Attached files
| file | filename |
|---|---|
| EX-2.1 - AGREEMENT AND PLAN OF MERGER, DATED AS OF JULY 20, 2012 - GenOn Energy, Inc. | d383531dex21.htm |
| EX-99.1 - JOINT PRESS RELEASE OF GENON AND NRG, ISSUED JULY 22, 2012 - GenOn Energy, Inc. | d383531dex991.htm |
| 8-K - FORM 8-K - GenOn Energy, Inc. | d383531d8k.htm |
 Creating the
Foundation for the Leading 21
Century
Competitive
Energy
Provider
NRG Energy
Exhibit 99.2
st |
 1
Safe Harbor
In addition to historical information, the information presented in this communication
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations,
projections, goals, assumptions, known and unknown risks and uncertainties and can typically
be identified by terminology such as “may,” “will,”
“should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,”
“think,” “anticipate,” “estimate,” “predict,”
“target,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such
forward-looking statements include, but are not limited to, statements about the
anticipated benefits of the proposed transaction between NRG and GenOn, each
party’s and the combined company’s future revenues, income, indebtedness, capital structure, plans, expectations,
objectives, projected financial performance and/or business results and other future events,
each party’s views of economic and market conditions, and the expected timing of
the completion of the proposed transaction.
Forward-looking statements are not a guarantee of future performance and
actual events or results may differ materially from any forward- looking statement
as result of various risks and uncertainties, including, but not limited to, those relating to: the ability to satisfy the
conditions to the proposed transaction between NRG and GenOn, the ability to successfully
complete the proposed transaction (including any financing arrangements in connection
therewith) in accordance with its terms and in accordance with expected schedule, the ability to obtain
stockholder, antitrust, regulatory or other approvals for the proposed transaction, or an
inability to obtain them on the terms proposed or on the anticipated schedule,
diversion of management attention on transaction-related issues, impact of the transaction on relationships with
customers, suppliers and employees, the ability to finance the combined business
post-closing and the terms on which such financing may be available, the financial
performance of the combined company following completion of the proposed transaction, the ability to successfully
integrate the businesses of NRG and GenOn, the ability to realize anticipated benefits of the
proposed transaction (including expected cost savings and other synergies) or the risk
that anticipated benefits may take longer to realize than expected, legislative, regulatory and/or
market developments, the outcome of pending or threatened lawsuits, regulatory or tax
proceedings or investigations, the effects of competition or regulatory intervention,
financial and economic market conditions, access to capital, the timing and extent of changes in law
and regulation (including environmental), commodity prices, prevailing demand and market
prices for electricity, capacity, fuel and emissions allowances, weather conditions,
operational constraints or outages, fuel supply or transmission issues, hedging ineffectiveness.
Additional information concerning other risk factors is contained in NRG's and
GenOn's most recently filed Annual Reports on Form 10-K, subsequent Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings.
Many of these risks, uncertainties and assumptions are beyond NRG's or GenOn's
ability to control or predict. Because of these risks, uncertainties and assumptions,
you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking
statements speak only as of the date they are made, and neither NRG nor GenOn undertakes any
obligation to update publicly or revise any forward-looking statements to reflect
events or circumstances that may arise after the date of this communication. All subsequent written and
oral forward-looking statements concerning NRG, GenOn, the proposed transaction, the
combined company or other matters and attributable to NRG or GenOn or any person acting
on their behalf are expressly qualified in their entirety by the cautionary statements above.
Forward Looking Statements |
 2
Safe Harbor Continued
This communication does not constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such jurisdiction. The
proposed business combination transaction between NRG and GenOn will be submitted to
the respective stockholders of NRG and GenOn for their consideration. NRG will file with the Securities and
Exchange Commission (“SEC”) a registration statement on Form S-4 that will
include a joint proxy statement of NRG and GenOn that also constitutes a prospectus of
NRG. NRG and GenOn will mail the joint proxy statement/prospectus to their respective stockholders. NRG and
GenOn also plan to file other documents with the SEC regarding the proposed transaction. This
communication is not a substitute for any prospectus, proxy statement or any other
document which NRG or GenOn may file with the SEC in connection with the proposed transaction.
