Filed by Reliant Energy, Incorporated
Pursuant to 425 under the Securities Act of 1933
Subject Company: CenterPoint Energy, Inc.
Commission File No.: 333-69502
The following article relating to the proposed transaction is being filed by
Reliant Energy, Incorporated pursuant to Rule 425:
RELIANT ENERGY SHAREHOLDERS APPROVE FORMATION OF A HOLDING COMPANY
NAMED CENTERPOINT ENERGY AS THE NEXT STEP IN THE BUSINESS SEPARATION
At a special shareholder meeting on December 17, 2001, Reliant Energy's
shareholders approved the formation of a new holding company through a merger of
Reliant Energy and one of its subsidiaries. The new holding company will be
named CenterPoint Energy, Inc. and will become the parent company of Reliant
Energy. It is being formed as a part of a corporate restructuring designed to
meet applicable regulatory requirements for the company's previously announced
business separation.
The corporate restructuring will result in Reliant Energy's separation
into two separately owned public companies. One will be the regulated energy
delivery company and will be named CenterPointEnergy. The other is Reliant
Resources, our competitive energy services provider, which is currently 80
percent-owned by Reliant Energy.
The business separation plan was announced in July of 2000, and
employees have been working diligently toward completing the separation process
since then. The first major step was completed in May of this year, when Reliant
Resources sold about 20 percent of its shares to the public in an initial public
offering, or "IPO." Reliant Resources began trading on the New York Stock
Exchange on May 1, 2001, under the symbol RRI.
RELIANT ENERGY COMMON STOCK WILL BECOME CENTERPOINT ENERGY COMMON STOCK
The formation of the new holding company is a major step in the business
separation. This holding-company structure is required to satisfy commitments
made by the company to the Public Utility Commission of Texas in the move to
retail electric competition.
When the holding company is formed, which is expected to be early next
year, each outstanding share of Reliant Energy common stock will automatically
be converted into one share of CenterPoint Energy common stock. Shareholders
will then own shares of CenterPoint Energy, which will trade under the symbol
CEP on the New York and Chicago Stock Exchanges. That change will be announced
when it occurs.
TIMING FOR FINAL BUSINESS SEPARATION NOT YET DETERMINED
In order to complete the separation, the company plans to distribute the
remaining stock of Reliant Resources to shareholders of CenterPoint Energy
through a non-cash dividend. The record date for that dividend will be
established by the board of directors after the restructuring. Shareholders who
hold CenterPoint Energy stock on the record date will, following the
distribution, have shares of stock in both CenterPoint Energy (which will
include only our regulated energy delivery businesses) and Reliant Resources.
The separation into two companies does not require further shareholder
action, but shareholders will receive notice from CenterPoint Energy when the
decision to distribute the Reliant Resources shares has been made.
The exact timing of the restructuring and distribution of Reliant
Resources shares to shareholders has still not been determined. The company is
awaiting several governmental approvals, including those of the Internal Revenue
Service and the Securities and Exchange Commission. The separation is expected
to be completed during the first quarter of 2002.
The number of Reliant Resources shares that shareholders will receive for
each CenterPoint Energy share owned will depend on how many shares of both
companies are outstanding at the time of the separation. If the separation
occurred today, shareholders would receive .8 Reliant Resources share for every
share of CenterPoint Energy owned. The ratio is not expected to change
significantly prior to the distribution.
COMPANIES ARE EXPECTED TO APPEAL TO DIFFERENT TYPES OF INVESTORS;
CENTERPOINT ENERGY WILL CONTINUE TO PAY DIVIDENDS; RELIANT RESOURCES WILL NOT
Both CenterPoint Energy and Reliant Resources will have sizeable and
well-established business operations. However, regulated energy delivery is very
different from competitive energy services, and each represents a distinct type
of investment. CenterPoint Energy is expected to appeal to investors who are
interested in dividend income and the steady, slower-growth characteristics of
regulated businesses. Reliant Resources, on the other hand, has attracted
investors who are more growth-oriented.
Many shareholders and employees have asked about dividends. As a
growth-oriented company, Reliant Resources does not pay a dividend, and does not
plan to pay dividends in the future.
CenterPoint Energy will continue to pay a dividend, Chairman, President
and CEO Steve Letbetter told shareholders. However, after the distribution of
Reliant Resources shares to shareholders, CenterPoint Energy will be a smaller
company. The dividend is expected to be less than that currently being paid by
Reliant Energy. "Nevertheless, CenterPoint Energy will continue to provide an
attractive yield and a dividend payout comparable to other regulated utilities.
That would suggest a payout greater than 50 percent of earnings per share. The
company continues to expect CenterPoint Energy's 2002 earnings to be in the
range of $1.17 to $1.22 per share," he said.
The level of the new dividend has not been established, but the board of
directors will determine the new dividend before the spin-off of Reliant
Resources. The current quarterly dividend payment schedule will continue. The
first payment of the new dividend to CenterPoint Energy shareholders would occur
in March of 2002.
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This MVP Bulletin contains forward-looking statements. Actual events and
results may differ materially from those projected. Factors that could affect
actual results include the timing and impact of future regulatory and
legislative decisions, effects of competition, weather variations, changes in
Reliant Energy's business plans, financial market conditions and other factors
discussed in Reliant Energy's filings with the Securities and Exchange
Commission.
In connection with the proposed holding company formation by Reliant
Energy, CenterPoint Energy and Reliant Energy have filed a joint proxy
statement/prospectus with the Securities and Exchange Commission. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTIONS, BECAUSE IT CONTAINS
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus and other documents containing information
about CenterPoint Energy and Reliant Energy, without charge, at the SEC's Web
site at www.sec.gov. Copies of the joint proxy statement/prospectus and the SEC
filings that are incorporated by reference in the joint proxy
statement/prospectus may also be obtained for free by directing a request to
Reliant Energy, Incorporated, Investors Services Department, P.O. Box 4505,
Houston, Texas 77210-4505, or by phone at 1-800-231-6406 or 713-207-3060.
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