) | — | |||||
Impairment charges | 69,009 | 6,223 | ||||||
FERC-authorized settlement with CLSP | (38,357 | ) | — | |||||
Write down on notes receivable | 4,572 | — | ||||||
Write downs (Gains)/Loss on sales of equity investments | 16,270 | (15,894 | ) | |||||
(Gains)/Loss on sale of assets | (689 | ) | (28,358 | ) | ||||
Restructuring costs | — | 35,293 | ||||||
Transaction costs | 2,694 | — | ||||||
Domestic mark to market (gains)/loss | (55,253 | ) | 235,156 |
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Many of our power generation facilities operate, wholly or partially, without long-term power sale agreements. |
Our financial performance may be impacted by future decreases in oil and natural gas prices, significant and unpredictable price fluctuations in the wholesale power markets and other market factors that are beyond our control. |
• | increases and decreases in generation capacity in our markets, including the addition of new supplies of power from existing competitors or new market entrants as a result of the development of new generation plants, expansion of existing plants or additional transmission capacity; |
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• | changes in power transmission or fuel transportation capacity constraints or inefficiencies; | |
• | electric supply disruptions, including plant outages and transmission disruptions; | |
• | weather conditions; | |
• | changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools and practices; | |
• | availability of competitively priced alternative power sources; | |
• | development of new fuels and new technologies for the production of power; | |
• | natural disasters, wars, embargoes, terrorist attacks and other catastrophic events; | |
• | regulations and actions of the ISOs or RTOs; and | |
• | federal and state power market and environmental regulation and legislation. |
Our costs, results of operations, financial condition and cash flows could be adversely impacted by an increase in fuel prices or disruption of our fuel supplies. |
• | weather conditions; | |
• | seasonality; | |
• | demand for energy commodities and general economic conditions; | |
• | disruption of electricity, gas or coal transmission or transportation, infrastructure or other constraints or inefficiencies; | |
• | additional generating capacity; | |
• | availability of competitively priced alternative energy sources; |
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• | availability and levels of storage and inventory for fuel stocks; | |
• | natural gas, crude oil, refined products and coal production levels; | |
• | the creditworthiness or bankruptcy or other financial distress of market participants; | |
• | changes in market liquidity; | |
• | natural disasters, wars, embargoes, acts of terrorism and other catastrophic events; | |
• | federal, state and foreign governmental regulation and legislation; and | |
• | our creditworthiness and liquidity and willingness of fuel suppliers/transporters to do business with us. |
There may be periods when we will not be able to meet our commitments under our forward sales obligations at a reasonable cost or at all. |
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Our trading operations and the use of hedging agreements could result in financial losses that negatively impact our results of operations. |
We may not have sufficient liquidity to hedge market risks effectively. |
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The accounting for our hedging activities may increase the volatility in our quarterly and annual financial results. |
• | electricity sales from our generation assets; | |
• | fuel utilized by those assets; and | |
• | emission allowances. |
Goodwill and/or other intangible assets that we will record in connection with the Acquisition are subject to mandatory annual impairment evaluations and as a result, the combined company could be required to write off some or all of this goodwill and other intangibles, which may adversely affect its financial condition and results of operations. |
Competition in wholesale power markets may have a material adverse effect on our results of operations, cash flows and the market value of our assets. |
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Operation of power generation facilities involves significant risks that could have a material adverse effect on our revenues and results of operations. |
Construction, expansion and refurbishment of power generation facilities involve significant risks that could result in unplanned power outages or reduced output and could have a material adverse effect on our revenues and results of operations. |
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• | delays in obtaining necessary permits and licenses; | |
• | environmental remediation of soil or groundwater at contaminated sites; | |
• | interruptions to dispatch at our facilities; | |
• | supply interruptions; | |
• | work stoppages; | |
• | labor disputes; | |
• | weather interferences; | |
• | unforeseen engineering, environmental and geological problems; and | |
• | unanticipated cost overruns. |
Supplier and/or customer concentration at certain of our facilities may expose us to significant financial credit or performance risks. |
We rely on power transmission facilities that we do not own or control and are subject to transmission constraints within a number of our core regions. If these facilities fail to provide us with adequate transmission capacity, we may be restricted in our ability to deliver wholesale electric power to our customers and we may either incur additional costs or forego revenues. Conversely, improvements to certain transmission systems could also reduce revenues. |
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Because we own less than a majority of some of our project investments, we cannot exercise complete control over their operations. |
Future acquisition activities may not be successful. |
Our operations are subject to hazards customary to the power generation industry. We may not have adequate insurance to cover all of these hazards. |
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Our business is subject to substantial governmental regulation and may be adversely affected by liability under, or any future inability to comply with, existing or future regulations or requirements. |
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Texas Genco’s ownership interest in a nuclear power facility subjects it to regulations, costs and liabilities uniquely associated with these types of facilities. |
We are subject to environmental laws and regulations that impose extensive and increasingly stringent requirements on our ongoing operations, as well as potentially substantial liabilities arising out of environmental contamination. These environmental requirements and liabilities could adversely impact our results of operations, financial condition and cash flows. |
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The value of our assets is subject to the nature and extent of decommissioning and remediation obligations applicable to us. |
Our business, financial condition and results of operations could be adversely impacted by strikes or work stoppages by our unionized employees. |
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Changes in technology may impair the value of our power plants. |
Acts of terrorism could have a material adverse effect on our financial condition, results of operations and cash flows. |
Our international investments are subject to additional risks that our U.S. investments do not have. |
• | fluctuations in currency valuation; | |
• | currency inconvertibility; | |
• | expropriation and confiscatory taxation; | |
• | restrictions on the repatriation of capital; and | |
• | approval requirements and governmental policies limiting returns to foreign investors. |
Texas Genco’s plants are the subject of a number of lawsuits filed by a large number of individuals who claim injury due to exposure to asbestos while working at sites along the Texas Gulf Coast, and NRG is also subject to asbestos-related claims with respect to certain of its facilities. |
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Our high level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, expose us to the risk of increased interest rates, make it more difficult for us to satisfy our obligations with respect to the notes offered hereby and limit our ability to react to changes in the economy or our industry. |
• | increasing our vulnerability to general economic and industry conditions; | |
• | requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to pay dividends to holders of our preferred or common stock or to use our cash flow to fund our operations, capital expenditures and future business opportunities; | |
• | limiting our ability to enter into long-term power sales or fuel purchases which require credit support; | |
• | exposing us to the risk of increased interest rates because certain of our borrowings, including borrowings under our senior secured credit facilities, are, and under our new senior secured credit facility and the 2014 floating rate notes will be, at variable rates of interest; | |
• | making it more difficult for us to satisfy our obligations with respect to these notes; | |
• | placing us at a competitive disadvantage compared to our competitors that have less debt; | |
• | limiting our ability to obtain additional financing for working capital including collateral postings, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and | |
• | limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who have less debt. |
• | general economic and capital market conditions; | |
• | credit availability from banks and other financial institutions; | |
• | investor confidence in us, our partners and the regional wholesale power markets; | |
• | our financial performance and the financial performance of our subsidiaries; | |
• | our levels of indebtedness and compliance with covenants in debt agreements; | |
• | maintenance of acceptable credit ratings; | |
• | cash flow; and | |
• | provisions of tax and securities laws that may impact raising capital. |
We may not be able to realize the anticipated benefits from the Acquisition. |
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Because the historical and pro forma financial information incorporated by reference or included elsewhere in this prospectus supplement may not be representative of our results as a combined company or capital structure after the Acquisition, and NRG’s and Texas Genco’s historical financial information are not comparable to their current financial information, you have limited financial information on which to evaluate us, NRG, Texas Genco and your investment decision. |
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The net proceeds from this offering will be deposited in escrow and we will be required to redeem the notes if we do not consummate the Acquisition on substantially the terms described in this prospectus supplement on or before September 30, 2006. |
If the Acquisition is not completed on or prior to September 30, 2006, NRG may not be able to obtain all the funds necessary to finance the special mandatory redemption required by the indentures. |
In a bankruptcy proceeding, the holders of notes might not be able to apply the escrowed funds to repay the notes without bankruptcy court approval. |
If NRG is unable to raise sufficient proceeds through other Financing Transactions described elsewhere in this prospectus supplement, NRG may draw down on a bridge loan facility in order to close the Acquisition which would significantly increase our indebtedness. If NRG elects not to consummate the financing under the bridge loan facility, NRG may seek alternative sources of financing for the Acquisition, the terms of which are unknown to us and could limit our ability to operate our business. |
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Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage. |
To service our indebtedness, we will use a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. |
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In the event of a bankruptcy or insolvency, holders of our secured indebtedness and other secured obligations will have a prior secured claim to any collateral securing such indebtedness or other obligations. |
Your right to receive payments on these notes could be adversely affected if any of our non-guarantor subsidiaries declare bankruptcy, liquidate or reorganize. |
We may not have access to the cash flow and other assets of our subsidiaries that may be needed to make payment on the notes. |
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We may not have the ability to raise the funds necessary to finance the change of control offer required by the indentures. |
Federal and state statutes allow courts, under specific circumstances, to void guarantees and require note holders to return payments received from guarantors. |
• | received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and | |
• | was insolvent or rendered insolvent by reason of such incurrence; or | |
• | was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or | |
• | intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. |
• | the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; or | |
• | if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or | |
• | it could not pay its debts as they become due. |
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Overview |
Certain Terms and Conditions of the Acquisition Agreement |
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Sources(1) | Amount | |||||
(in millions) | ||||||
Gross proceeds of 2014 floating rate notes offered hereby | $ | 300 | ||||
Gross proceeds of 2014 fixed rate notes offered hereby | 1,100 | |||||
Gross proceeds of 2016 notes offered hereby | 2,200 | |||||
New senior secured term loan facility | 3,575 | |||||
Cash released from canceling existing funded letter of credit facility | 350 | |||||
Gross proceeds of common stock offering | 1,000 | |||||
Common stock consideration to be issued to Sellers | 1,606 | (2) | ||||
Gross proceeds of mandatory convertible preferred stock offering | 500 | |||||
NRG’s cash on hand | 383 | |||||
Total | $ | 11,014 | ||||
Uses | Amount | |||||||
(in millions) | ||||||||
Purchase price less acquisition costs(2) | $ | 6,005 | ||||||
Texas Genco’s cash on hand to reduce consideration | (222 | ) | ||||||
Refinancing: | ||||||||
Repayment of NRG’s existing credit facilities | 877 | |||||||
Repayment of Texas Genco’s existing credit facilities | 1,614 | |||||||
Total repayment of existing credit facilities | 2,491 | |||||||
Repurchase of NRG’s Second Priority Notes | 1,080 | |||||||
Repurchase of Texas Genco’s Unsecured Senior Notes | 1,125 | |||||||
Accrued interest for NRG and Texas Genco outstanding debt | 52 | |||||||
Estimated underwriting commissions, tender offer premiums, fees and expenses | 483 | |||||||
Total | $ | 11,014 | ||||||
(1) | NRG has entered into the commitment letter with the bridge lenders pursuant to which the bridge lenders have committed to fund NRG’s new senior secured credit facility and to provide, subject to certain conditions, the additional financing required for the Acquisition through a $5.1 billion bridge loan facility in the event that this offering, the common stock offering and/or the mandatory convertible preferred stock offering are not consummated. In the event that NRG is unable to raise sufficient proceeds through the consummation of this offering, the common stock offering and/or the mandatory convertible preferred stock offering, NRG may draw down on the bridge loan facility, in whole or in part, in order to finance the Acquisition. In the event that NRG does not consummate the common stock and mandatory convertible stock offerings as currently contemplated and elects not to consummate the financing under the bridge loan facility, it could seek alternative sources of financing for the Acquisition, which may include, among other alternatives, the issuance in part of senior secured debt securities or borrowing in part on a senior secured basis. |
(2) | The common stock component of the consideration for the Acquisition is based on a fair value of $45.37 per share of NRG’s common stock and the Other Consideration is valued based on an average common stock price of $40.73, as prescribed by the Acquisition Agreement. This is because the foregoing table is based on a pro forma closing date of the Acquisition of September 30, 2005. To the extent NRG’s common stock price for purposes of the equity component, and Texas Genco’s cash on hand, is different at closing of the Acquisition, this amount and the purchase price for the Acquisition will be adjusted accordingly. |
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As of September 30, 2005 | |||||||||||||||||||||
Cumulative | |||||||||||||||||||||
As Adjusted | |||||||||||||||||||||
Cumulative | for Audrain, | ||||||||||||||||||||
As Adjusted | Refinancing and | Cumulative | |||||||||||||||||||
As Adjusted | for Audrain and | Texas Genco | As Adjusted | ||||||||||||||||||
Historical | for Audrain | Refinancing(9) | Acquisition | for the Transactions(1) | |||||||||||||||||
Cash and cash equivalents | $ | 504.3 | $ | 519.3 | $ | 250.1 | $ | 137.3 | $ | 153.9 | |||||||||||
Restricted cash | 91.5 | 91.5 | 91.5 | 91.5 | 91.5 | ||||||||||||||||
Long-term debt (including revolving line of credit): | |||||||||||||||||||||
Old Senior Secured Credit Facility: | |||||||||||||||||||||
Old Term Loan Facility | 796.6 | 796.6 | — | — | — | ||||||||||||||||
Old Revolving Credit Facility(2) | 80.0 | 80.0 | — | — | — | ||||||||||||||||
Outstanding Second Priority Notes(3) | 1,080.4 | 1,080.4 | — | — | — | ||||||||||||||||
Xcel Energy Note(4) | 9.6 | 9.6 | 9.6 | 9.6 | 9.6 | ||||||||||||||||
New Senior Secured Credit Facility | — | — | 446.6 | 3,575 | 3,575 | ||||||||||||||||
2016 Notes offered hereby | — | — | 1,080.4 | 2,200 | 2,200 | ||||||||||||||||
2014 Fixed Rate Notes offered hereby | — | — | — | 1,100 | 1,100 | ||||||||||||||||
2014 Floating Rate Notes offered hereby | — | — | — | 300 | 300 | ||||||||||||||||
Existing non-guarantor debt(5) | 607.2 | 607.2 | 607.2 | 607.2 | 607.2 | ||||||||||||||||
Total debt, before capital leases | 2,573.8 | 2,573.8 | 2,143.8 | 7,791.8 | 7,791.8 |
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As of September 30, 2005 | |||||||||||||||||||||
Cumulative | |||||||||||||||||||||
As Adjusted | |||||||||||||||||||||
Cumulative | for Audrain, | ||||||||||||||||||||
As Adjusted | Refinancing and | Cumulative | |||||||||||||||||||
As Adjusted | for Audrain and | Texas Genco | As Adjusted | ||||||||||||||||||
Historical | for Audrain | Refinancing(8) | Acquisition | for the Transactions(1) | |||||||||||||||||
Capital leases | 470.4 | 230.5 | 230.5 | 234.4 | 234.4 | ||||||||||||||||
Total debt and capital leases | $ | 3,044.2 | $ | 2,804.3 | $ | 2,374.3 | $ | 8,026.2 | $ | 8,026.2 | |||||||||||
3.625% Convertible Preferred Stock | 246.2 | 246.2 | 246.2 | 246.2 | 246.2 | ||||||||||||||||
Mandatory Convertible Preferred Stock(6) | — | — | — | 486.2 | 486.2 | ||||||||||||||||
Convertible Perpetual Preferred Stock | 406.2 | 406.2 | 406.2 | 406.2 | 406.2 | ||||||||||||||||
Other stockholders’ equity(7) | 1,613.0 | 1,628.2 | 1,538.6 | 4,085.7 | 4,060.5 | ||||||||||||||||
Total capitalization | $ | 5,309.6 | $ | 5,084.9 | $ | 4,565.3 | $ | 13,250.5 | $ | 13,225.3 | |||||||||||