INVESTORS AND SECURITY HOLDERS OF GENON AND NRG ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and stockholders will be able to
obtain free copies of the joint proxy statement/prospectus and other documents containing
important information about NRG and GenOn, once such documents are filed with the SEC,
through the website maintained by the SEC at www.sec.gov. NRG and GenOn make available free of
charge at www.nrgenergy.com and www.genon.com, respectively (in the “Investor
Relations” section), copies of materials they file with, or furnish to, the SEC.
attributable to NRG or GenOn or any person acting on their behalf are expressly qualified in their entirety by the
cautionary statements above.
NRG, GenOn, and certain of their respective directors and executive officers may be deemed to
be participants in the solicitation of proxies from the stockholders of GenOn and NRG
in connection with the proposed transaction. Information about the directors and executive officers
of NRG is set forth in its proxy statement for its 2012 annual meeting of stockholders, which
was filed with the SEC on March 12, 2012. Information about the directors and
executive officers of GenOn is set forth in its proxy statement for its 2012 annual meeting of stockholders,
which was filed with the SEC on March 30, 2012. These documents can be obtained free of
charge from the sources indicated above. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy statement/prospectus and other relevant
materials to be filed with the SEC when they become available.
Additional
Information
And
Where
To
Find
It
Participants
In
the
Merger
Solicitation |
 3
Transaction Overview and NRG
Strategic Update
D. Crane
Transaction Rationale and GenOn
Update
E. Muller
Transaction Benefits
A. Cleary
Financial Summary
K. Andrews
Closing Remarks and Q&A
D. Crane, E. Muller
Agenda |
 4
Executive Summary
$300
MM
Annual
Free
Cash
Flow
Benefits
from
the
Combination
$200
MM
Annual
EBITDA
From
Cost
and
Operational
Efficiency
Synergies
Significant EBITDA and Free Cash Flow per Share Accretion by 2014
:
Initiating Pro Forma Guidance
:
A Value Creating Event for All Stakeholders
2013
2014
Consolidated Adjusted EBITDA:
~$2,535-2,735
~$2,630-2,830
~$825-1,025
~$845-1,045
1
Per share figures based on midpoint of NRG and Pro Forma guidance ranges. Assumes 227.8 MM
shares currently outstanding and 321.7 MM pro forma shares outstanding 2
Assumes transaction closing on January 2, 2013, $150 MM of synergies in 2013, and $200 MM in
2014 ($MM)
7%
12%
EBITDA
FCF, before growth
investments
¹
²
FCF, before growth investments: |
 5
Key Transaction Terms
Consideration
100% Stock, fixed exchange ratio
GenOn
shareholders
will
receive
0.1216
shares
of
NRG
in
exchange
for
each
share
of
GenOn
20.6% premium based on closing prices at close of business on July 20, 2012
Pro Forma
Ownership
71% NRG shareholders
29% GenOn shareholders
Governance
Directors –
12 from NRG, 4 from GenOn
Howard Cosgrove (Chairman)
Edward R. Muller (Vice-Chairman)
Timing &
Approvals
Expected to close by Q1 2013
Shareholder approvals for NRG and GenOn expected Q4 2012
Regulatory
approvals
include
FERC,
antitrust,
New
York
and
Texas
Public
Utilities Commission
No debt holder consents or amendments required
Dual
Headquarters
Commercial/Financial: Princeton, NJ
Operational: Houston, TX
Company Name
NRG Energy
Retail Brands:
Management
David Crane –
President and Chief Executive Officer
Kirk Andrews –
Chief Financial Officer
Mauricio Gutierrez –
Chief Operating Officer
Anne Cleary –
Chief Integration Officer
NRG
Reliant
Green Mountain |
 6
Expanding and Strengthening the Base Enables NRG
to Grow Across Its Competitive Energy Business Model
The Strategic Benefits of the Combination
-
Retail -
-
Wholesale -
-
Clean -
Energy
–
Wholesale –
Multi-market, multi
-fuel,
economic generation across the
merit order, scale conventional
power generation company
-
Retail -
Multi-market,
