NRG Energy, Inc. Prices Offering of $500 Million Convertible Senior Notes
May 21 2018 - 10:43PM
Business Wire
NRG Energy, Inc. (NYSE:NRG) has priced its offering of $500
million in aggregate principal amount of its 2.75% convertible
senior notes due 2048 (the “Notes”). NRG has granted to the initial
purchasers a 30-day option to purchase up to an additional $75
million in aggregate principal amount of the Notes. The Notes will
be senior unsecured obligations of NRG and will be guaranteed by
certain of its subsidiaries.
The Notes will be convertible, under certain circumstances, into
cash, shares of NRG’s common stock or a combination thereof at
NRG’s election. The initial conversion rate will be 20.9479 shares
of common stock per $1,000 principal amount of Notes (representing
an initial conversion price of approximately $47.74 per share of
common stock), subject to customary adjustments. The initial
conversion rate represents a premium of approximately 42.50% to the
last reported sale price of $33.50 per share of NRG’s common stock
on the New York Stock Exchange on May 21, 2018. Interest on the
Notes is payable semi-annually in arrears on June 1 and December 1
of each year, commencing on December 1, 2018. The Notes will mature
on June 1, 2048, unless earlier repurchased or converted in
accordance with their terms. The Notes will be convertible only
upon the occurrence of certain events and during certain periods,
but will be freely convertible at any time from, and including,
December 1, 2024 until the close of business on the second
scheduled trading day immediately before June 1, 2025 and at any
time from, and including, December 1, 2047 until the close of
business on the second scheduled trading day immediately before the
maturity date.
NRG will have the option to redeem the Notes, in whole or in
part, at any time, on or after June 1, 2025, at a cash redemption
price equal to the principal amount of the Notes to be redeemed,
plus accrued and unpaid interest. Unless NRG has previously called
all outstanding Notes for redemption, holders of the Notes may
require NRG to repurchase their Notes on each of September 1, 2025,
June 1, 2033 and June 1, 2040, at a cash repurchase price equal to
the principal amount of the Notes to be repurchased, plus accrued
and unpaid interest. In addition, if certain corporate events that
constitute a “fundamental change” occur before the Notes mature,
then holders of the Notes may require NRG to repurchase their Notes
at a cash repurchase price equal to the principal amount of the
Notes to be repurchased, plus accrued and unpaid interest.
NRG intends to use cash on hand and the proceeds from the
offering, including any proceeds from the exercise of the 30-day
option, to repay a portion of its outstanding indebtedness and to
pay fees and expenses related to the offering and incurred in
connection with its repayment of indebtedness. As a result, the
Notes offering is expected to be leverage neutral.
In connection with the offering of the Notes, NRG intends to use
cash on hand to repurchase shares of its common stock in an
aggregate amount to complete NRG’s previously announced $500
million share repurchase program. The transactions are expected to
be effected (i) by repurchases from purchasers of the Notes in
privately negotiated transactions (the “Private Repurchases”)
concurrently with the closing of the Notes offering and (ii)
through an accelerated share repurchase transaction (the “ASR”).
NRG entered into the ASR with an affiliate of one of the initial
purchasers (the “ASR Counterparty”) concurrently with the pricing
of the Notes. The ASR is conditioned upon the closing of the Notes
offering.
In connection with the ASR, NRG has been advised that the ASR
Counterparty expects to purchase shares of NRG’s common stock in
secondary market transactions, and may execute other transactions
in NRG’s common stock, or in derivative transactions relating to
NRG’s common stock, beginning on the first trading day immediately
following the pricing of the Notes and during the term of the ASR
(the “ASR Term”). These activities, including the ASR and the
Private Repurchases, may increase, or prevent a decrease, in the
market price of NRG’s common stock or the Notes, which could affect
the ability of holders to convert the Notes and, to the extent the
activity occurs during any observation period related to a
conversion of Notes, it could affect the amount and value of the
consideration that holders will receive upon conversion of the
Notes.
NRG expects the purchase price per share of the common stock
repurchased from certain purchasers of Notes in privately
negotiated transactions concurrently with the closing of the
offering of the Notes to equal $33.50, which was the closing price
per share of NRG’s common stock on the New York Stock Exchange on
the date of the pricing of the offering of the Notes. The purchase
price per share of the common stock repurchased through the ASR
will generally be equal to the average volume-weighted average
price of NRG’s common stock during the ASR Term. The exact number
of shares repurchased pursuant to the ASR will be determined based
on such purchase price.
The Notes and related guarantees are being offered only to
qualified institutional buyers in reliance on Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). The
offer and sale of the Notes, the related guarantees and any shares
of common stock potentially issuable upon conversion of the Notes
have not been registered under the Securities Act or the securities
laws of any other jurisdiction, and those securities may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements. This press
release does not constitute an offer to sell the Notes, nor a
solicitation for an offer to purchase the Notes.
About NRG
At NRG, we’re redefining power by putting customers at the
center of everything we do. We create value by generating
electricity and serving nearly 3 million residential and commercial
customers through our portfolio of retail electricity brands. A
Fortune 500 company, NRG delivers customer-focused solutions for
managing electricity, while enhancing energy choice and working
towards a sustainable energy future.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934. These statements are subject
to certain risks, uncertainties and assumptions, and typically can
be identified by the use of words such as “will,” “expect,”
“estimate,” “anticipate,” “forecast,” “plan,” “believe” and similar
terms. Although NRG believes that its expectations are reasonable,
it can give no assurance that these expectations will prove to have
been correct, and actual results may vary materially. Factors that
could cause actual results to differ materially from those
contemplated above include, among others, risks and uncertainties
related to the capital markets generally and whether NRG will
consummate the offering, the anticipated terms of the Notes and the
anticipated use of proceeds.
NRG undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. The foregoing review of factors that
could cause NRG’s actual results to differ materially from those
contemplated in the forward-looking statements included in this
news release should be considered in connection with information
regarding risks and uncertainties that may affect NRG’s future
results included in NRG’s filings with the Securities and Exchange
Commission.
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version on businesswire.com: https://www.businesswire.com/news/home/20180521006151/en/
For NRG Energy, Inc.Media:Marijke Shugrue,
609-524-5262orInvestors:Kevin L. Cole, CFA,
609-524-4526orLindsey Puchyr, 609-524-4527
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