(1) | NRG has entered into the commitment letter with the bridge lenders pursuant to which the bridge lenders have committed to fund NRG’s new senior secured credit facility and to provide, subject to certain conditions, the additional financing required for the Acquisition through a $5.1 billion bridge loan facility in the event that this offering, the common stock offering and/or the mandatory convertible preferred stock offering are not consummated. In the event that NRG is unable to raise sufficient proceeds through the consummation of this offering, the common stock offering and/or the mandatory convertible preferred stock offering, NRG may draw down on the bridge loan facility, in whole or in part, in order to finance the Acquisition. See “Description of Certain Other Indebtedness and Preferred Stock — Bridge Loan Facility.” In the event that NRG does not consummate the common stock and mandatory convertible stock offerings as currently contemplated and elects not to consummate the financing under the bridge loan facility, it could seek alternative sources of financing for the Acquisition, which may include, among other alternatives, the issuance in part of senior secured debt securities or borrowing in part on a senior secured basis. |
(2) | Total borrowing availability under the revolving credit facility portion of NRG’s old senior secured credit facility is $150.0 million, of which $80.0 million was drawn at September 30, 2005. |
(3) | The outstanding balance for the Second Priority Notes has been increased by $14.8 million because the tack-on offering was sold at a premium. The outstanding note balance excludes a decrease of $16.7 million as a result of an unfavorable fair value hedge on an interest rate swap entered into in March 2004. This interest rate swap will remain after the Acquisition and Financing Transactions. |
(4) | Xcel Energy Note has been reduced by $0.4 million as a result of marking the debt to a market rate of 9% in connection with NRG’s Fresh Start reporting on December 5, 2003. The stated interest rate of the note is 3%. |
(5) | As of September 30, 2005, existing non-guarantor debt has been reduced by $59.0 million as a result of marking the debt to a market rate in connection with NRG’s Fresh Start reporting on December 5, 2003. For more information on the various components of NRG’s debt, refer to Note 18 to NRG’s audited consolidated financial statements as of and for the year ended December 31, 2004 as amended on our Current Report on Form 8-K filed on December 20, 2005 incorporated herein by reference. |
(6) | The Mandatory Preferred Convertible Stock will be converted on March 16, 2009 and is subject to a 6% cumulative annual dividend. The Mandatory Convertible Preferred Stock has a total liquidation preference of $500 million and a conversion rate of shares of common stock per share of Mandatory Convertible Preferred Stock and are convertible at the option of the holder at any time. |
(7) | Pro forma adjustments to Stockholders’ Equity include the issuance of $1.0 billion of common stock in the concurrent common stock offering, and the issuance of common stock and reissuance of treasury stock to the Sellers valued at $1,606.4 million. These amounts are impacted by a $15.3 million gain on the sale of Audrain, a $25.2 million loss from the sale of Rocky Road and closing costs net of tax of $115.7 million. |
(8) | Refinancing reflects the changes due to the refinancing of NRG’s old debt structure. |
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Predecessor Company | Reorganized NRG | |||||||||||||||||||||||||||||||
For the Year | For the Year | For the Year | Period from | Period from | For the Year | For the Nine | For the Nine | |||||||||||||||||||||||||
Ended | Ended | Ended | January 1- | December 6- | Ended | Months Ended | Months Ended | |||||||||||||||||||||||||
December 31, | December 31, | December 31, | December 5, | December 31, | December | September 30, | September 30, | |||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2003 | 31, 2004 | 2004 | 2005 | |||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||
($ in thousands, except per share data) | ||||||||||||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||||||||||
Total operating revenues | $ | 1,664,980 | $ | 2,085,350 | $ | 1,938,293 | $ | 1,798,387 | $ | 138,490 | $ | 2,347,882 | $ | 1,770,669 | $ | 1,942,828 | ||||||||||||||||
Legal settlement | — | — | — | 462,631 | — | — | — | — | ||||||||||||||||||||||||
Fresh start reporting adjustments | — | — | — | (4,118,636 | ) | — | — | — | — | |||||||||||||||||||||||
Reorganization items | — | — | — | 197,825 | 2,461 | (13,390 | ) | (1,656 | ) | — | ||||||||||||||||||||||
Restructuring and impairment charges | — | — | 2,563,060 | 237,575 | — | 44,661 | 42,183 | 6,223 | ||||||||||||||||||||||||
Total operating costs and expenses | 1,308,589 | 1,703,531 | 4,321,385 | (1,475,523 | ) | 122,328 | 1,955,887 | 1,459,756 | 1,861,569 | |||||||||||||||||||||||
Minority interest in (earnings)/losses of consolidated subsidiaries | (840 | ) | — | — | — | (134 | ) | (16 | ) | (18 | ) | (36 | ) | |||||||||||||||||||
Equity in earnings of unconsolidated affiliates | 139,364 | 210,032 | 68,996 | 170,901 | 13,521 | 159,825 | 117,187 | 82,501 | ||||||||||||||||||||||||
Write downs and losses on sales of equity method investments | — | — | (200,472 | ) | (147,124 | ) | — | (16,270 | ) | (14,057 | ) | 15,894 | ||||||||||||||||||||
Income/(loss) from continuing operations | 149,729 | 210,502 | (2,788,452 | ) | 2,949,078 | 11,405 | 159,144 | 142,154 | 6,991 | |||||||||||||||||||||||
Income/(loss) on discontinued operations, net of income taxes | 33,206 | 54,702 | (675,830 | ) | (182,633 | ) | (380 | ) | 26,473 | 25,326 | 12,612 | |||||||||||||||||||||
Net income/(loss)(1) | 182,935 | 265,204 | (3,464,282 | ) | 2,766,445 | 11,025 | 185,617 | 167,480 | 19,603 | |||||||||||||||||||||||
Net income per share—basic | NA | NA | NA | NA | $ | 0.11 | $ | 1.86 | $ | 1.67 | $ | 0.07 | ||||||||||||||||||||
Net income per share—diluted | NA | NA | NA | NA | $ | 0.11 | $ | 1.85 | $ | 1.67 | $ | 0.07 | ||||||||||||||||||||
Weighted average shares outstanding-basic (in millions) | NA | NA | NA | NA | 100 | 100 | 100 | 86 | ||||||||||||||||||||||||
Weighted average shares outstanding-diluted (in millions) | NA | NA | NA | NA | 100 | 100 | 100 | 86 |
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Predecessor Company | Reorganized NRG | ||||||||||||||||||||||||||||||||
For the Year | For the Year | For the Year | Period from | Period from | For the Year | For the Nine | For the Nine | ||||||||||||||||||||||||||
Ended | Ended | Ended | January 1- | December 6- | Ended | Months Ended | Months Ended | ||||||||||||||||||||||||||
December 31, | December 31, | December 31, | December 5, | December 31, | December | September 30, | September 30, | ||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2003 | 31, 2004 | 2004 | 2005 | ||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||
($ in thousands, except per share data) | |||||||||||||||||||||||||||||||||
Other Financial and Operating Data and Ratios: | |||||||||||||||||||||||||||||||||
Capital expenditures | $ | (223,560 | ) | $ | (1,322,130 | ) | $ | (1,439,733 | ) | $ | (113,502 | ) | $ | (10,560 | ) | $ | (114,360 | ) | $ | (78,293 | ) | $ | (45,518 | ) | |||||||||
Depreciation and amortization | 92,673 | 140,975 | 207,027 | 218,843 | 11,808 | 208,036 | 158,603 | 144,317 | |||||||||||||||||||||||||
Cash flows from operating activities | 361,678 | 276,014 | 430,042 | 238,509 | (588,875 | ) | 643,993 | 595,421 | (113,802 | ) | |||||||||||||||||||||||
Ratio of earnings to fixed charges(2) | 1.81 | x | 1.26 | x | — | (3) | 9.82 | x(4) | 1.68 | x | 1.83 | x | 1.80 | x | 1.19 | x | |||||||||||||||||
Ratio of earnings to combined fixed charges and preference dividends(2) | 1.81 | x | 1.26 | x | — | (3) | 9.82 | x(4) | 1.68 | x | 1.82 | x | 1.80 | x | 1.04 | x | |||||||||||||||||
Balance Sheet Data (at period end): | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 36,746 | $ | 86,738 | $ | 360,860 | $ | 395,982 | $ | 551,223 | $ | 1,103,678 | $ | 1,098,782 | $ | 504,336 | |||||||||||||||||
Restricted cash | 7,236 | 68,320 | 211,966 | 493,047 | 116,067 | 109,633 | 145,571 | 91,508 | |||||||||||||||||||||||||
Total Assets | 5,986,289 | 12,915,222 | 10,896,851 | 9,167,329 | 9,244,987 | 7,830,283 | 8,185,858 | 7,795,367 | |||||||||||||||||||||||||
Long-term debt: | |||||||||||||||||||||||||||||||||
Recourse corporate level debt | 1,512,386 | 3,742,400 | 3,998,280 | 8,651 | 2,458,690 | 2,544,048 | 2,437,088 | 1,964,865 | |||||||||||||||||||||||||
Non-recourse project level debt | 1,689,954 | 3,946,811 | 4,814,432 | 3,386,434 | 1,689,340 | 1,179,806 | 1,131,764 | 1,077,533 | |||||||||||||||||||||||||
Total long-term debt including current maturities | 3,202,340 | 7,689,211 | 8,812,712 | 3,395,085 | 4,148,030 | 3,723,854 | 3,568,852 | 3,042,398 | |||||||||||||||||||||||||
Stockholders’ equity/(deficit) | 1,462,088 | 2,237,129 | (696,199 | ) | 2,404,000 | 2,437,256 | 2,692,164 | 2,597,151 | 2,019,168 |
(1) | Our results include the following items that have had a significant impact on our operations during the periods indicated below: |
Predecessor Company | Reorganized NRG | |||||||||||||||||||||||||||||||
For the | For the | |||||||||||||||||||||||||||||||
For the Year | For the Year | For the Year | Period from | Period from | For the Year | Nine Months | Nine Months | |||||||||||||||||||||||||
Ended | Ended | Ended | January 1 - | December 6 - | Ended | Ended | Ended | |||||||||||||||||||||||||
December 31, | December 31, | December 31, | December 5, | December 31, | December 31, | September 30, | September 30, | |||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2003 | 2004 | 2004 | 2005 | |||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||
($ in thousands, except per share data) | ||||||||||||||||||||||||||||||||
Income/(loss) on discontinued operations, net of income taxes | $ | 33,206 | $ | 54,702 | $ | (675,830 | ) | $ | (182,633 | ) | $ | (380 | ) | $ | 26,473 | $ | 25,326 | $ | 12,612 | |||||||||||||
Legal settlement | — | — | — | 462,631 | — | — | — | — | ||||||||||||||||||||||||
Fresh start reporting adjustments | — | — | — | (4,118,636 | ) | — | — | — | — | |||||||||||||||||||||||
Corporate relocation charges | — | — | — | — | — | 16,167 | 12,474 | 5,651 | ||||||||||||||||||||||||
Reorganization items | — | — | — | 197,825 | 2,461 | (13,390 | ) | (1,656 | ) | — | ||||||||||||||||||||||
Restructuring and impairment charges | — | — | 2,563,060 | 237,575 | — | 44,661 | 42,183 | 6,223 | ||||||||||||||||||||||||
Write downs and gains/(losses) on sales of equity method investments | — | — | (200,472 | ) | (147,124 | ) | — | (16,270 | ) | (14,057 | ) | 15,894 | ||||||||||||||||||||
FERC authorized settlement | — | — | — | — | — | (38,357 | ) | (38,357 | ) | — | ||||||||||||||||||||||
Write down of Note Receivable | — | — | — | — | — | 4,572 | 4,572 | — |
(2) | The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. The ratio of earnings to fixed charges and preference dividends is computed by dividing earnings by fixed charges and preference dividends. For this purpose, “earnings” includes pre-tax income (loss) before adjustments for minority interest in our consolidated subsidiaries and income or loss from equity investees, plus fixed charges and distributed income of equity investees, and amortization of capitalized interest reduced by interest capitalized. “Fixed charges” include interest, whether expensed or capitalized for both continuing and discontinued operations, amortization of debt expense and the portion of rental expense that is representative of the interest factor in these rentals. “Preference dividends” equals the amount of pre-tax earnings that is required to pay the dividends on outstanding preference securities. |
(3) | For the year ended December 31, 2002, the deficiency of earnings to fixed charges was $3,023 million. |
(4) | For the period January 1, 2003 through December 5, 2003, the earnings include a one time earning of $4,119 million due to Fresh Start adjustments. |
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Texas Genco Holdings, Inc.—Predecessor | Texas Genco LLC(1) | ||||||||||||||||||||||||||||||||||||
Period from | |||||||||||||||||||||||||||||||||||||
For the | January 1, | Period from | For the | ||||||||||||||||||||||||||||||||||
Nine Months | 2005 | July 19, 2004 | Nine Months | ||||||||||||||||||||||||||||||||||
Ended | through | through | Ended | ||||||||||||||||||||||||||||||||||
For the Years Ended December | September 30, | April 13, | December 31, | September 30, | |||||||||||||||||||||||||||||||||
2000(2) | 2001(2) | 2002 | 2003 | 2004 | 2004 | 2005 | 2004 | 2005 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||
($ in millions, except per unit data) | |||||||||||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||||||||||
Revenues(3) | $ | 3,334 | $ | 3,411 | $ | 1,541 | $ | 2,002 | $ | 2,054 | $ | 1,630 | $ | 61 | $ | 96 | $ | 2,000 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||||
Fuel and purchased power expense(4) | 2,397 | 2,527 | 1,083 | 1,171 | 1,021 | 810 | 6 | 45 | 913 | ||||||||||||||||||||||||||||
Operation and maintenance(5) | 393 | 402 | 391 | 411 | 415 | 319 | 35 | 24 | 329 | ||||||||||||||||||||||||||||
Depreciation and amortization | 151 | 154 | 157 | 159 | 89 | 85 | 5 | 13 | 253 | ||||||||||||||||||||||||||||
Write-down of assets(6) | — | — | — | — | 763 | 649 | — | — | — | ||||||||||||||||||||||||||||
Gain on sale of assets | — | — | — | — | — | — | — | — | (28 | ) | |||||||||||||||||||||||||||
Taxes other than income taxes | 63 | 63 | 43 | 39 | 41 | 33 | 3 | — | 35 | ||||||||||||||||||||||||||||
Total | 3,004 | 3,146 | 1,674 | 1,780 | 2,329 | 1,896 | 49 | 82 | 1,502 | ||||||||||||||||||||||||||||
Operating income (loss) | 330 | 265 | (133 | ) | 222 | (275 | ) | (267 | ) | 12 | 14 | 498 | |||||||||||||||||||||||||
Other income | 1 | 2 | 3 | 2 | 5 | 3 | 1 | — | 3 | ||||||||||||||||||||||||||||
Interest income (expense), net(7) | (59 | ) | (65 | ) | (26 | ) | (2 | ) | — | — | — | (34 | ) | (134 | ) | ||||||||||||||||||||||
Income (loss) before income taxes | 272 | 202 | (156 | ) | 222 | (270 | ) | (264 | ) | 13 | (20 | ) | 367 | ||||||||||||||||||||||||
Income tax expense (benefit)(8) | 100 | 74 | (63 | ) | 71 | (171 | ) | (94 | ) | 4 | — | 21 | |||||||||||||||||||||||||
Income (loss) before cumulative effective of accounting change | 172 | 128 | (93 | ) | 151 | (99 | ) | (170 | ) | 9 | (20 | ) | 346 | ||||||||||||||||||||||||
Cumulative effect of accounting change, net of tax(9) | — | — | — | 99 | — | — | — | — | — | ||||||||||||||||||||||||||||
Net Income (loss) | $ | 172 | $ | 128 | $ | (93 | ) | $ | 250 | $ | (99 | ) | $ | (170 | ) | $ | 9 | $ | (20 | ) | $ | 346 | |||||||||||||||
Earnings Per Share Data: | |||||||||||||||||||||||||||||||||||||
Net income (loss) per share—basic | $ | 2.15 | $ | 1.60 | $ | (1.16 | ) | $ | 3.13 | $ | (1.25 | ) | $ | (2.13 | ) | $ | 0.14 | $ | (0.13 | ) | $ | 2.05 | |||||||||||||||
Net income (loss) per share—diluted | 2.15 | 1.60 | (1.16 | ) | 3.13 | (1.25 | ) | (2.13 | ) | 0.14 | (0.13 | ) | 1.98 | ||||||||||||||||||||||||
Weighted average shares outstanding—basic (in millions)(10) | 80.0 | 80.0 | 80.0 | 80.0 | 79.4 | 80.0 | 64.8 | 156.5 | 168.6 | ||||||||||||||||||||||||||||
Weighted average shares outstanding—diluted (in millions)(10) | 80.0 | 80.0 | 80.0 | 80.0 | 79.4 | 80.0 | 64.8 | 156.5 | 175.1 | ||||||||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||||||||||
Capital expenditures | $ | 252 | $ | 409 | $ | 258 | $ | 157 | $ | 73 | $ | 46.0 | $ | 9 | $ | 6 | $ | 74 | |||||||||||||||||||
Balance Sheet Data (at period end): | |||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net(11) | $ | 3,667 | $ | 3,905 | $ | 4,096 | $ | 4,126 | $ | 474 | $ | 478 | $ | 474 | $ | 2,446 | $ | 3,542 | |||||||||||||||||||
Total assets(12) | 4,032 | 4,323 | 4,508 | 4,640 | 1,395 | 4,272 | 996 | 4,588 | 6,099 | ||||||||||||||||||||||||||||
Total debt | — | — | — | — | — | — | 75 | 2,280 | 2,743 | ||||||||||||||||||||||||||||
Net capitalization | 2,323 | 2,624 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Shareholders’ equity | — | — | 2,824 | 3,033 | 454 | 2,680 | 466 | — | — | ||||||||||||||||||||||||||||
Members’ equity(12)(13) | — | — | — | — | — | — | — | 772 | 773 |
(1) | Texas Genco LLC was formed on July 19, 2004 to facilitate the acquisition of Texas Genco Holdings, Inc. in a multi-step transaction from CenterPoint Energy, Inc. and other minority public stockholders. On December 13, 2004, Texas Genco Holdings, Inc. divided its nuclear and non-nuclear generating assets and liabilities between two of its wholly-owned subsidiaries. Its non-nuclear generating assets and liabilities were allocated to Texas Genco II, LP and its nuclear assets and liabilities and its cash were |
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allocated to Texas Genco, LP. The non-nuclear generating assets and liabilities, together with assets and liabilities unrelated to the wholesale generation business held by Texas Genco Services, LP, another wholly-owned subsidiary of Texas Genco Holdings, Inc., are referred to as the “Non-Nuclear Assets.” On December 14, 2004, Texas Genco Holdings, Inc. merged with a wholly-owned subsidiary of CenterPoint Energy, Inc. As a result of this merger, CenterPoint Energy, Inc. acquired 100% of the issued and outstanding common stock of Texas Genco Holdings, Inc. On December 15, 2004, two wholly-owned subsidiaries of Texas Genco LLC merged with and into Texas Genco II, LP and Texas Genco Services, LP, respectively. As a result of these mergers, referred to as the “Initial Acquisition,” Texas Genco II, LP and Texas Genco Services, LP became wholly-owned subsidiaries of Texas Genco LLC and Texas Genco LLC thereby acquired the Non-Nuclear Assets. On April 13, 2005, a wholly-owned subsidiary of Texas Genco LLC merged with and into Texas Genco Holdings, Inc. As a result of this merger, which is referred to as the “Nuclear Acquisition,” Texas Genco Holdings, Inc. became a wholly- owned subsidiary of Texas Genco LLC and Texas Genco LLC thereby indirectly acquired Texas Genco Holdings, Inc.’s assets and liabilities, including its indirect 30.8% undivided interest in STP. On May 19, 2005, pursuant to the exercise of a right of first refusal by Texas Genco, LP subsequent to a third party offer to American Electric Power, or AEP, in early 2004, Texas Genco LLC acquired from AEP an additional indirect 13.2% undivided interest, equivalent to 330 MW, in STP for approximately $174.2 million, less adjustments for working capital and other purchase price adjustments. This acquisition is referred to as the “ROFR.” As a result, Texas Genco LLC, through Texas Genco, LP, owns a 44.0% undivided interest, equivalent to 1,101 MW, in STP. The transactions described above are referred to, collectively, as the “The Texas Genco Formation Transactions.” | ||
(2) | Prior to January 1, 2002, Texas Genco Holdings, Inc. sold power as part of an integrated utility at regulated rates; thereafter, power was sold at market-based rates. Therefore, the historical information included in the Texas Genco Holdings, Inc. financial statements for periods prior to January 1, 2002 does not reflect what the financial position and results of operations of Texas Genco Holdings, Inc. would have been had Texas Genco Holdings, Inc. been operated as a separate, stand-alone wholesale electric power generation company in a deregulated market during the periods presented. | |