multi-brand competitive
retail energy providers
with distinct value
propositions
-
Clean -
Energy
EV
Charging
Smart
Metering
Distributed
Solar |
 7
Enabling NRG’s Retail Growth Platform
Eastern
Markets
(TWh)
ERCOT Market
(TWh)
NRG Generation
GenOn
A Foundation to Duplicate NRG’s
Successful Texas-based Integrated Model
NRG Plants
GenOn Plants
NRG Plants
GenOn Plants
States served by NRG retail
Source: Company filings; NRG and GEN capacity as of June 30, 2012, generation based on 2011
TWhs 1
Includes co-op and contracted loads
2
Includes full year Energy Plus volumes
3
Potential generation based on nameplate capacity at 85% availability factor
NRG potential
generation in TX w/
existing capacity³
Potential load
assuming 20%
net length
(TWh basis)
NRG Retail Load
Pro Forma potential
generation in East w/
existing capacity³
Potential load
assuming 20%
net length
(TWh basis)
Pro Forma East
23 GW capacity
3 TWh 2011
competitive retail
load
2
Pro Forma Gulf Coast
16
GW capacity
55 TWh 2011
competitive retail load
in ERCOT; contract
and co-op loads
States
Served
by
NRG
retail
1
46
55
80
67
0
50
100
150
200
2011 Generation
2011 Load
34
7
3
174
144
0
50
100
150
200
2011 Generation
2011 Load |
 8
The Combined Company Expects to Build on NRG’s Leadership in the
Clean Energy Economy on the Strength of its Greening Conventional Portfolio
Greening Conventional; Clean Renewables
Clean Energy Leadership
Continuous Improvement in
Environmental Performance
Source: EPA and companies’
estimates. Includes domestic units reporting through the EPA Acid Rain program
1
Excludes NRG International and Thermal assets. 2015 emissions estimates based on
2011 unit emissions adjusted for controls and retirements
2
Net MWs AC
772 MW
(utility scale) by 2014
~80% reduction
in SO emissions
Alpine
Avenal
Blythe
CVSR
Ivanpah
Agua Caliente
Avra
Valley
Roadrunner
California
Arizona
New Mexico
Utility Scale Solar
Distributed Solar
NRG Wind: 450 MW
~70% reduction
in NO
x
emissions
NRG
GEN ~35% reduction
in CO emissions
2
2
2
1 |
 9
2012 On Track
NRG Update
Delivering on
Financial
Performance
Q2 2012 EBITDA ~$530 million (YTD ~$830 million)
Reaffirming 2012 Full Year Guidance:
Consolidated Adjusted EBITDA: $1,825-$2,000 million
FCF before growth investments: $800-$1,000 million
Delivering on
Capital
Allocation
Objectives
First ever quarterly dividend payment of $0.09/share ($0.36/share annually)
Record Date: August 1, 2012
Payable Date: August 15, 2012
Implied
dividend
yield
of
~2.0%
1
Payout
ratio:
~9%
of
FCF
before
growth
investments
2
Sale of Schkopau resulting in $174 million in net proceeds and expansion of
the RP basket
2
nd
Quarter
Results
Announcing full results on August 8, 2012
1
Based on NRG stock price as of July 20, 2012
2
Payout ratio based on the midpoint of 2012 FCF before growth investments guidance
|
 10
Transaction Rationale and GenOn Updates |
 11
Transaction Rationale
Combination efficiencies are a key driver of shareholder value in
our sector
A multi-region, multi-fuel portfolio that will be better positioned to
compete throughout the commodity cycle
Real, measurable, and actionable cost synergies of $175 million
per year plus $25 million in annual operational efficiency
synergies achievable within first full year of combined operations
Total transaction free cash flow benefits of $300 million per year
to be realized from cost and operational efficiency synergies as
well as balance sheet efficiencies
Greater scale enhances combined company’s ability to revitalize
its generation fleet and optimize portfolio value |
 12
(GW)
Source: SNL, company filings as of YE 2011 filings; NRG and GEN capacity as of June 30,
2012. Excludes NRG International, NRG Thermal, and NRG and GEN projects under
construction
Largest Owner of Competitive Generation
47
38
28
24
23
15
14
13
12
12
11
10
9
0
5
10
15
20
25
30
35
40
45
50
NRG/GEN
EXC
CPN
NRG
GEN
NEE
EFH
PSEG
GDF
DYN
PPL
EIX
AES