(3) | Revenues for Texas Genco LLC include amortization of the liability related to below-market power sales contracts recorded in connection with the Initial Acquisition and the effect of other non-trading derivatives, which increased revenues by $12.3 million and decreased revenues by $3.6 million, respectively, for the period from Inception through December 31, 2004. For the nine months ended September 30, 2005, amortization of the liability related to below-market power sales contracts increased revenues for Texas Genco LLC by $186.3 million and the effect of other non-trading derivatives decreased revenues for Texas Genco LLC by $28.9 million. | |
(4) | Fuel and purchased power expense for Texas Genco LLC includes fuel-related depreciation and amortization—amortization of nuclear fuel—and the amortization of the liability related to above-market coal purchase contracts (which contracts expire in 2010) recorded in connection with the Initial Acquisition. Fuel-related depreciation and amortization had no effect on fuel expense for the period of Inception through December 31, 2004 and increased fuel expense by $10.3 million for the nine months ended September 30, 2005. The amortization of the liability related to above-market coal purchase contracts decreased fuel and purchased power expense for Texas Genco LLC by $1.5 million for the period from Inception through December 31, 2004 and $37.0 million for the nine months ended September 30, 2005. | |
(5) | Operation and maintenance for Texas Genco Holdings, Inc. includes allocations of overhead costs from CenterPoint Energy, Inc. Operations and maintenance for Texas Genco LLC includes payments to CenterPoint Energy, Inc. and Reliant Energy, Inc. for transition services. Operations and maintenance for Texas Genco LLC for the nine months ended September 30, 2005 includes a charge of $35.3 million related to our workforce optimization plan and a payment of $7.5 million of monitoring fees paid to affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group. | |
(6) | For the year ended December 31, 2004, Texas Genco Holdings, Inc. recorded an asset impairment of $763.0 million ($426.0 million net of tax) to reflect the net realizable value for the assets to be sold in the Initial Acquisition. Texas Genco Holdings, Inc. ceased depreciation on its coal, lignite and natural gas-fired generation plants at the time these assets were considered “held for sale.” This resulted in a decrease in depreciation expense of $69.0 million for the year ended December 31, 2004 as compared to the same period in 2003. | |
(7) | Interest income (expense), net for Texas Genco LLC includes amortization of deferred financing fees of $(1.0) million for the period from Inception through December 31, 2004 and $10.5 million for the nine months ended September 30, 2005. | |
(8) | Texas Genco LLC is a limited liability company that is treated as a partnership for U.S. federal income tax purposes and is, therefore, not itself subject to federal income taxation. Profits or losses are subject to taxation at the member interest level. Texas Genco Holdings, Inc., holds an indirect 44.0% undivided interest in STP and is a corporation that is subject to U.S. federal income taxation on its income. | |
(9) | Cumulative effect of an accounting change resulting from the allocation of Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations.” |
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(10) | Texas Genco Holdings, Inc.’s Board of Directors declared an 80,000-for-one stock split that was effected on December 18, 2002. On January 6, 2003, CenterPoint Energy distributed approximately 19% of the 80 million outstanding shares of Texas Genco’s common stock to CenterPoint Energy’s shareholders. Earnings per share has been presented as if the 80,000,000 shares were outstanding for all historical periods in accordance with Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share.” |
(11) | In accordance with ERCOT rules, Texas Genco has placed four units into mothball status for more than 180 days, retired one unit, sold one unit and intends to sell eight units, together representing approximately 3,378 MW of available capacity. Texas Genco placed one additional unit representing approximately 461 MW of net capacity, which was operated pursuant to a “reliability must run” contract with the ERCOT, into mothball status for more than 180 days when the contract terminated on October 29, 2005. On November 14, 2005, Texas Genco completed the sale of its natural gas-fired generation plant at Deepwater, representing 174 MW of available capacity. |
(12) | Total assets and members’ equity as of September 30, 2005 reflects distributions to members of an aggregate of $85.8 million from July 1, 2005 through September 30, 2005, representing preliminary distributions of net proceeds relating to certain asset sales. |
(13) | Members’ equity includes capital contributions from Texas Genco’s existing equityholders of $899.5 million, of which $892.2 million was contributed by the investment funds affiliated with The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group and $7.3 million was contributed by certain members of Texas Genco’s management team. |
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(i) | On December 8, 2005, NRG entered into an Asset Purchase and Sale Agreement to sell all the assets of NRG Audrain Generating LLC, or Audrain, to AmerenUE, a subsidiary of Ameren Corporation. For purposes of these pro forma statements we have reflected the sale of assets of Audrain as a discontinued operation. The purchase price is $115 million, subject to customary purchase price adjustments. The transaction is expected to close during the first half of 2006. The |
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sale is subject to customary approvals, including FERC, Missouri Public Utilities Commission, Illinois Commerce Commission, and Hart-Scott-Rodino review. We expect to record a gain of approximately $15 million at closing. |
(ii) | On May 19, 2005, pursuant to the exercise of a right of first refusal, or the ROFR, by Texas Genco, subsequent to a third party offer to American Electric Power, or AEP, in early 2004, Texas Genco acquired from AEP an additional 13.2% undivided interest in South Texas Project, or STP. As a result, Texas Genco now owns a 44.0% undivided interest in STP. For pro forma purposes, NRG has accounted for the ROFR as a business acquisition and included the ROFR in our pro forma adjustments to the statements of operation. |
(iii) | On December 27, 2005, NRG entered into two purchase and sale agreements for projects co-owned with Dynegy, Inc. Under the agreements, NRG will acquire Dynegy’s 50 percent ownership interest in WCP Holdings, and become the sole owner of WCP’s 1,808 MW of generation in Southern California. In addition, NRG is selling to Dynegy its 50 percent ownership interest in Rocky Road Power LLC, or Rocky Road, a 330 MW gas-fueled, simple cycle peaking plant located in Dundee, Illinois. These transactions are conditioned upon each other and NRG will pay Dynegy a net purchase price of $160 million at closing. NRG will effectively fund the net purchase price with cash held by WCP. NRG anticipates closing both transactions during the first quarter 2006. For purposes of these pro forma financial statements, we have assumed that the fair value of our equity investment in Rocky Road is equal to the negotiated price of $45 million. The current cost of our investment in Rocky Road is $70.2 million as of September 30, 2005 and we will record an impairment in our investment due to an other-than-temporary loss in our Rocky Road investment in the amount of $25.2 million. |
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Approximate U.S. Portfolio Net | Approximate U.S. Portfolio Net | Approximate U.S. Portfolio Net | ||
Capacity By Fuel Type(1) | Capacity By Dispatch Level | Capacity By Region | ||
![]() | ![]() | ![]() |
(1) | Reflects only domestic generation capacity; 19 MW of wood-fired generation capacity not shown. Also includes 461 MW of generation capacity from facilities that were mothballed after September 30, 2005. |
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![(MAP)](https://capedge.com/proxy/424B3/0000950123-06-000584/y16555by1655504.gif)
Annual Average for | Annual Average for | |||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2006-2007 | 2006-2010 | ||||||||||||||||||||||
Net Baseload Capacity (MW)(1) | 5,294 | 5,340 | 5,340 | 5,340 | 5,340 | 5,317 | 5,331 | |||||||||||||||||||||
Total Baseload Sales (MW)(2) | 4,274 | 4,271 | 4,152 | 3,428 | 1,372 | 4,273 | 3,499 | |||||||||||||||||||||
Total Available Baseload Capacity Sold Forward | 81 | % | 80 | % | 78 | % | 64 | % | 26 | % | 80 | % | 66 | % | ||||||||||||||
Weighted Average Forward Price ($ per MWh)(3) | $ | 44 | $ | 39 | $ | 41 | $ | 48 | $ | 52 | $ | 42 | $ | 45 | ||||||||||||||
Total Revenues Sold Forward ($ in millions) | $ | 1,654 | $ | 1,445 | $ | 1,505 | $ | 1,434 | $ | 621 | $ | 1,553 | $ | 1,333 |
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(1) | Net Baseload Capacity represents nominal summer net megawatt capacity of power generation adjusted for ownership, known upgrades and excluding capacity from mothballed units as of September 30, 2005. Capacity verification is based upon independent system operator, or ISO, required annual or semi-annual testing requirements. |
(2) | Includes amounts under fixed price firm and non-firm power sales contracts and amounts financially hedged under natural gas swap contracts. The forward natural gas swap quantities are reflected in equivalent MW and are derived by first dividing the quantity of MMBtu of natural gas hedged by the forward market heat rate (in MMBtu/ MWh, mid-point of the bid and offer as quoted by brokers in the market of the relevant Electric Reliability Council of Texas zones as of September 19, 2005) to arrive at the equivalent MWh hedged which is then divided by 8,760 to arrive at MW hedged. |
(3) | Includes amounts under fixed price power sales contracts and amounts financially hedged under natural gas swap contracts. |
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Credit Rating | Letters of Credit(2) | Cash(2) | Junior Liens | Collateral Posted | ||||||||||||
A- and above | $ | 633,034,400 | $ | 570,323,548 | $ | 2,179,220,554 | $ | 3,382,578,502 | ||||||||
BBB- through BBB+ | $ | 167,349,108 | $ | 54,210,141 | $ | 1,739,911 | $ | 223,299,160 | ||||||||
Below BBB- | $ | 7,771,000 | $ | 3,895,000 | $ | 0 | $ | 11,666,000 | ||||||||
Not Rated(1) | $ | 38,201,000 | $ | 2,968,992 | $ | 0 | $ | 41,196,992 | ||||||||
Total | $ | 846,355,508 | $ | 631,397,681 | $ | 2,180,960,464 | $ | 3,658,713,654 | ||||||||
(1) | Not Rated indicates that no rating has been issued, or that an external rating agency (for example, Standard & Poor’s or Moody’s) does not rate a particular obligation as a matter of policy. The Not Rated row above consists of collateral posted to 17 counterparties, mainly gas producers. |
(2) | As of September 30, 2005, WCP had collateral posted totaling $24.6 million, which is excluded from the table above. Of this amount, letters of credit totaled $10.7 million and cash totaled $13.9 million. |
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Process | Supplier(s) | Procurement Status | ||
Yellow cake U3O8(30-40% of total fuel cost). Conversion to uranium hexafluoride (UF6) (3-5% of total fuel cost). | Contracts with Cameco (Canada) and Cogema/ Arriba (France) combine these steps. | 100% covered under favorable contracts through mid-2011 and then 25% covered through 2021. | ||
Enrichment of U235 content (35-45%). | Urenco (Germany), Cogema/ Arriba (France), Louisiana Enrichment Services, or LES(1)(joint venture between Westinghouse & Urenco). | Urenco and Cogema contracts cover through mid-2008. Balance of current license period under contract with Urenco/LES. | ||
Fabrication of fuel rods (15-20%). | Westinghouse. | Contract covers life of operating license. |
(1) | Enrichment by LES assumes successful completion of LES licensing and construction of facility in New Mexico. |
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SO2 | NOx | Hg | Particulate | |||||||||||||||||||||||||||||
Control | Install | Control | Install | Control | Install | Control | Install | |||||||||||||||||||||||||
Units | Equipment | Date | Equipment | Date | Equipment | Date | Equipment | Date | ||||||||||||||||||||||||
Huntley 67 | Wet FGD(1) | 2013 | SNCR | 2010 | FF-ACI(2) | 2011 | ESP | 1973 | ||||||||||||||||||||||||
Huntley 68 | Wet FGD(1) | 2013 | SNCR | 2011 | FF-ACI(2) | 2009 | ESP | 1973 | ||||||||||||||||||||||||
Dunkirk 1 | None | — | SNCR | 2010 | FF-ACI(2) | 2010 | ESP | 1974 | ||||||||||||||||||||||||
Dunkirk 2 | None | — | SNCR | 2011 | FF-ACI(2) | 2011 | ESP | 1974 | ||||||||||||||||||||||||
Dunkirk 3 | None | — | SNCR | 2010 | FF-ACI(2) | 2011 | ESP | 1975 | ||||||||||||||||||||||||
Dunkirk 4 | None | — | SNCR | 2011 | FF-ACI(2) | 2010 | ESP | 1976 | ||||||||||||||||||||||||
Indian River 1 | In-Duct Scrubber | 2012 | SNCR & LNB(3) | 2008 | Co-Benefit of Scrubbers | 2012 | ESP (IR1-3) | 1976 | ||||||||||||||||||||||||
Indian River 2 | In-Duct Scrubber | 2013 | SNCR & LNB(3) | 2008 | Co-Benefit of Scrubbers | 2013 | ESP (IR1-3) | 1976 | ||||||||||||||||||||||||
Indian River 3 | In-Duct Scrubber | 2012 | LNB(3) & SNCR upgrade | 2008 | Co-Benefit of Scrubbers | 2012 | ESP (IR1-3) | 1980 | ||||||||||||||||||||||||
Indian River 4 | Dry Scrubber | 2011 | LNB(3) & SNCR upgrade | 2008 | Co-Benefit of Scrubbers | 2011 | ESP (IR1-3) | 1980 | ||||||||||||||||||||||||
Big Cajun 2 U1 | Dry Scrubber | 2011 | None | ACI(2) | 2012 | ESP | 1981 | |||||||||||||||||||||||||
Big Cajun 2 U2 | Dry Scrubber | 2010 | SCR(4) | 2010 | ACI(2) | 2011 | ESP | 1981 | ||||||||||||||||||||||||
Big Cajun 2 U3 | Dry Scrubber | 2013 | SCR(4) | 2013 | ACI(2) | 2014 | ESP | 1983 | ||||||||||||||||||||||||
Limestone | FGD | 1986-87 | LNB/OFA(3) | 2000-01 | Co-Benefit of Scrubbers | — | ESP | 1986-87 | ||||||||||||||||||||||||
WA Parish U 5 -7 | None | NA | SCR & LNB/OFA(3) | 2000-04 | None | — | FF | 1988 | ||||||||||||||||||||||||
WA Parish U 8 | FGD | 1982 | SCR & LNB/OFA(3) | 2000-04 | Co-Benefit of Scrubber | — | FF | 1988 |
(1) | FGD stands for Flue Gas Desulfurization |
(2) | FF-ACI stands for Fabric Filter with Activated Carbon Injection |
(3) | LNB/ OFA stands for Low NOx Burner with Over Fire Air |
(4) | SCR stands for Selective Catalytic Reduction |
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TEXAS (ERCOT) |
Operating Strategy |
Benchmark | ||||||||
Average 5-Year | Average | |||||||
Availability | Availability | |||||||
Factor | Factor | |||||||
Limestone | 89.4 | 85.4 | ||||||
W. A. Parish | 87.8 | 83.6 | ||||||
South Texas Project | 87.8 | 88.9 |
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Facilities |
Net | ||||||||||||
Generation | ||||||||||||
Capacity | ||||||||||||
Generation Sites | Location | % Owned | (MW)(1) | Primary Fuel Type(2) | ||||||||
Solid Fuel Baseload Units: | ||||||||||||
W. A. Parish(3) | Thompsons, TX | 100% | 2,463 | Low Sulfur Coal | ||||||||
Limestone | Jewett, TX | 100% | 1,614 | Lignite/Low Sulfur Coal | ||||||||
South Texas Project(4) | Bay City, TX | 44% | 1,101 | Nuclear | ||||||||
Total Solid Fuel Baseload | 5,178 | |||||||||||
Operating Natural Gas- Fired Units: | ||||||||||||
Cedar Bayou | Chambers County, TX | 100% | 1,498 | Natural Gas | ||||||||
T. H. Wharton | Houston, TX | 100% | 1,025 | Natural Gas | ||||||||
W. A. Parish (Natural gas)(3) | Thompsons, TX | 100% | 1,191 | Natural Gas | ||||||||
S. R. Bertron | Deer Park, TX | 100% | 844 | Natural Gas | ||||||||
Greens Bayou | Houston, TX | 100% | 760 | Natural Gas | ||||||||
P.H. Robinson(5) | Bacliff, TX | 100% | 461 | Natural Gas | ||||||||
San Jacinto | LaPorte, TX | 100% | 162 | Natural Gas | ||||||||
Total Operating Natural | ||||||||||||
Gas-Fired | 5,941 | |||||||||||
Total Texas (ERCOT) Region | 11,119 | |||||||||||
(1) | Actual capacity can vary depending on factors including weather conditions, operational conditions and other factors. ERCOT requires periodic demonstration of capability, and the capacity may vary individually and in the aggregate from time to time. Excludes 3,378 MW of inactive capacity available for redevelopment of which 174 MW of available capacity was sold on November 14, 2005. An additional 461 MW was moved to inactive status after September 30, 2005. |
(2) | Low sulfur coal is coal mined from the Powder River Basin, a coal-producing area in northeastern Wyoming and southeastern Montana, which coal has low sulfur content relative to most coal from the eastern United States. |
(3) | W. A. Parish has nine units, four of which are baseload coal-fired units and five of which are natural gas-fired units. |
(4) | Generation capacity figure consists of our 44.0% undivided interest in the two units of STP. |
(5) | P.H. Robinson Unit 2 was placed into inactive status on October 29, 2005. |
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Market Framework |
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NORTHEAST REGION |
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Net | ||||||||||||||||
Generation | ||||||||||||||||
Capacity | ||||||||||||||||
Plant | Location | % Owned | (MW)* | Primary Fuel Type | ||||||||||||
Oswego | Oswego, NY | 100.0% | 1,634 | Oil | ||||||||||||
Arthur Kill | Staten Island, NY | 100.0% | 841 | Natural Gas | ||||||||||||
Middletown | Middletown, CT | 100.0% | 770 | Oil | ||||||||||||
Indian River | Millsboro, DE | 100.0% | 737 | Coal | ||||||||||||
Astoria Gas Turbines | Queens, NY | 100.0% | 553 | Natural Gas | ||||||||||||
Dunkirk | Dunkirk, NY | 100.0% | 522 | Coal | ||||||||||||
Huntley | Tonawanda, NY | 100.0% | 552 | Coal | ||||||||||||
Montville | Uncasville, CT | 100.0% | 497 | Oil | ||||||||||||
Norwalk Harbor | So. Norwalk, CT | 100.0% | 342 | Oil | ||||||||||||
Devon | Milford, CT | 100.0% | 124 | Natural Gas | ||||||||||||
Vienna | Vienna, MD | 100.0% | 170 | Oil | ||||||||||||
Somerset Power | Somerset, MA | 100.0% | 127 | Coal | ||||||||||||
Connecticut Remote Turbines | Various locations in CT | 100.0% | 104 | Oil | ||||||||||||
Conemaugh | New Florence, PA | 3.7% | 64 | Coal | ||||||||||||
Keystone | Shelocta, PA | 3.7% | 63 | Coal | ||||||||||||
Total Northeast Region | 7,099 | |||||||||||||||
* | Excludes 382 MW of inactive capacity. |
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SOUTH CENTRAL REGION |
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Net | ||||||||||||||
Generating | ||||||||||||||
Capacity | ||||||||||||||
Plant | Location | % Owned | (MW) | Primary Fuel Type | ||||||||||
Big Cajun II(1) | New Roads, LA | 86.0% | 1,489 | Coal | ||||||||||
Bayou Cove | Jennings, LA | 100.0% | 300 | Natural Gas | ||||||||||
Big Cajun I—(Peakers) Units 3 & 4 | New Roads, LA | 100.0% | 210 | Natural Gas | ||||||||||
Big Cajun I—Units 1 & 2 | New Roads, LA | 100.0% | 220 | Natural Gas/Oil | ||||||||||
Sterlington | Sterlington, LA | 100.0% | 176 | Natural Gas | ||||||||||
Total South Central | 2,395 | |||||||||||||
(1) | NRG owns 100% of Units 1 & 2; 58% of Unit 3 |
Term | Contract Load | Customers | ||||||||
Form A | 25 yrs. | 42% | 6 | |||||||
Form B | 25 yrs. | 3% | 1 | |||||||
Form C | 9-14 yrs. | 42% | 4 |
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WESTERN REGION |
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Net | |||||||||||||
Generation | |||||||||||||
Capacity | Primary | ||||||||||||
Plant | Location | % Owned | (MW) | Fuel Type | |||||||||
WCP(1) | |||||||||||||
Encina | Carlsbad, CA | 50.0% | 483 | Natural Gas | |||||||||
El Segundo | El Segundo, CA | 50.0% | 335 | Natural Gas | |||||||||
Cabrillo II | San Diego, CA | 50.0% | 86 | Natural Gas | |||||||||
Total WCP | 904 | ||||||||||||
Other Western Region Assets | |||||||||||||
Saguaro | Henderson, NV | 50.0% | 46 | Natural Gas | |||||||||
Chowchilla | Northern CA | 100.0% | 49 | Natural Gas | |||||||||
Red Bluff | Northern CA | 100.0% | 45 | Natural Gas | |||||||||
140 | |||||||||||||
Total Western Region | 1,044 | ||||||||||||
(1) | On December 27, 2005, NRG entered into a purchase and sale agreement to acquire Dynegy’s 50% ownership interest in WCP Holdings to become the sole owner of power plants totaling approximately 1,800 MW of generation capacity in the Western region. The transaction, which is subject to regulatory approval, is expected to close in the first quarter of 2006. |
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OTHER |
Other North American Assets |
Net | |||||||||||||
Generating | |||||||||||||
Capacity | Primary Fuel | ||||||||||||
Plant | Location | % Owned | MW | Type | |||||||||
Other Assets | |||||||||||||
Audrain* | Vandalia, MO | 100.0% | 577 | Natural Gas | |||||||||
Rockford I (Peaker) | Rockford, IL | 100.0% | 310 | Natural Gas | |||||||||
Rocky Road Partnership* | East Dundee, IL | 50.0% | 165 | Natural Gas | |||||||||
Rockford II (Peaker) | Rockford, IL | 100.0% | 160 | Natural Gas | |||||||||
Dover | Dover, DE | 100.0% | 104 | Natural Gas/Coal | |||||||||
Power Smith Cogeneration | Oklahoma City, OK | 6.25% | 7 | Natural Gas | |||||||||
Ilion Cogeneration* | New York | 100.0% | 58 | Natural Gas | |||||||||
James River | Virginia | 50.0% | 55 | Coal | |||||||||
Cadillac* | Cadillac, MI | 50.0% | 19 | Wood | |||||||||
Paxton Creek | Harrisburg, PA | 100.0% | 12 | Natural Gas | |||||||||
Other North American Assets | 1,467 | ||||||||||||
* | Certain of the above projects are in a state of transition. The Audrain project is under contract for sale. Closing is expected in 2006. NRG is in advanced discussions regarding the transfer of the Cadillac project. NRG is currently performing under an agreement whereby the Ilion project will be disconnected and terminated. On December 27, 2005, NRG entered into a purchase and sale agreement with Dynegy through which NRG will sell to Dynegy its 50% ownership interest in the jointly held entity that owns the Rocky Road power plant. The transaction is conditioned upon NRG’s acquisition of Dynegy’s 50% interest in WCP Holdings and subject to regulatory approval, and is expected to close in the first quarter of 2006. See “Summary— Recent Developments.” |
Australia and All Other Generation and Non-Generation Assets |
Net | ||||||||||||||
Generating | ||||||||||||||
Capacity | Primary | |||||||||||||
Plant | Location | % Owned | MW | Fuel Type | ||||||||||
Operating Assets | ||||||||||||||
Flinders | Australia | 100.0% | 700 | Coal | ||||||||||
Gladstone | Australia | 37.5% | 605 | Coal | ||||||||||
Schkopau | Germany | 41.9% | 400 | Coal | ||||||||||
MIBRAG(1) | Germany | 50.0% | 55 | Coal | ||||||||||
Itiquira | Brazil | 98.7% | 156 | Hydro | ||||||||||
Total International Assets | 1,916 | |||||||||||||
(1) | Primarily a coal mining facility. Approximately 90% of MIBRAG’s revenues represent coal sales and 8% represent electricity sales. MIBRAG owns 110 MW of net exportable generation. Approximately two-thirds of that amount is sold to third parties and one-third is used to power mining and other MIBRAG operations. NRG equity in net exportable electricity is 55 MW. |
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Thermal and Chilled Water Businesses |
Resource Recovery Facilities |
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Federal Energy Regulatory Commission |
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Nuclear Regulatory Commission |
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Public Utility Commission of Texas |
Regulatory Developments |
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Regional Businesses—Market Developments |
Texas (ERCOT) Region |
Texas Nodal Protocols |
Northeast Region |
RMR Agreements |
LICAP Market Developments |
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Connecticut |
New York |
Mid Atlantic |
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South Central Region |
Western Region |
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U.S. Federal Environmental Initiatives |
Air |
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Water |
Nuclear Waste |
Regional U.S. Environmental Regulatory Initiatives |
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Domestic Site Remediation Matters |
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International Environmental Matters |
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General |
Nuclear |
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Texas Commercial Energy Litigation |
The Valence Litigation |
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Texas Genco Asbestos Litigation |
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California Wholesale Electricity Litigation and Related Investigations |
FERC Proceedings |
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California Attorney General |
Canadian Claim |
New York Operating Reserve Markets |
Connecticut Congestion Charges |
New York Environmental Settlement |
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Station Service Disputes |
U.S. Environmental Protection Agency |
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Itiquira Energetica, S.A. |
CFTC Trading Litigation |
Disputed Claims Reserve |
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% | Thermal Energy | |||||||||||
Name and Location of | Date of | Ownership | Purchaser/MSW | |||||||||
Facility | Acquisition | Generating Capacity(1) | Interest | Supplier | ||||||||
NRG Energy Center Minneapolis, MN | 1993 | Steam: 1,203 mmBtu/hr. (353 MWt) Chilled Water: 41,630 tons (146 MWt) | 100% | Approx. 100 steam customers and 47 chilled water customers | ||||||||
NRG Energy Center San Francisco, CA | 1999 | Steam: 482 mmBtu/Hr. (141 MWt) | 100% | Approx. 165 steam customers | ||||||||
NRG Energy Center Harrisburg, PA | 2000 | Steam: 440 mmBtu/hr. (129 MWt) Chilled water: 2,400 tons (8 MWt) | 100% | Approx. 265 steam customers and 3 chilled water customers | ||||||||
NRG Energy Center Pittsburgh, PA | 1999 | Steam: 266 mmBtu/hr. (78 MWt) Chilled water: 12,580 tons (44 MWt) | 100% | Approx. 25 steam and 25 chilled water customers | ||||||||
NRG Energy Center San Diego, CA | 1997 | Chilled water: 7,425 tons (26 MWt) | 100% | Approx. 20 chilled water customers | ||||||||
NRG Energy Center St. Paul, MN | 1992 | Steam: 430 mmBtu/hr. (126 MWt) | 100% | Rock-Tenn Company | ||||||||
Camas Power Boiler, Washington | 1997 | Steam: 200 mm Btu/hr. (59 MWt) | 100% | Georgia-Pacific Corp. | ||||||||
NRG Energy Center Dover, DE | 2000 | Steam: 190 mmBtu/hr. (56 MWt) | 100% | Kraft Foods Inc. | ||||||||
NRG Energy Center Oak Park Heights, MN | 1992 | Steam: 200 mmBtu/Hr. (59 MWt) | 100% | Andersen Corp., MN Correctional Facility |
(1) | Thermal production and transmission capacity is based on 1,000 Btus per pound of steam production or transmission capacity. The unit mmBtu is equal to one million Btus. |
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% | ||||||||||||||
Name and Location | Date of | Ownership | ||||||||||||
of Facility | Acquisition | Processing Capacity(1) | Interest | MSW Supplier | ||||||||||
Newport, MN(1) | 1993 | MSW: 1,500 tons/day | 100% | Ramsey and Washington Counties | ||||||||||
Elk River, MN(2) | 2001 | MSW: 1,500 tons/day | 85% | Anoka, Hennepin and Sherburne Counties; Tri-County Solid Waste Management Commissioner |
(1) | The Newport facilities are strictly related to garbage-sorting facilities. |
(2) | For the Elk River facility, NRG’s 85% interest is related strictly to garbage-sorting facilities. |
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Name | Age | Position | ||||
Directors | ||||||
Howard E. Cosgrove | 62 | Director, Chairman of the Board | ||||
John F. Chlebowski | 60 | Director and Chair, Audit Committee | ||||
Lawrence S. Coben | 47 | Director and Chair, Compensation Committee | ||||
David Crane | 46 | President, Chief Executive Officer and Director | ||||
Stephen L. Cropper | 55 | Director and Chair, Commercial Operations Oversight Committee | ||||
Maureen Miskovic | 47 | Director | ||||
Anne C. Schaumburg | 56 | Director | ||||
Herbert H. Tate | 52 | Director | ||||
Thomas H. Weidemeyer | 58 | Director | ||||
Walter R. Young | 61 | Director and Chair, Governance and Nominating Committee | ||||
Officers | ||||||
David Crane | 46 | President, Chief Executive Officer and Director | ||||
Robert C. Flexon | 47 | Executive Vice President and Chief Financial Officer | ||||
Caroline Angoorly | 41 | Vice President, Environmental and New Business | ||||
John P. Brewster | 52 | Executive Vice President, International Operations and President, South Central Region | ||||
Scott J. Davido | 44 | Executive Vice President and President, Northeast Region | ||||
Kevin T. Howell | 48 | Executive Vice President, Commercial Operations | ||||
James J. Ingoldsby | 48 | Vice President and Controller | ||||
Christine A. Jacobs | 53 | Vice President, Plant Operations | ||||
Timothy W.J. O’Brien | 46 | Vice President and General Counsel | ||||
George P. Schaefer | 55 | Vice President and Treasurer | ||||
Steve Winn | 40 | Executive Vice President and President, Texas Region |
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Member of Audit Committee
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• | after consummation of the Acquisition, will be general unsecured obligations of NRG; | |
• | will be secured by a security interest in the escrow account until the earlier of September 30, 2006 and the date on which NRG consummates the Acquisition; | |
• | will bepari passuin right of payment with all existing and future unsecured senior Indebtedness of NRG; | |
• | will be senior in right of payment to any future subordinated Indebtedness of NRG; and | |
• | will be unconditionally guaranteed on a joint and several basis by the Guarantors. |
• | will be a general unsecured obligation of the Guarantor; | |
• | will bepari passuin right of payment with all unsecured senior Indebtedness of that Guarantor; and | |
• | will be senior in right of payment to any future subordinated Indebtedness of that Guarantor. |
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2014 Fixed Rate Notes |
2016 Notes |
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2014 Floating Rate Notes |
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• | to NRG upon the satisfaction of the following conditions (and delivery to the trustee of a certificate from an officer of NRG confirming that these conditions have been satisfied): |
(1) all conditions to the closing of the Acquisition have been satisfied or waived; | |
(2) the Acquisition will be consummated concurrently with the release of funds and on substantially the terms described in this prospectus supplement; | |
(3) the Related Financing Transactions have been consummated or will be consummated prior to or concurrently with the consummation of the Acquisition; | |
(4) the escrowed funds will be applied in the manner described under the caption “Use of Proceeds”; and | |
(5) no Event of Default shall have occurred and be continuing or result therefrom; or |
• | to the trustee in connection with a special mandatory redemption. |
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(1) immediately after giving effect to that transaction, no Default or Event of Default exists; and | |
(2) either: |
(a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under each applicable indenture and its Subsidiary Guarantee pursuant to supplemental agreements reasonably satisfactory to the trustee under such indenture; | |
(b) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of each applicable indenture; or | |
(c) immediately after giving effect to that transaction, such Person qualifies as an Excluded Subsidiary. |
(1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) NRG or a Restricted Subsidiary of NRG, if the sale or other disposition does not violate the “Asset Sale” provisions of the applicable indenture governing such series of notes; | |
(2) in connection with any sale or other disposition of Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) NRG or a Restricted Subsidiary of NRG, if (a) the sale or other disposition does not violate the “Asset Sale” provisions of the applicable indenture governing such series of notes and (b) following such sale or other disposition, that Guarantor is not a direct or indirect Subsidiary of NRG; | |
(3) if NRG designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the applicable indenture governing such series of notes; | |
(4) the date that any Subsidiary that is not an Excluded Subsidiary becomes an Excluded Subsidiary; | |
(5) upon defeasance or satisfaction and discharge of such notes as provided below under the captions “—Legal Defeasance and Covenant Defeasance” and “—Satisfaction and Discharge”; | |
(6) upon a dissolution of a Guarantor that is permitted under the applicable indenture governing such series of notes; | |
(7) as to any Subsidiary Guarantee issued on the date of the applicable supplemental indenture that is subject to Section 69 of the New York Public Service Law, on the 364th day after such issuance, unless on or before such 364th day such Guarantee is permitted under the New York Public Service Law, pursuant to an order issued by the New York Public Service Commission, to be outstanding after such 364th day; or |
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(8) otherwise with respect to the Guarantee of any Guarantor, upon: |
(a) the prior consent of holders of at least a majority in aggregate principal amount of such notes then outstanding; | |
(b) the consent of requisite lenders under the Credit Agreement (as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time) to the release of such Guarantor’s Guarantee of all Obligations under the Credit Agreement; or | |
(c) the contemporaneous release of such Guarantor’s Guarantee of all Obligations under the Credit Agreement (as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time). |
See “—Repurchase at the Option of Holders—Asset Sales.” |
2014 Fixed Rate Notes |
(1) at least 65% of the aggregate principal amount of 2014 fixed rate notes issued in this offering (excluding 2014 fixed rate notes held by NRG and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and | |
(2) the redemption occurs within 90 days of the date of the closing of such Equity Offering. |
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Year | Percentage | |||
2010 | % | |||
2011 | % | |||
2012 | % | |||
2013 and thereafter | 100.000 | % |
2016 Notes |
(1) at least 65% of the aggregate principal amount of 2016 notes issued in this offering (excluding 2016 notes held by NRG and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and | |
(2) the redemption occurs within 90 days of the date of the closing of such Equity Offering. |
Year | Percentage | |||
2011 | % | |||
2012 | % | |||
2013 | % | |||
2014 | % | |||
2015 and thereafter | 100.000 | % |
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2014 Floating Rate Notes |
(1) at least 65% of the aggregate principal amount of 2014 floating rate notes issued in this offering (excluding 2014 floating rate notes held by NRG and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and | |
(2) the redemption occurs within 90 days of the date of the closing of such Equity Offering. |
Year | Percentage | |||
2008 | % | |||
2009 | % | |||
2010 | % | |||
2011 and thereafter | 100.000 | % |
Change of Control |
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(1) accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer; | |
(2) deposit with the applicable paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and | |
(3) deliver or cause to be delivered to the applicable trustee the notes properly accepted together with an officers’ certificate stating the aggregate principal amount of notes or portions of notes being purchased by NRG. |
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Asset Sales |
(1) NRG (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of or, in the case of Specified Joint Venture Sales, receives consideration at least equal to the value prescribed by the agreements relating to such specified joint ventures; and | |
(2) at least 75% of the consideration received in the Asset Sale by NRG or such Restricted Subsidiary is in the form of cash. For purposes of this provision, each of the following will be deemed to be cash: |
(a) any liabilities, as shown on NRG’s most recent consolidated balance sheet, of NRG or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases NRG or such Restricted Subsidiary from further liability; | |
(b) any securities, notes or other obligations received by NRG or any such Restricted Subsidiary from such transferee that are converted by NRG or such Restricted Subsidiary into cash within 180 days of the receipt of such securities, notes or other obligations, to the extent of the cash received in that conversion; | |
(c) any stock or assets of the kind referred to in clauses (4) or (6) of the next paragraph of this covenant; and | |
(d) any Designated Noncash Consideration received by NRG or any Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (d) that is at the time outstanding, not to exceed the greater of (x) $500.0 million or (y) 2.5% of Total Assets at the time of the receipt of such Designated Noncash Consideration, with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value. |
(1) to repay Indebtedness and other Obligations under a Credit Facility and, if such Indebtedness is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; | |
(2) in the case of a sale of assets pledged to secure Indebtedness (including Capital Lease Obligations), to repay the Indebtedness secured by those assets; | |
(3) in the case of an Asset Sale by a Restricted Subsidiary that is not a Guarantor, to repay Indebtedness of a Restricted Subsidiary that is not a Guarantor (other than Indebtedness owed to NRG or another Restricted Subsidiary of NRG); | |
(4) to acquire all or substantially all of the assets of, or any Capital Stock of, another Person engaged primarily in a Permitted Business, if, after giving effect to any such acquisition of Capital Stock, such Person is or becomes a Restricted Subsidiary of NRG and a Guarantor; | |
(5) to make a capital expenditure; | |
(6) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business; or | |
(7) any combination of the foregoing. |
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Changes in Covenants When Notes Rated Investment Grade |
(1) the rating assigned to such notes by each of S&P and Moody’s is an Investment Grade Rating; and | |
(2) no Default or Event of Default shall have occurred and be continuing, then, beginning on that day and subject to the provisions of the following two paragraphs, the covenants in such supplemental indenture specifically listed under the following captions will be suspended as to such notes: |
(a) “—Repurchase at the Option of Holders—Asset Sales;” | |
(b) “—Certain Covenants— Restricted Payments;” | |
(c) “—Certain Covenants— Incurrence of Indebtedness and Issuance of Preferred Stock;” | |
(d) “—Certain Covenants— Dividend and Other Payment Restrictions Affecting Subsidiaries;” | |
(e) “—Certain Covenants— Designation of Restricted, Unrestricted and Excluded Project Subsidiaries;” | |
(f) “—Transactions with Affiliates;” and | |