Top U.S. Companies By Competitive Generation Capacity
The Largest Competitive Power Generation
Company in the US |
 13
MA
MD
MT
FL
NM
TX
OK
KS
NE
SD
ND
WY
CO
UT
ID
AZ
NV
WA
CA
OR
KY
NY
MI
NH
CT
VA
WV
OH
IN
IL
NC
TN
SC
AL
AR
LA
MO
IA
MN
WI
GA
MS
VT
NJ
DE
ME
RI
MA
MD
PA
Enhanced Generation, Fuel and Revenue Diversity
The Combined Company Becomes a Truly Diversified
Competitive Power Generation Company
West
Total (Pro Forma)
East
Gulf Coast
Pro Forma
Pro Forma
16 GW; 64 TWh
23 GW; 40 TWh
Pro Forma
8 GW; 0.8 TWh
47 GW; 105 TWh
Note: Totals may not sum to 100 due to rounding
Source: Company filings; NRG and GEN capacity as of June 30, 2012, generation based on 2011
TWhs Excludes NRG International, NRG Thermal, and NRG and GEN projects under
construction GWs by Region
GWs by Fuel Type
Power Plants
NRG
GenOn
Coal,
38%
Oil/Gas,
62%
East, 49%
Gulf
Coast,
35%
West,
16%
Coal, 31%
Nuclear,
3%
Solar,
Wind, 1%
Oil/Gas,
66%
Solar,
2%
Oil/Gas,
98%
Coal, 35%
Nuclear,
7%
Wind, 3%
Oil/Gas,
55% |
 14
Substantial Transaction Benefits
Total Annual Free Cash Flow Benefits of
$300 MM, Including $200 MM of EBITDA
Significant Opportunities Across the
Combined Company
Cost
Create an integrated “best in
class”
organization by aligning
key cost functions, including:
Personnel Synergies
IT Systems
Facilities
Fees / Services
Insurance
Other
Operational
$175 MM/year
$25 MM/year
$100 MM/year
Synergies
Balance Sheet Efficiencies
Operational improvement and
efficiencies across the
combined fleet, driven by the
application of:
Create a more efficient pro
forma capital structure,
including:
Reduce leverage
Lower cash balance and
liquidity requirements
Improve cost of capital
through prudent cash
management and stronger
pro forma balance sheet
Collateral benefits |
 15
GenOn Update
1
Guidance numbers are based on forward curves as of July 9, 2012
2012 On Track
2012
Raising
Adjusted
EBITDA
Guidance
1
to
$467
million
from
$446
million
2013 and
2014
Raising
2013
Adjusted
EBITDA
Guidance
1
to
$687
million
from
$669
million
Providing
2014
Adjusted
EBITDA
Guidance
1
of
$730
million
2
nd
Quarter
Results
Announcing Q2 2012 results on August 9, 2012 |
 16
Transaction Benefits |
 17
Real, Measurable and Actionable Cost Synergies
$175 MM of Annual Cost Synergies to be Fully
Realized in First Full Year of Operation
2013
1
Cost to achieve excludes advisor fees, bridge commitment fees, and other
transaction-related costs; includes non-cash related expenses of approx. $14 MM
Delivering Synergy Value by YE 2013
Cost Synergies by Functional Area ($MM)
1
($100)
($50)
$0
$50
$100
$150
$200
Q1
Q2
Q3
Q4
Incremental Cost to Achieve
Cumulative Annual Synergies
Target Run Rate:
$175 MM/year
Target One Time Cost:
$155 MM
G&A Overlap
$116
Redundant
Fees/Services
$27
IT and
Facilities
$18
Other Misc.
$14 |
 18
Operational Efficiency Synergies
$25 MM/year by 2014 –
a 25% Improvement to NRG’s Existing Plan
Leveraging
the
Program
Reliability, capacity and
efficiency improvements
Procurement savings
Asset optimization
($MM)
Incremental $25 MM
operational efficiency
synergies:
$30
$65
$100
$75
$125
$0
$20
$40
$60
$80
$100
$120
$140
2012
2013
2014
Pro Forma Upside
1Q12 NRG Plan |
 19
Transaction Benefit Summary
Cost Synergies
Operational Efficiency Synergies
Balance Sheet Efficiencies
$175 MM
$25 MM
$100 MM
The Pro Forma Combination Will Drive
$300 MM in Annual Transaction Benefits |
 20
Financial Summary |
 21
Transaction Structure
Description of Structure
GenOn will combine with and, upon closing,
become an excluded project subsidiary of
NRG (non-guarantor)
A shared services agreement between both
companies will enable the value of synergies
to be captured by the parent
Structure permitted under indentures, with
no bondholder approvals required from
either NRG or GenOn bondholders
Structure triggers a change of control put
right by holders of GenOn’s HoldCo debt
Cash on hand and $1.6 billion bridge
in place to fund if exercised
NRG
Energy,
Inc.