(g) clause (4) of the covenant described below under the caption “—Merger, Consolidation or Sale of Assets.” |
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Restricted Payments |
(1) declare or pay any dividend or make any other payment or distribution on account of NRG’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving NRG or any of its Restricted Subsidiaries) or to the direct or indirect holders of NRG’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of NRG or to NRG or a Restricted Subsidiary of NRG); | |
(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving NRG) any Equity Interests of NRG or any direct or indirect parent of NRG (other than any such Equity Interests owned by NRG or any Restricted Subsidiary of NRG); | |
(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of NRG or any Guarantor that is contractually subordinated to the notes or any Subsidiary Guarantee of the notes (excluding any intercompany Indebtedness between or among NRG and any of its Restricted Subsidiaries), except (a) a payment of interest or principal at the Stated Maturity thereof or (b) a payment, purchase, redemption, defeasance, acquisition or retirement of any subordinated Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or payment at final maturity, in each case due within one year of the date of payment, purchase, redemption, defeasance, acquisition or retirement; or | |
(4) make any Restricted Investment |
(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and | |
(2) NRG would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”; and | |
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by NRG and its Restricted Subsidiaries since the date of the supplemental indentures (excluding Restricted Payments permitted by clauses (2), (3), (4), (6), (7), (8), (9), (10), (11), (12) and (13) of the next succeeding paragraph), is less than the sum, without duplication, of: |
(a) 50% of the Consolidated Net Income of NRG for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing before the date of the supplemental indentures to the end of NRG’s most recently ended fiscal quarter for which financial statements are publicly available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit),plus | |
(b) 100% of the aggregate proceeds received by NRG after the date of the Acquisition as a contribution to its equity capital (unless such contribution would constitute Disqualified Stock) or |
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from the issue or sale of Equity Interests of NRG (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of NRG that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of NRG),plus | |
(c) 100% of the aggregate proceeds received upon the sale or other disposition of any Investment (other than a Permitted Investment) made since the date of the supplemental indentures;plusthe net reduction in Investments (other than Permitted Investments) in any Person resulting from dividends, repayments of loans or advances or other transfers of assets subsequent to the date of the supplemental indentures, in each case to NRG or any Restricted Subsidiary from such Person;plusto the extent that the ability to make Restricted Payments was reduced as the result of the designation of an Unrestricted Subsidiary or Excluded Project Subsidiary, the portion (proportionate to NRG’s equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary or Excluded Project Subsidiary at the time such Unrestricted Subsidiary or Excluded Project Subsidiary is redesignated, or liquidated or merged into, a Restricted Subsidiary that is not an Excluded Subsidiary;provided, in each case, that the foregoing may not exceed, in the aggregate, the amount of all Investments which previously reduced the ability to make Restricted Payments; andprovided further, that Concurrent Cash Distributions shall be excluded from this clause (c). |
(1) the payment of any dividend within 90 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of the applicable indenture; | |
(2) so long as no Default has occurred and is continuing or would be caused thereby, the making of any Restricted Payment in exchange for, or out of the aggregate proceeds of the substantially concurrent sale (other than to a Subsidiary of NRG) of, Equity Interests of NRG (other than Disqualified Stock) or from the contribution of equity capital (unless such contribution would constitute Disqualified Stock) to NRG;providedthat the amount of any such proceeds that are utilized for any such Restricted Payment will be excluded from clause (3)(b) of the preceding paragraph; | |
(3) so long as no Default has occurred and is continuing or would be caused thereby, the defeasance, redemption, repurchase or other acquisition of Indebtedness of NRG or any Guarantor that is contractually subordinated to the notes or to any Subsidiary Guarantee with the proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; | |
(4) the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of NRG to the holders of its Equity Interests on a pro rata basis; | |
(5) so long as no Default has occurred and is continuing or would be caused thereby, (a) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of NRG or any Restricted Subsidiary of NRG held by any current or former officer, director or employee of NRG or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, severance agreement, shareholders’ agreement or similar agreement or employee benefit plan or (b) the cancellation of Indebtedness owing to NRG or any of its Restricted Subsidiaries from any current or former officer, director or employee of NRG or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of NRG or any of its Restricted Subsidiaries;providedthat the aggregate price paid for the actions in clause (a) may not exceed $10.0 million in any twelve-month period (with unused amounts in any period being carried over to succeeding periods) and may not exceed $50.0 million in the aggregate since the date of the supplemental indentures;provided, furtherthat (i) such amount in any calendar year may be increased by the cash proceeds of “key man” life insurance policies received by NRG and its Restricted Subsidiaries after the date of the supplemental indentures less any amount previously applied to the making of Restricted Payments pursuant to this clause (5) and |
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(ii) cancellation of the Indebtedness owing to NRG from employees, officers, directors and consultants of NRG or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of NRG from such Persons shall be permitted under this clause (5) as if it were a repurchase, redemption, acquisition or retirement for value subject hereto; | |
(6) the repurchase of Equity Interests in connection with the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options and the repurchases of Equity Interests in connection with the withholding of a portion of the Equity Interests granted or awarded to an employee to pay for the taxes payable by such employee upon such grant or award; | |
(7) so long as no Default has occurred and is continuing or would be caused thereby, the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of (a) preferred stock issued pursuant to the Acquisition Agreement described in this prospectus supplement, (b) preferred stock outstanding on the date of the supplemental indentures, (c) Disqualified Stock of NRG or any Restricted Subsidiary of NRG issued on or after the date of the supplemental indentures in accordance with the terms of each applicable indenture or (d) preferred stock issued on or after the date of the supplemental indentures in accordance with the terms of each applicable indenture; | |
(8) payments to holders of NRG’s Capital Stock in lieu of the issuance of fractional shares of its Capital Stock; | |
(9) the purchase, redemption, acquisition, cancellation or other retirement for a nominal value per right of any rights granted to all the holders of Capital Stock of NRG pursuant to any shareholders’ rights plan adopted for the purpose of protecting shareholders from unfair takeover tactics;providedthat any such purchase, redemption, acquisition, cancellation or other retirement of such rights is not for the purpose of evading the limitations of this covenant (all as determined in good faith by a senior financial officer of NRG); | |
(10) so long as no Default has occurred and is continuing or would be caused thereby, upon the occurrence of a Change of Control or Asset Sale and after the completion of the offer to repurchase the notes as described above under the caption “—Repurchase at the Option of Holders—Change of Control” or “—Repurchase at the Option of Holders—Asset Sales,” as applicable (including the purchase of all notes tendered), any purchase, defeasance, retirement, redemption or other acquisition of Indebtedness that is contractually subordinated to the notes or any subsidiary guarantee required under the terms of such Indebtedness, with, in the case of an Asset Sale, Net Proceeds, as a result of such Change of Control or Asset Sale; | |
(11) so long as no Default has occurred and is continuing or would be caused thereby, the purchase, redemption or other acquisition or retirement for value of the Sponsor Preferred Stock with the Net Proceeds of an Asset Sale;providedthat, in connection with such Asset Sale, an Asset Sale Offer has been completed as described above under the caption “—Repurchase at the Option of Holders—Asset Sales” (including the purchase of all notes tendered in such Asset Sale Offer); | |
(12) the Acquisition; | |
(13) the purchase, redemption, acquisition, cancellation or other retirement of preferred stock of Itiquira to effectuate the Itiquira Refinancing; and | |
(14) so long as no Default has occurred and is continuing or would be caused thereby, other Restricted Payments in an aggregate amount not to exceed $250.0 million since the date of the supplemental indentures. |
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Incurrence of Indebtedness and Issuance of Preferred Stock |
(1) the incurrence by NRG and PMI (and the guarantee thereof by the Guarantors) of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of NRG and its Restricted Subsidiaries thereunder) not to exceed $6.0 billion less the aggregate amount of all repayments, optional or mandatory, of the principal of any term Indebtedness under a Credit Facility that have been made by NRG or any of its Restricted Subsidiaries since the date of the supplemental indentures with the Net Proceeds of Asset Sales (other than Excluded Proceeds) and less, without duplication, the aggregate amount of all repayments or commitment reductions with respect to any revolving credit borrowings under a Credit Facility that have been made by NRG or any of its Restricted Subsidiaries since the date of the supplemental indentures as a result of the application of the Net Proceeds of Asset Sales (other than Excluded Proceeds) in accordance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales” (excluding temporary reductions in revolving credit borrowings as contemplated by that covenant); | |
(2) the incurrence by NRG and its Restricted Subsidiaries of (i) the Existing Indebtedness and (ii) Acquired Debt (other than Non-Recourse Debt and the Existing Genco Credit Facility and Notes Indebtedness) incurred pursuant to the Acquisition; | |
(3) the incurrence by NRG and the Guarantors of Indebtedness represented by the notes and the related Subsidiary Guarantees to be issued on the date of the supplemental indentures; | |
(4) the incurrence by NRG or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment used or useful in the business of NRG or any of its Restricted Subsidiaries or incurred within 180 days thereafter, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed at any time outstanding 5.0% of Total Assets; | |
(5) the incurrence by NRG or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge Indebtedness (other than intercompany Indebtedness) that was permitted by the applicable supplemental indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (4), (5), (11), (16), (17) (18), (19), (20) and (21) of this paragraph; | |
(6) the incurrence by NRG or any of its Restricted Subsidiaries of intercompany Indebtedness between or among NRG and any of its Restricted Subsidiaries;provided, however, that: (a) if NRG or any Guarantor is the obligor on such Indebtedness and the payee is not NRG or a Guarantor, such |
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Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the notes, in the case of NRG, or the Subsidiary Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than NRG or a Restricted Subsidiary of NRG and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either NRG or a Restricted Subsidiary of NRG will be deemed, in each case, to constitute an incurrence of such Indebtedness by NRG or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); | |
(7) the issuance by any of NRG’s Restricted Subsidiaries to NRG or to any of its Restricted Subsidiaries of shares of preferred stock;provided, however, that: |
(a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than NRG or a Restricted Subsidiary of NRG; and | |
(b) any sale or other transfer of any such preferred stock to a Person that is not either NRG or a Restricted Subsidiary of NRG; |
will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7); |
(8) the incurrence by NRG or any of its Restricted Subsidiaries of Hedging Obligations; | |
(9) the guarantee by (i) NRG or any of the Guarantors of Indebtedness of NRG or a Guarantor that was permitted to be incurred by another provision of this covenant; (ii) any of the Excluded Project Subsidiaries of Indebtedness of any other Excluded Project Subsidiary; and (iii) any of the Excluded Foreign Subsidiaries of Indebtedness of any other Excluded Foreign Subsidiary;providedthat if the Indebtedness being guaranteed is subordinated to orpari passuwith the notes, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; | |
(10) the incurrence by NRG or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) inadvertently drawn against insufficient funds in the ordinary course of business, so long as such Indebtedness is covered within five business days; | |
(11) the Xcel Note; | |
(12) the incurrence by NRG or any of its Restricted Subsidiaries of Indebtedness in respect of (i) workers’ compensation claims, self-insurance obligations, bankers’ acceptance and (ii) performance and surety bonds provided by NRG or a Restricted Subsidiary in the ordinary course of business; | |
(13) (i) the incurrence of Non-Recourse Debt by any Excluded Project Subsidiary, (ii) the incurrence of Indebtedness and guarantees pursuant to the Itiquira Refinancing, and (iii) the incurrence of the Existing Genco Credit Facility and Notes Indebtedness;provided that such Existing Genco Credit Facility and Notes Indebtedness is paid in full on the first Business Day after the Acquisition is consummated; | |
(14) the incurrence of Indebtedness that may be deemed to arise as a result of agreements of NRG or any Restricted Subsidiary of NRG providing for indemnification, adjustment of purchase price or any similar obligations, in each case, incurred in connection with the disposition of any business, assets or Equity Interests of any Subsidiary;providedthat the aggregate maximum liability associated with such provisions may not exceed the gross proceeds (including non-cash proceeds) of such disposition; | |
(15) the incurrence by NRG or any Restricted Subsidiary of NRG of Indebtedness represented by letters of credit, guarantees or other similar instruments supporting Hedging Obligations of NRG or any of its Restricted Subsidiaries (other than Excluded Subsidiaries) permitted to be incurred by the applicable indenture; | |
(16) Indebtedness, Disqualified Stock or preferred stock of Persons or assets that are acquired by NRG or any Restricted Subsidiary of NRG or merged into NRG or a Restricted Subsidiary of NRG in accordance with the terms of the applicable indenture;providedthat such Indebtedness, Disqualified |
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Stock or preferred stock is not incurred in contemplation of such acquisition or merger; andprovided furtherthat after giving effect to such acquisition or merger, either: |
(a) NRG would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of this covenant; or | |
(b) the Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition or merger; |
(17) Environmental CapEx Debt;provided, that prior to the incurrence of any Environmental CapEx Debt, NRG shall deliver to the applicable trustee an officers’ certificate designating such Indebtedness as Environmental CapEx Debt; | |
(18) Indebtedness incurred to finance Necessary Capital Expenditures;provided, that prior to the incurrence of any Indebtedness to finance Necessary Capital Expenditures, NRG shall deliver to the applicable trustee an officers’ certificate designating such Indebtedness as Necessary CapEx Debt; | |
(19) Indebtedness of NRG or any Restricted Subsidiary consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business; | |
(20) the incurrence by NRG and the Guarantors of Indebtedness represented by the Related Financing Transactions on or before the date the Acquisition is consummated; and | |
(21) the incurrence by NRG and/or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (21), not to exceed $500.0 million. |
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; | |
(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and |
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(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: |
(a) the fair market value of such asset at the date of determination, and | |
(b) the amount of the Indebtedness of the other Person; |
Antilayering |
Liens |
Sale and Leaseback Transactions |
(1) NRG or that Guarantor, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption “—Liens”; | |
(2) the gross proceeds of that sale and leaseback transaction are at least equal to the fair market value of the property that is subject of that sale and leaseback transaction, as determined in good faith by a senior financial officer of NRG; and | |
(3) if such sale and leaseback transaction constitutes an Asset Sale, the transfer of assets in that sale and leaseback transaction is permitted by, and NRG applies the proceeds of such transaction in compliance with, the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.” |
Dividend and Other Payment Restrictions Affecting Subsidiaries |
(1) pay dividends or make any other distributions on its Capital Stock to NRG or any of its Restricted Subsidiaries (other than Excluded Subsidiaries), or with respect to any other interest or |
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participation in, or measured by, its profits, or pay any indebtedness owed to NRG or any of its Restricted Subsidiaries (other than Excluded Subsidiaries); | |
(2) make loans or advances to NRG or any of its Restricted Subsidiaries (other than Excluded Subsidiaries); or | |
(3) transfer any of its properties or assets to NRG or any of its Restricted Subsidiaries (other than Excluded Subsidiaries). |
(1) agreements governing Existing Indebtedness, on the date of the supplemental indentures, and the Credit Agreement, on the date of the Acquisition; | |
(2) the indentures, the notes, the security documents and the Subsidiary Guarantees (including the exchange notes and related Subsidiary Guarantees); | |
(3) applicable law, rule, regulation or order; | |
(4) customary non-assignment provisions in contracts, agreements, leases, permits and licenses; | |