GenOn
(Excluded
Project
Sub)
NRG
Operating
Subs
NRG
Excluded
Project
Subs
GenOn
Operating
Subs
GenOn
Excluded
Project
Subs
Shared
Services
Agreement
Transaction Structure Provides Maximum Flexibility |
 22
1
2
3
4
2013
2014
NRG
$650-$850
$500-$700
GenOn¹
(75)
43
Synergies
150
200
Balance Sheet
Efficiencies
100
100
Pro Forma
~$825-$1,025
~$845-$1,045
(141)
-
Significant Accretion to Key Metrics
EBITDA ($MM)
Free Cash Flow Before Growth
¹
($MM)
EBITDA per Share
4
FCF Before Growth per Share
4
2013
2014
2013
2014
2013
2014
NRG
$1,700-$1,900
$1,700-$1,900
GenOn
²
687
730
Synergies
150
200
Balance Sheet
Efficiencies
N/A
N/A
Pro Forma
~$2,535-$2,735
~$2,630-$2,830
One-time Costs
³
$7.90
$8.49
$2.63
$2.94
Transition
Year
$7.90
$8.19
$3.29
$2.88
Transition
Year
Including
one-time
costs
Significantly Accretive to EBITDA
and
Free Cash Flow before Growth in First Full Year of Operations
7% Accretion
12% Accretion
Assumes transaction closes on Jan 1 2013 and synergies are fully realized by
2014; Based on forward curves as of July 9, 2012
Excludes $14 MM non-cash related expenses. Also excludes advisor fees, bridge
commitment fees, and other transaction-related costs
Per share figures based on midpoint of NRG and Pro Forma guidance ranges. Assumes 227.8 MM
shares currently outstanding and 321.7 MM pro forma shares outstanding
|
 23
Balance Sheet Efficiencies
Reduced Leverage of At Least $1 Billion and Other
Collateral Synergies Drives Approximately $100 MM of
Annual Incremental Cash Flow Benefits
1
Debt excludes discounts/premiums from balances
2
Assumes that no debt is put and $1.6 Bn bridge is not utilized
3
Debt subject to change of control puts, that if exercised will be repurchased
4
Present value of remaining lease payments is $903 million and $458 million, respectively
As of March 31, 2012
Exchange and Debt
Paydown
March 31, 2012
NRG
GEN
ProForma
Cash and cash equivalents
$1,014
$1,693
($1,000)
$1,707
Restricted cash
217
12
-
229
Total cash:
1,231
1,705
(1,000)
1,936
Recourse debt:
Term loan facility
1,588
-
-
1,588
Unsecured Notes
6,090
-
-
6,090
Tax Exempt Bonds
273
-
-
273
Recourse subtotal
7,951
-
-
7,951
Non-Recourse debt:
Solar non-recourse debt
1,561
-
-
1,561
Term Loan Facility
-
690
(690)
-
Unsecured
Notes
-
2,525
-
2,525
GenOn Americas Generation Notes
-
850
-
850
Conventional non-recourse debt
636
170
-
806
GMA/REMA
Operating
Leases
-
-
-
-
Non-Recourse subtotal
2,197
4,235
(690)
5,742
To Be Determined
(310)
(310)
Total Debt
$10,148
$4,235
($1,000)
$13,383
4
3
1
1
2
$ in millions |
 24
Immediately Accretive to Target Credit Metrics
Transaction Structure Meaningfully Improves Target
Prudent Balance Sheet Management Metrics
1
NRG results assume the midpoint of guidance
2
Net debt assumed for GenOn is based on balances as of March 31, 2012. Pro Forma metrics
reflects impact of transaction benefits Credit Ratings
NRG
GenOn
S&P
Moody's
S&P
Moody's
First Lien Debt
BB+
Baa3
B+
B1
Unsecured Debt
BB-
B1
B-
B3
Corporate (Outlook)
BB-
Negative
Ba3 Negative
B-
Stable
B2 Negative
Credit Statistics
NRG
Stand
Alone
Long Term
NRG
Pro
Forma
2013
2014
Target
2013
2014
Net Debt/Total Capital
54.1%
53.1%
45% -
60%
55.1%
54.4%
Corporate Debt/
Corporate EBITDA
4.8x
4.6x
4.25x
4.4x
4.1x
Corporate FFO/
Corporate Debt
13.3%
13.9%
> 18%
15.2%
16.4%
2
1 |
 25