(5) purchase money obligations for property acquired and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph; | |
(6) any agreement for the sale or other disposition of the stock or assets of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition; | |
(7) Permitted Refinancing Indebtedness;providedthat the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; | |
(8) Liens permitted to be incurred under the provisions of the covenant described above under the caption “—Liens” and associated agreements that limit the right of the debtor to dispose of the assets subject to such Liens; | |
(9) provisions limiting the disposition or distribution of assets or property in joint venture, partnership, membership, stockholder and limited liability company agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements, including owners’, participation or similar agreements governing projects owned through an undivided interest, which limitation is applicable only to the assets that are the subject of such agreements; | |
(10) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in connection with a Permitted Business; | |
(11) restrictions or conditions contained in any trading, netting, operating, construction, service, supply, purchase, sale or similar agreement to which NRG or any Restricted Subsidiary of NRG is a party entered into in connection with a Permitted Business;providedthat such agreement prohibits the encumbrance of solely the property or assets of NRG or such Restricted Subsidiary that are the subject of that agreement, the payment rights arising thereunder and/or the proceeds thereof and not to any other asset or property of NRG or such Restricted Subsidiary or the assets or property of any other Restricted Subsidiary; | |
(12) any instrument governing Indebtedness or Capital Stock of a Person acquired by NRG or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the applicable indenture to be incurred; | |
(13) Indebtedness of a Restricted Subsidiary of NRG existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by NRG; |
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(14) with respect to clause (3) of the first paragraph of this covenant only, restrictions encumbering property at the time such property was acquired by NRG or any of its Restricted Subsidiaries, so long as such restriction relates solely to the property so acquired and was not created in connection with or in anticipation of such acquisition; | |
(15) provisions limiting the disposition or distribution of assets or property in agreements governing Non-Recourse Debt, which limitation is applicable only to the assets that are the subject of such agreements; and | |
(16) any encumbrance or restrictions of the type referred to in clauses (1), (2) and (3) of the first paragraph of this covenant imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (15) above;providedthat such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of a senior financial officer of NRG, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewals, increase, supplement, refunding, replacement or refinancing. |
Merger, Consolidation or Sale of Assets |
(1) either: (a) NRG is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than NRG) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state of the United States or the District of Columbia;providedthat if the Person is a partnership or limited liability company, then a corporation wholly-owned by such Person organized or existing under the laws of the United States, any state of the United States or the District of Columbia that does not and will not have any material assets or operations shall become a co-issuer of each series of notes pursuant to supplemental indentures duly executed by the applicable trustee; | |
(2) the Person formed by or surviving any such consolidation or merger (if other than NRG) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of NRG under the notes and the indentures pursuant to supplemental indentures or other documents and agreements reasonably satisfactory to the trustee; | |
(3) immediately after such transaction, no Default or Event of Default exists; and | |
(4) (i) NRG or the Person formed by or surviving any such consolidation or merger (if other than NRG), or to which such sale, assignment, transfer, conveyance or other disposition has been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock” or (ii) NRG’s Fixed Charge Coverage Ratio is greater after giving pro forma effect to such consolidation or merger and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period than NRG’s actual Fixed Charge Coverage Ratio for the period. |
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(1) a merger of NRG with an Affiliate solely for the purpose of reincorporating NRG in another jurisdiction or forming a direct holding company of NRG; and | |
(2) any sale, transfer, assignment, conveyance, lease or other disposition of assets between or among NRG and its Restricted Subsidiaries, including by way of merger or consolidation. |
Transactions with Affiliates |
(1) the Affiliate Transaction is on terms that are no less favorable to NRG (as reasonably determined by NRG) or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by NRG or such Restricted Subsidiary with an unrelated Person; and | |
(2) NRG delivers to the trustee: |
(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $50.0 million, a resolution of the Board of Directors set forth in an officers’ certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and | |
(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $100.0 million, an opinion as to the fairness to NRG or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. |
(1) any employment agreement or director’s engagement agreement, employee benefit plan, officer and director indemnification agreement or any similar arrangement entered into by NRG or any of its Restricted Subsidiaries or approved by the Board of Directors of NRG in good faith; | |
(2) transactions between or among NRG and/or its Restricted Subsidiaries; | |
(3) transactions with a Person (other than an Unrestricted Subsidiary of NRG) that is an Affiliate of NRG solely because NRG owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person; | |
(4) payment of directors’ fees; | |
(5) any issuance of Equity Interests (other than Disqualified Stock) of NRG or its Restricted Subsidiaries; | |
(6) Restricted Payments that do not violate the provisions of the applicable indenture described above under the caption “—Restricted Payments”; | |
(7) any agreement in effect as of the date of the supplemental indentures or any amendment thereto or replacement thereof and any transaction contemplated thereby or permitted thereunder, so long as any such amendment or replacement agreement taken as a whole is not more disadvantageous to the Holders than the original agreement as in effect on the date of the supplemental indentures; | |
(8) payments or advances to employees or consultants that are incurred in the ordinary course of business or that are approved by the Board of Directors of NRG in good faith; |
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(9) the existence of, or the performance by NRG or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the date of the supplemental indentures and any similar agreements which it may enter into thereafter;provided, however, that the existence of, or the performance by NRG or any of its Restricted Subsidiaries of obligations under, any future amendment to any such existing agreement or under any similar agreement entered into after the date of the supplemental indentures shall only be permitted by this clause (9) to the extent that the terms of any such amendment or new agreement are not otherwise more disadvantageous to the holders of the notes in any material respect; | |
(10) transactions permitted by, and complying with, the provisions of the covenant described under “—Merger, Consolidation or Sale of Assets”; | |
(11) transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services (including pursuant to joint venture agreements) otherwise in compliance with the terms of the applicable indenture that are fair to NRG and its Restricted Subsidiaries, in the reasonable determination of a senior financial officer of NRG, or are on terms not materially less favorable taken as a whole as might reasonably have been obtained at such time from an unaffiliated party; | |
(12) any repurchase, redemption or other retirement of Capital Stock of NRG held by employees of NRG or any of its Subsidiaries; | |
(13) loans or advances to employees or consultants; | |
(14) the transactions contemplated by the Acquisition Agreement and the payment of all fees and expenses related thereto; | |
(15) any Permitted Investment in another Person involved in a Permitted Business; | |
(16) transactions in which NRG or any Restricted Subsidiary of NRG, as the case may be, delivers to the trustee a letter from an Independent Financial Advisor stating that such transaction is fair to NRG or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (1) of the preceding paragraph; | |
(17) the guarantee of Permitted Itiquira Indebtedness; and | |
(18) any agreement to do any of the foregoing. |
Additional Subsidiary Guarantees |
• | NRG or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary (other than an Excluded Subsidiary or a Domestic Subsidiary that does not Guarantee any other Indebtedness of NRG) after the date of the supplemental indentures, | |
• | any Excluded Subsidiary that is a Domestic Subsidiary ceases to be an Excluded Subsidiary after the date of the supplemental indentures, or | |
• | any Domestic Subsidiary that does not Guarantee any other Indebtedness of NRG subsequently Guarantees other Indebtedness of NRG, |
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Designation of Restricted, Unrestricted and Excluded Project Subsidiaries |
Payments for Consent |
New York Public Service Law |
(1) all quarterly and annual reports that would be required to be filed with the Commission onForms 10-Qand 10-K if NRG were required to file such reports; and | |
(2) all current reports that would be required to be filed with the Commission onForm 8-K if NRG were required to file such reports. |
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(1) default for 30 days in the payment when due of interest on such notes; | |
(2) default in payment when due of the principal of, or premium, if any, on such notes; | |
(3) failure by NRG or any of its Restricted Subsidiaries for 30 days after written notice given by the trustees or holders, to comply with any of the other agreements in the indenture governing such notes; | |
(4) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by NRG or any of its Restricted Subsidiaries (or the payment of which is guaranteed by NRG or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the supplemental indentures, if that default: |
(a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a“Payment Default”); or | |
(b) results in the acceleration of such Indebtedness prior to its express maturity, |
and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $100.0 million or more;providedthat this clause (4) shall not apply to (i) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness to a Person that is not an Affiliate of NRG; (ii) Non-Recourse Debt of NRG Peaker Finance Company LLC; and (iii) Non-Recourse Debt of NRG or any of its Subsidiaries (except to the extent that NRG or any of its Restricted Subsidiaries that are not parties to such Non-Recourse Debt becomes directly or indirectly liable, including pursuant to any contingent obligation, for any Indebtedness thereunder and such liability, individually or in the aggregate, exceeds $100.0 million); |
(5) one or more judgments for the payment of money in an aggregate amount in excess of $100.0 million (excluding therefrom any amount reasonably expected to be covered by insurance) shall be rendered against NRG any Restricted Subsidiary or any combination thereof and the same shall not have been paid, discharged or stayed for a period of 60 days after such judgment became final and non-appealable; | |
(6) failure by NRG to comply with any material term of the escrow and security agreement that is not cured within 10 days; |
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(7) the escrow and security agreement or any other security document or any Lien purported to be granted thereby on the escrow account or the cash or Government Securities therein is held in any judicial proceeding to be unenforceable or invalid, in whole or in part, or ceases for any reason (other than pursuant to a release that is delivered or becomes effective as set forth in the indenture governing such notes) to be fully enforceable and perfected; | |
(8) except as permitted by the indenture governing such notes, any Subsidiary Guarantee shall be held in any final and non-appealable judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor (or any group of Guarantors) that constitutes a Significant Subsidiary, or any Person acting on behalf of any Guarantor (or any group of Guarantors) that constitutes a Significant Subsidiary, shall deny or disaffirm its or their obligations under its or their Subsidiary Guarantee(s); and | |
(9) certain events of bankruptcy or insolvency described in the indenture governing such notes with respect to NRG or any of its Restricted Subsidiaries (other than the Exempt Subsidiaries) that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary. |
(1) such holder has previously given the trustee for such series notice that an Event of Default is continuing; | |
(2) holders of at least 25% in aggregate principal amount of the notes of such series that are then outstanding have requested the trustee to pursue the remedy; | |
(3) such holders have offered such trustee reasonable security or indemnity against any loss, liability or expense; | |
(4) such trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and | |
(5) holders of a majority in aggregate principal amount of such notes that are then outstanding have not given such trustee a direction inconsistent with such request within such60-day period. |
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(1) the rights of holders of such notes that are then outstanding to receive payments in respect of the principal of, or interest or premium on such notes when such payments are due from the trust referred to below; | |
(2) NRG’s obligations with respect to such notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust; | |
�� (3) the rights, powers, trusts, duties and immunities of the trustee for such notes, and NRG’s and the Guarantors’ obligations in connection therewith; and | |
(4) the Legal Defeasance provisions of the indenture for such notes. |
(1) NRG must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the notes subject to Legal Defeasance or Covenant Defeasance, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants to pay the principal of, or interest and premium on such notes that are then outstanding on the Stated Maturity or on the applicable redemption date, as the case may be, and NRG must specify whether such notes are being defeased to maturity or to a particular redemption date; | |
(2) in the case of Legal Defeasance, NRG has delivered to the trustee an opinion of counsel reasonably acceptable to the trustee for the applicable series of notes confirming that (a) NRG has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the supplemental indentures, there has been a change in the applicable federal income tax law, in |
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either case to the effect that, and based thereon such opinion of counsel will confirm that, the holders of such notes that are then outstanding will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; | |
(3) in the case of Covenant Defeasance, NRG has delivered to the trustee for the applicable series of notes an opinion of counsel reasonably acceptable to the trustee confirming that the holders of such notes that are then outstanding will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; | |
(4) no Default or Event of Default with respect to such series of notes has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); | |
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture governing such notes) to which NRG or any of its Subsidiaries is a party or by which NRG or any of its Subsidiaries is bound; | |
(6) NRG must deliver to the trustee for the applicable series of notes an officers’ certificate stating that the deposit was not made by NRG with the intent of preferring the holders of notes over the other creditors of NRG with the intent of defeating, hindering, delaying or defrauding creditors of NRG or others; and | |
(7) NRG must deliver to the trustee for the applicable series of notes an officers’ certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. |
(1) reduce the principal amount of such notes whose holders must consent to an amendment, supplement or waiver; | |
(2) reduce the principal of or change the fixed maturity of any such note or alter the provisions with respect to the redemption of such notes (other than provisions relating to the covenants described above under the caption “—Repurchase at the Option of Holders”); | |
(3) reduce the rate of or change the time for payment of interest on any such note; | |
(4) waive a Default or Event of Default in the payment of principal of, or interest or premium on such notes (except a rescission of acceleration of such notes by the holders of at least a majority in aggregate principal amount of such notes and a waiver of the payment default that resulted from such acceleration); |
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(5) make any such note payable in currency other than that stated in such notes; | |
(6) make any change in the provisions of the indenture governing such notes relating to waivers of past Defaults or the rights of holders of such notes to receive payments of principal of, or interest or premium on such notes; | |
(7) waive a redemption payment with respect to any such note (other than a payment required by one of the covenants described above under the caption “—Repurchase at the Option of Holders”); | |
(8) amend or waive any term of the escrow and security agreements; or | |
(9) make any change in the preceding amendment and waiver provisions. |
(1) to cure any ambiguity, defect or inconsistency; | |
(2) to provide for uncertificated notes in addition to or in place of certificated notes; | |
(3) to provide for the assumption of NRG’s obligations to holders of notes in the case of a merger or consolidation or sale of all or substantially all of NRG’s assets; | |
(4) to make any change that would provide any additional rights or benefits to the holders of notes or that does not adversely affect the legal rights under any indenture of any such holder; | |
(5) to comply with requirements of the Commission in order to effect or maintain the qualification of any indenture under the Trust Indenture Act; | |
(6) to conform the text of any indenture or the notes to any provision of this Description of Notes to the extent that such provision in this Description of Notes was intended to be a verbatim recitation of a provision of that indenture or the notes outstanding thereunder; | |
(7) to evidence and provide for the acceptance and appointment under any indenture of a successor trustee pursuant to the requirements thereof; | |
(8) to provide for the issuance of additional notes in accordance with the limitations set forth in the indentures as of the date hereof; or | |
(9) to allow any Guarantor to execute a supplemental indenture and/or a Subsidiary Guarantee with respect to the notes. |
(1) either: |
(a) all such notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to NRG, have been delivered to the trustee for such notes for cancellation; or | |
(b) all such notes that have not been delivered to the trustee for such notes for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and NRG or any Guarantor has irrevocably deposited or caused to be deposited with the trustee for such notes as trust funds in trust solely for the benefit of the holders of such notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on such notes not delivered to the trustee for cancellation for principal, premium and accrued interest to the date of maturity or redemption; |
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(2) no Default or Event of Default under such indenture has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which NRG or any Guarantor is a party or by which NRG or any Guarantor is bound; | |
(3) NRG or any Guarantor has paid or caused to be paid all sums payable by it under such indenture; and | |
(4) NRG has delivered irrevocable instructions to the trustee under such indenture to apply the deposited money toward the payment of such notes at maturity or the redemption date, as the case may be. |
(1) Indebtedness of any other Person or asset existing at the time such other Person or asset is merged with or into, is acquired by, or became a Subsidiary of such specified Person, as the case may be, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and | |
(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. |
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(1) 1.0% of the principal amount of such note; or | |
(2) the excess of: |
(A) the present value at such redemption date of (i) the redemption price of such note at February 1, 2010, (such redemption price being set forth in the table appearing above under the caption “—Optional Redemption”) plus (ii) all required interest payments due on the note through February 1, 2010 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over | |
(B) the principal amount of the note, if greater; and |
(b) with respect to any 2016 note on any redemption date, the greater of: |
(1) 1.0% of the principal amount of such note; or | |
(2) the excess of: |
(A) the present value at such redemption date of (i) the redemption price of such note at February 1, 2011, (such redemption price being set forth in the table appearing above under the caption “—Optional Redemption”) plus (ii) all required interest payments due on the note through February 1, 2011 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over | |
(B) the principal amount of the note, if greater. |
(1) the sale, lease, conveyance or other disposition of any assets or rights;providedthat the sale, conveyance or other disposition of all or substantially all of the assets of NRG and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indentures described above under the caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sale covenant; and | |
(2) the issuance of Equity Interests in any of NRG’s Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries. |
(1) any single transaction or series of related transactions for which NRG or its Restricted Subsidiaries receive aggregate consideration of less than $50.0 million; | |
(2) a transfer of assets or Equity Interests between or among NRG and its Restricted Subsidiaries; | |
(3) an issuance of Equity Interests by a Restricted Subsidiary of NRG to NRG or to a Restricted Subsidiary of NRG; | |
(4) the sale or lease of products or services and any sale or other disposition of damaged, worn-out or obsolete assets; |
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(5) the sale or discount, in each case without recourse, of accounts receivable, but only in connection with the compromise or collection thereof; | |
(6) the licensing of intellectual property; | |
(7) the sale, lease, conveyance or other disposition for value of energy, fuel or emission credits or contracts for any of the foregoing; | |
(8) the sale or other disposition of cash or Cash Equivalents; | |
(9) a Restricted Payment that does not violate the covenant described above under the caption “—Certain Covenants—Restricted Payments” or a Permitted Investment; | |
(10) to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, any exchange of like property (excluding any “boot” thereon) for use in a Permitted Business; and | |
(11) a disposition of assets in connection with a foreclosure, transfer or deed in lieu of foreclosure or other exercise of remedial action. |
(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; | |
(2) with respect to a partnership, the Board of Directors of the general partner of the partnership; | |
(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and | |
(4) with respect to any other Person, the board or committee of such Person serving a similar function. |
(1) in the case of a corporation, corporate stock; | |
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; | |
(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and | |
(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the |
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foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. |
(1) United States dollars, Euros or, in the case of any Foreign Subsidiary, any local currencies held by it from time to time; | |
(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (providedthat the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than twelve months from the date of acquisition; | |
(3) certificates of deposit and eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 12 months and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better; | |
(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; | |
(5) commercial paper having one of the two highest ratings obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and in each case maturing within 12 months after the date of acquisition; | |
(6) readily marketable direct obligations issued by any state of the United States or any political subdivision thereof, in either case having one of the two highest rating categories obtainable from either Moody’s or S&P; and | |
(7) money market funds that invest primarily in securities described in clauses (1) through (6) of this definition. |
(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of NRG and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act, but excluding any employee benefit plan of NRG or any of its Restricted Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of such plan); | |
(2) the adoption of a plan relating to the liquidation or dissolution of NRG; | |
(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as defined above) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of NRG, measured by voting power rather than number of shares; or | |
(4) the first day on which a majority of the members of the Board of Directors of NRG are not Continuing Directors. |
(1) an amount equal to any extraordinary loss (including any loss on the extinguishment or conversion of Indebtedness) plus any net loss realized by such Person or any of its Restricted Subsidiaries |
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in connection with an Asset Sale (without giving effect of the threshold provided in the definition thereof), to the extent such losses were deducted in computing such Consolidated Net Income;plus | |
(2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income;plus | |
(3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income;plus | |
(4) any expenses or charges related to any equity offering, Permitted Investment, acquisition, disposition, recapitalization or Indebtedness permitted to be incurred by the indenture including a refinancing thereof (whether or not successful), including such fees, expenses or charges related to the offering of the notes and the Credit Agreement, and deducted in computing Consolidated Net Income;plus | |
(5) any professional and underwriting fees related to any equity offering, Permitted Investment, acquisition, recapitalization or Indebtedness permitted to be incurred under the indenture and, in each case, deducted in such period in computing Consolidated Net Income;plus | |
(6) the amount of any minority interest expense deducted in calculating Consolidated Net Income (less the amount of any cash dividends paid to the holders of such minority interests);plus | |
(7) any non cash gain or loss attributable to Mark to Market Adjustments in connection with Hedging Obligations;plus | |
(8) without duplication, any writeoffs, writedowns or other non-cash charges reducing Consolidated Net Income for such period, excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period,plus | |
(9) all items classified as extraordinary, unusual or nonrecurring non-cash losses or charges (including, without limitation, severance, relocation and other restructuring costs), and related tax effects according to GAAP to the extent such non-cash charges or losses were deducted in computing such Consolidated Net Income;plus | |
(10) depreciation, depletion, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges and expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income;minus | |
(11) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business; in each case, on a consolidated basis and determined in accordance with GAAP (including, without limitation, any increase in amortization or depreciation or other non-cash charges resulting from the application of purchase accounting in relation to the Acquisition or any acquisition that is consummated after the date of the supplemental indenture);minus | |
(12) interest income for such period; |
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(1) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions (including pursuant to other intercompany payments but excluding Concurrent Cash Distributions) paid in cash to the specified Person or a Restricted Subsidiary of the Person; | |
(2) for purposes of the covenant described above under the caption “—Restricted Payments” only, the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; | |
(3) the cumulative effect of a change in accounting principles will be excluded; | |
(4) any net after-tax non-recurring or unusual gains, losses (less all fees and expenses relating thereto) or other charges or revenue or expenses (including, without limitation, relating to severance, relocation, one-time compensation charges and the Acquisition) shall be excluded; | |
(5) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights to officers, directors or employees shall be excluded, whether under FASB 123R or otherwise; | |
(6) any net after-tax income (loss) from disposed or discontinued operations and any net after-tax gains or losses on disposal of disposed or discontinued operations shall be excluded; | |
(7) any gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions shall be excluded; | |
(8) any impairment charge or asset write-off pursuant to Financial Accounting Statement No. 142 and No. 144 or any successor pronouncement shall be excluded; and | |
(9) any accruals or reserves or other charges related to the Acquisition and the Related Financing Transactions incurred on or before January 1, 2007, shall be excluded. |
(1) was a member of such Board of Directors on the date of the supplemental indentures; or | |
(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. |
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(a) each Subsidiary of NRG that is an obligor or otherwise bound with respect to Non-Recourse Debt on the date of the supplemental indenture, | |
(b) any Person that becomes a Subsidiary of NRG after the date of the supplemental indenture that is an obligor or otherwise bound solely with respect to Non-Recourse Debt, and | |
(c) any Subsidiary of NRG that is designated by NRG’s Board of Directors as an Excluded Project Subsidiary pursuant to a Board Resolution, |
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(1) Investments and acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance withRegulation S-X under the Securities Act, but including all Pro Forma Cost Savings) as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period will be calculated on the same pro forma basis; | |
(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded; | |
(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date; | |
(4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; | |
(5) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and | |
(6) if any Indebtedness that is being incurred on the Calculation Date bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness. |
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(1) the consolidated interest expense of such Person and its Restricted Subsidiaries (other than interest expense of any Excluded Subsidiary the Consolidated Cash Flow of which is excluded from the Consolidated Cash Flow of such Person pursuant to the definition of “Consolidated Cash Flow”) for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates;plus | |
(2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period;plus | |
(3) any interest accruing on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon;plus | |
(4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable in Equity Interests of NRG (other than Disqualified Stock) or to NRG or a Restricted Subsidiary of NRG, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP;minus | |
(5) interest income for such period. |
(1) NRG’s Restricted Subsidiaries other than the Excluded Foreign Subsidiaries, the Excluded Project Subsidiaries, and the Immaterial Subsidiaries; and | |
(2) any other Restricted Subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the indentures; |
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(1) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements, and | |
(2) (i) agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates, commodity prices or commodity transportation or transmission pricing or availability, including but not limited to the Goldman Sachs Hedge Agreement; (ii) any netting arrangements, power purchase and sale agreements, fuel purchase and sale agreements, swaps, options and other agreements, in each case, that fluctuate in value with fluctuations in energy, power or gas prices; and (iii) agreements or arrangements for commercial or trading activities with respect to the purchase, transmission, distribution, sale, lease or hedge of any energy related commodity or service. |
(1) in respect of borrowed money; | |
(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); | |
(3) in respect of banker’s acceptances; | |
(4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions; | |
(5) representing the balance deferred and unpaid of the purchase price of any property (including trade payables) or services due more than six months after such property is acquired or such services are completed; or | |
(6) representing the net amount owing under any Hedging Obligations, |
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(a) the Concurrent Cash Distribution shall be deemed to be Net Proceeds received in connection with an Asset Sale and applied as set forth above under the caption “Asset Sales”; and | |
(b) the amount of such Investment shall be deemed to be the fair market value of the Investment, less the amount of the Concurrent Cash Distribution. |
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(1) any mortgage, deed of trust, deed to secure debt, lien (statutory or otherwise), pledge, hypothecation, encumbrance, restriction, collateral assignment, charge or security interest in, on or of such asset; | |
(2) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; and | |
(3) in the case of Equity Interests or debt securities, any purchase option, call or similar right of a third party with respect to such Equity Interests or debt securities. |
(1) any non-cash loss attributable to themark-to-market movement in the valuation of Hedging Obligations (to the extent the cash impact resulting from such loss has not been realized) or other derivative instruments pursuant to Financial Accounting Standards Board Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities;”plus |
(a) any loss relating to amounts paid in cash prior to the stated settlement date of any Hedging Obligation that has been reflected in Consolidated Net Income in the current period;plus |
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(b) any gain relating to Hedging Obligations associated with transactions recorded in the current period that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated Cash Flow pursuant to clauses (2)(a) and (2)(b) below;less, |
(2) any non-cash gain attributable to themark-to-market movement in the valuation of Hedging Obligations (to the extent the cash impact resulting from such gain has not been realized) or other derivative instruments pursuant to Financial Accounting Standards Board Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities;”less |
(a) any gain relating to amounts received in cash prior to the stated settlement date of any Hedging Obligation that has been reflected in Consolidated Net Income in the current period;less | |
(b) any loss relating to Hedging Obligations associated with transactions recorded in the current period that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated Cash Flow pursuant to clauses (1)(a) and (1)(b) above. |
(1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any Asset Sale (without giving effect to the threshold provided for in the definition thereof); or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and | |
(2) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. |
(1) as to which neither NRG nor any of its Restricted Subsidiaries (other than an Excluded Project Subsidiary) (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) other than pursuant to a Non-Recourse Guarantee or any arrangement to provide or guarantee to provide goods and services on an arm’s length basis, (b) is |
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directly or indirectly liable as a guarantor or otherwise, other than pursuant to a Non-Recourse Guarantee, or (c) constitutes the lender; | |
(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of NRG (other than the notes and the Credit Agreement) or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of such other Indebtedness to be accelerated or payable prior to its Stated Maturity; and | |
(3) in the case of Non-Recourse Debt incurred after the date of the supplemental indentures, as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of NRG or any of its Restricted Subsidiaries except as otherwise permitted by clauses (1) or (2) above; |
(1) any Investment in NRG or in a Restricted Subsidiary of NRG that is a Guarantor; | |
(2) any Investment in an Immaterial Subsidiary; | |
(3) any Investment in an Excluded Foreign Subsidiary for so long as the Excluded Foreign Subsidiaries do not collectively own more than 20% of the consolidated assets of NRG as of the most recent fiscal quarter end for which financial statements are publicly available; | |
(4) any issuance of letters of credit in an aggregate amount not to exceed $250.0 million solely for working capital requirements and general corporate purposes of any of the Excluded Subsidiaries; | |
(5) any Investment in Cash Equivalents (and, in the case of Excluded Subsidiaries only, Cash Equivalents or other liquid investments permitted under any Credit Facility to which it is a party); | |