Liquidity Surplus
Currently, the available combined
liquidity meaningfully surpasses needs
Surplus liquidity permits:
At least $1 billion debt reduction
Elimination of GenOn credit facility
($788 million)
Combined with other collateral
efficiencies, $100 million annual free
cash flow benefits
$2.8 billion pro forma liquidity more
than sufficient to support the combined
business
Minimum cash balance will be
maintained at $900 million
Liquidity Improvement
As of March 31, 2012
$ in millions
NRG
GEN
Debt Pay
down /
Retirement
Pro Forma
Cash and Cash Equivalents
$1,014
$1,693
($1,000)
$1,707
Restricted/Reserved Cash
217
12
-
229
Total Cash
1,231
1,705
(1,000)
1,936
Revolver Availability
1,141
532
1
(788)
885
Total Current Liquidity
$2,372
$2,237
($1,788)
$2,821
1
Excludes availability under Marsh Landing credit facility
Balance Sheet Efficiency and Liquidity Surplus
Delivers Annual Free Cash Flow Uplift of $100 million |
 26
Closing Remarks and Q&A |
 27
Transaction Benefit Summary
Cost Synergies
Operational Efficiency Synergies
Balance Sheet Efficiencies
$175 MM
$25 MM
$100 MM
The Pro Forma Combination Will Drive
$300 MM in Annual Transaction Benefits |
 28
Appendix |
 29
Expected Transaction Timeline
3Q2012
4Q2012
1Q2013
File Registration
Statement /
Proxy Statement
Announcement
Shareholder
Meetings
Transaction Close
Regulatory Approval Process
(Antitrust, FERC, State Agencies)
NRG
Dividend
NRG
Dividend
NRG
Dividend
Expect to Close the Transaction by the First
Quarter of 2013 |
 30
Manageable Proforma Debt Maturity Profile
1
Based on preliminary analysis
2
Debt maturity schedule as of 3/31/12: Excludes Marsh Landing Project Financings
3
Does not include $310 MM of debt repayment as the company will apply the payment to the best
available option 4
Includes $850 MM of GenOn Americas Generation notes in 2021 and beyond
Debt Maturity Profile (2013–2021)
1,2,3
($MM)
4
Unsecured Notes NRG
Term Loan B
Revolver
Unsecured Notes Genon |
 31
Combined Federal NOL Tax Attributes
(assuming transaction is consummated)
As a result of the combination:
GenOn will experience an ownership change under Section 382 which
further limits the utilization of its $2.6 billion in NOLs
GenOn is expected to be in a Net Unrealized Built in Loss position
(NUBIL) which further restricts the utilization of immediate tax
deductions
during
the
5
year
observable
period
2013
–
2017
NRG anticipates that it will not be subject to a Section 382 limitation for its
$600 million NOL balance as a result of the combination
NRG expects to pay Alternative Minimum Tax and some state tax on
taxable income over the next four years
Any incremental NOLs generated post closing of the combination will be
unrestricted |
 32
Transaction Detail
Sources and Uses
Sources ($MM)
Uses ($MM)
NRG Equity Issuance
$1,694
Equity Purchase Price
$1,694
Debt Assumed
3,235
Debt Assumed
3,235
Cash
1,060
Repayment of GenOn TLB
690
310
Transaction
Costs
2
60
Total Sources Of Funds
$5,989
Total Uses Of Funds
$5,989
Pro Forma Ownership
Exchange Ratio
0.1216
Implied Premium
20.6%
Shares Owned:
NRG
227.8
GenOn
93.8
Total Shares
321.67
% of Combined Company Owned:
NRG
71%
GenOn
29%
Total
100%
1
Pro Forma based on 7/18/2012 share balances and share prices as of 7/20/2012
2
Expected transaction costs at closing
Repayment of Debt – TBD
1 |