(6) any Investment by NRG or any Restricted Subsidiary of NRG in a Person, if as a result of such Investment: |
(a) such Person becomes a Restricted Subsidiary of NRG and a Guarantor or an Immaterial Subsidiary; or | |
(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, NRG or a Restricted Subsidiary of NRG that is a Guarantor; |
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(7) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”; | |
(8) Investments made as a result of the sale of Equity Interests of any Person that is a Subsidiary of NRG such that, after giving effect to any such sale, such Person is no longer a Subsidiary of NRG, if the sale of such Equity Interests constitutes an Asset Sale and the Net Proceeds received from such Asset Sale are applied as set forth above under the caption “—Repurchase at the Option of Holders—Asset Sales”; | |
(9) Investments to the extent made in exchange for the issuance of Equity Interests (other than Disqualified Stock) of NRG; | |
(10) any Investments received in compromise or resolution of (a) obligations of trade creditors or customers of NRG or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (b) litigation, arbitration or other disputes with Persons who are not Affiliates; | |
(11) Investments represented by Hedging Obligations; | |
(12) loans or advances to employees; | |
(13) repurchases of the notes orpari passuIndebtedness; | |
(14) any Investment in securities of trade creditors, trade counter-parties or customers received in compromise of obligations of those Persons, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; | |
(15) negotiable instruments held for deposit or collection; | |
(16) receivables owing to NRG or any Restricted Subsidiary of NRG and payable or dischargeable in accordance with customary trade terms;provided, however, that such trade terms may include such concessionary trade terms as NRG of any such Restricted Subsidiary of NRG deems reasonable under the circumstances; | |
(17) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes; | |
(18) Investments resulting from the acquisition of a Person that at the time of such acquisition held instruments constituting Investments that were not acquired in contemplation of the acquisition of such Person; | |
(19) any Investment in any Person engaged primarily in one or more Permitted Businesses (including, without limitation, Excluded Subsidiaries, Unrestricted Subsidiaries, and Persons that are not Subsidiaries of NRG) made for cash since the date of the supplemental indentures; | |
(20) the contribution of any one or more of the Specified Facilities to a Restricted Subsidiary that is not a Guarantor; | |
(21) Investments made pursuant to a commitment that, when entered into, would have complied with the provisions of the applicable indenture; and | |
(22) other Investments made since the date of the supplemental indentures in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (22) that are at the time outstanding not to exceed the greater of (a) $500.0 million and (b) 2.5% of Total Assets;provided, however, that if any Investment pursuant to this clause (22) is made in any Person that is not a Restricted Subsidiary of NRG and a Guarantor at the date of the making of the Investment and such Person becomes a Restricted Subsidiary and a Guarantor after such date, such |
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Investment shall thereafter be deemed to have been made pursuant to clause (1) above, and shall cease to have been made pursuant to this clause (22). |
(1) Liens on assets of NRG or any Guarantor securing Indebtedness and other Obligations under Credit Facilities, in an aggregate principal amount not exceeding, on the date of the creation of such Liens, the greater of (a) 30.0% of Total Assets or (b) $6.0 billion less the aggregate amount of all repayments, optional or mandatory, of the principal of any term Indebtedness under a Credit Facility that have been made by NRG or any of its Restricted Subsidiaries since the date of the supplemental indentures with the Net Proceeds of Asset Sales (other than Excluded Proceeds) and less, without duplication, the aggregate amount of all repayments or commitment reductions with respect to any revolving credit borrowings under a Credit Facility that have been made by NRG or any of its Restricted Subsidiaries since the date of the supplemental indentures as a result of the application of the Net Proceeds of Asset Sales (other than Excluded Proceeds) in accordance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales” (excluding temporary reductions in revolving credit borrowings as contemplated by that covenant); | |
(2) Liens to secure obligations with respect to (i) contracts (other than for Indebtedness) for commercial and trading activities for the purchase, transmission, distribution, sale, lease or hedge of any energy related commodity or service, and (ii) Hedging Obligations; | |
(3) Liens on assets of Excluded Subsidiaries securing Indebtedness of Excluded Subsidiaries that was permitted by the terms of the indentures to be incurred; | |
(4) Liens (a) in favor of NRG or any of the Guarantors; (b) incurred by Excluded Project Subsidiaries in favor of any other Excluded Project Subsidiary; or (c) incurred by Excluded Foreign Subsidiaries in favor of any other Excluded Foreign Subsidiary; | |
(5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature; | |
(6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4), (13) and (20) of the second paragraph of the covenant entitled “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” covering only the assets acquired with or financed by such Indebtedness; | |
(7) Liens existing on the date of the supplemental indentures; | |
(8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded;providedthat any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; | |
(9) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens; | |
(10) survey exceptions, easements or reservations of, or rights of others for, licenses,rights-of-way, sewers, electric lines, telegraph and telephone lines, oil, gas and other mineral interests and leases, and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; | |
(11) Liens created for the benefit of (or to secure) the notes (or the Subsidiary Guarantees); |
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(12) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the applicable indenture;provided, however, that: |
(a) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and | |
(b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Referencing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement; |
(13) Liens incurred or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security; | |
(14) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of NRG or any of its Restricted Subsidiaries, including rights of offset and set-off; | |
(15) leases or subleases granted to others that do not materially interfere with the business of NRG and its Restricted Subsidiaries; | |
(16) statutory Liens arising under ERISA; | |
(17) Liens on property (including Capital Stock) existing at the time of acquisition of the property by NRG or any Subsidiary of NRG;providedthat such Liens were in existence prior to, such acquisition, and not incurred in contemplation of, such acquisition; | |
(18) Liens arising from Uniform Commercial Code financing statements filed on a precautionary basis in respect of operating leases intended by the parties to be true leases (other than any such leases entered into in violation of the applicable indenture); | |
(19) Liens on assets and Equity Interests of a Subsidiary that is an Excluded Subsidiary; | |
(20) Liens granted in favor of Xcel Energy, Inc. pursuant to the Xcel Indemnification Agreements as in effect on the date of the supplemental indentures on NRG’s interest in all revenues received by NRG pursuant to the Facility Instruments; | |
(21) Liens to secure Indebtedness incurred to finance Necessary Capital Expenditures that encumber only the assets purchased, installed or otherwise acquired with the proceeds of such Indebtedness; | |
(22) Liens to secure Environmental CapEx Debt that encumber only the assets purchased, installed or otherwise acquired with the proceeds of such Environmental CapEx Debt; | |
(23) Liens relating to the escrow and security agreement in effect on the date of the supplemental indentures and future escrow arrangements securing Indebtedness incurred in accordance with the indentures; | |
(24) Liens on assets or securities deemed to arise in connection with the execution, delivery or performance of contracts to sell such assets or stock otherwise permitted under the indentures; | |
(25) Liens on assets of Itiquira incurred pursuant to the Itiquira Refinancing; and | |
(26) any restrictions on any Equity Interest or undivided interests, as the case may be, of a Person providing for a breach, termination or default under any joint venture, stockholder, membership, limited liability company, partnership, owners’, participation or other similar agreement between such Person and one or more other holders of Equity Interests or undivided interests of such Person, as the case may be, if a security interest or Lien is created on such Equity Interest or undivided interest, as the case may be, as a result thereof; |
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(27) any customary provisions limiting the disposition or distribution of assets or property (including without limitation Equity Interests) or any related restrictions thereon in joint venture, partnership, membership, stockholder and limited liability company agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements, including owners’, participation or similar agreements governing projects owned through an undivided interest; provided, however, that any such limitation is applicable only to the assets that are the subjects of such agreements; | |
(28) those Liens or other exceptions to title, in either case on or in respect of any facility of NRG or any Subsidiary, arising as a result of any shared facility agreement entered into after the closing date with respect to such facility, except to the extent that any such Liens or exceptions, individually or in the aggregate, materially adversely affect the value of the relevant property or materially impair the use of the relevant property in the operation of the business of NRG or such Subsidiary; | |
(29) Liens on cash deposits and other funds maintained with a depositary institution, in each case arising in the ordinary course of business by virtue of any statutory or common law provision relating to banker’s liens, includingSection 4-210 of the Uniform Commercial Code; | |
(30) any Liens on property and assets (other than certain properties or assets defined as “core” collateral) designated as Excluded Assets from time to time by NRG under clause (xiii) of the related definition under the Credit Agreement, which shall not have, when taken together with all other “non-core” property and assets that constitute Excluded Assets pursuant to such clause at the relevant time of determination, a fair market value in excess of $250 million in the aggregate (and, to the extent that such fair market value of such asset exceeds $250 million in the aggregate, such property or assets shall cease to be an Excluded Asset only to the extent of such excess fair market value); and | |
(31) Liens incurred by NRG or any Subsidiary of NRG with respect to obligations that do not exceed $100.0 million at any one time outstanding. |
(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); | |
(2) such Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; | |
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the notes on terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; | |
(4) such Indebtedness is incurred either by NRG (and may be guaranteed by any Guarantor) or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and | |
(5) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the notes, the Permitted Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the notes, the Permitted Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the notes. |
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(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and | |
(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). |
(1) has no Indebtedness other than Non-Recourse Debt; | |
(2) except as permitted by the covenant described above under the caption “—Certain Covenants—Affiliate Transactions,” is not party to any agreement, contract, arrangement or understanding with NRG or any Restricted Subsidiary of NRG unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to NRG or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of NRG; | |
(3) is a Person with respect to which neither NRG nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results except as otherwise permitted by the Credit Agreement as in effect on the date of the supplemental indentures; and | |
(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of NRG or any of its Restricted Subsidiaries except as otherwise permitted by the Credit Agreement as in effect on the date of the supplemental indentures. |
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(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by | |
(2) the then outstanding principal amount of such Indebtedness. |
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Guarantees and Collateral |
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Interest |
• | Alternate Base Rate loans. Interest is expected to be at a spread (the “Applicable Margin”) over the Alternate Base Rate for term loans and for revolving loans and swing-line loans, calculated on a365-day or366-day basis, as the case may be, when the Alternate Base Rate is determined by reference to the prime rate, and on a360-day basis at all other times. The “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater of (a) the “prime rate” publicly announced from time to time by The Wall Street Journal as the “base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks” and (b) the federal funds effective rate in effect on such day plus1/2 of 1%. | |
• | Eurodollar loans. Interest will be determined for periods to be selected by NRG, or “interest periods,” of one, two, three or six months and, to the extent available to all of the lenders, nine or twelve months, and is expected be at a spread (the “Applicable Margin”) over the Adjusted LIBO Rate for term loans and for revolving loans and swing-line loans, calculated on a360-day basis. The “Adjusted LIBO Rate” shall mean, with respect to any Eurodollar loan for any interest period and as determined from time to time, an interest rate per annum equal to the product of (a) the rate per annum determined by the Administrative Agent at approximately 11:00 a.m., London time, on the date that is two business days prior to the commencement of the relevant interest period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars (as set forth by the Bloomberg Information Service or any successor thereto or any other service selected by the Administrative Agent which has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to the relevant interest period and (b) certain statutory reserves as agreed upon in the senior secured credit facility. |
ABR Revolving | ||||||||||||||||
Eurodollar | ABR Term | Eurodollar | Loans and | |||||||||||||
Consolidated Senior Leverage Ratio | Term Loans | Loans | Revolving Loans | Swingline Loans | ||||||||||||
Category 1 | ||||||||||||||||
Greater than 3.50 to 1.00 | 2.0% | 1.0 | % | 2.00 | % | 1.00 | % | |||||||||
Category 2 | ||||||||||||||||
Greater than 3.00 to 1.00 but less than or equal to 3.50 to 1.00 | 1.75% | 0.75 | % | 1.75 | % | 0.75 | % | |||||||||
Category 3 | ||||||||||||||||
Less than or equal to 3.00 to 1.00 | 1.75% | 0.75 | % | 1.50 | % | 0.50 | % |
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Default Interest and Fees |
Commitment and Letter of Credit Fees |
Covenants |
• | indebtedness (including guarantees and other contingent obligations); | |
• | liens; | |
• | sale and lease-back transactions; | |
• | investments, loans and advances; | |
• | mergers, acquisitions, consolidations and asset sales; | |
• | dividends and other restricted payments; | |
• | transactions with affiliates; | |
• | business activities and hedging agreements; | |
• | capital expenditures; | |
• | limitations on debt payments; |
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• | changes to the terms of any material indebtedness that materially increase the obligations of the obligor or confer additional material rights to the holder of such indebtedness; and | |
• | other matters customarily restricted in such agreements. |
• | breaches of representations and warranties; | |
• | payment defaults; | |
• | noncompliance with covenants; | |
• | bankruptcy; | |
• | judgments in excess of a specified amount; | |
• | any confirmation order that is reversed, amended or modified in any material respects, vacated or stayed; | |
• | any event that could result in our liability under the Employee Retirement Income Security Act of 1974 in excess of a specified amount; | |
• | failure of any guarantee or pledge agreement supporting the senior secured credit facility to be in full force and effect; | |
• | failure of any lien created in favor of the loan parties to be a valid, perfected and first priority lien on any material collateral securing the senior secured credit facility; and | |
• | a change of control, as such term is defined in the senior secured credit facility. |
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September 30, 2005 | December 31, 2005 | |||||||
($ in millions) | ($ in millions) | |||||||
Letters of Credit(1) | $ | 846 | $ | 831 | ||||
Cash Margin(1) | 631.4 | 432.5 | ||||||
Parental Guarantees(2) | 142.1 | 167.1 | ||||||
Junior Liens on ERCOT Assets | 2,181 | 2,221 |
(1) | At December 31, 2005 and September 30, 2005, West Coast Power’s collateral posted totaled $48.4 million and $24.6 million, respectively and is not included in the table above. Of these amounts, letters of credit totaled $0 and $10.7 million, respectively and cash totaled $48.4 million and $13.9 million, respectively. |
(2) | Parental guarantees were provided by either NRG Energy, Inc. or Texas Genco LLC on behalf of their subsidiaries. |
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Interest |
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Sale, Exchange or Other Disposition of Notes |
Federal Estate Tax |
Information Reporting and Backup Withholding |
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Principal Amount of | ||||||||||||
Floating Rate Senior Notes | Principal Amount of % | Principal Amount of % | ||||||||||
Underwriter | due 2014 | Senior Notes due 2014 | Senior Notes due 2016 | |||||||||
Morgan Stanley & Co. Incorporated | ||||||||||||
Citigroup Global Markets Inc. | ||||||||||||
Lehman Brothers Inc. | ||||||||||||
Banc of America Securities LLC | ||||||||||||
Deutsche Bank Securities Inc. | ||||||||||||
Goldman, Sachs & Co. | ||||||||||||
Merrill Lynch, Pierce, Fenner & Smith Incorporated | ||||||||||||
Total | $ | $ | $ | |||||||||
S-169
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S-170
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S-171
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MORGAN STANLEY | CITIGROUP |
BANC OF AMERICA SECURITIES LLC |
DEUTSCHE BANK SECURITIES |
GOLDMAN, SACHS & CO. |
MERRILL LYNCH & CO. |