NRG Energy finds fault with Exelon's plan to gain board representation

By Lisa Kerner

Charlotte, N.C., Nov. 18 - NRG Energy, Inc. took issue with Exelon Corp.'s plan to present a proposal at NRG's 2009 annual meeting to expand the size of the company's board of directors and to nominate directors to fill the newly created directorships.

According to NRG, Exelon's Nov. 10 letter does not comply with NRG's bylaws to present a proposal or nominate directors at an annual meeting.

"It seems plain that your letter constitutes an effort to manufacture an issue for litigation," NRG said in its Nov. 17 letter to Exelon included in a form 8-K filed with the Securities and Exchange Commission.

"Rather than wasting time and resources on manufactured issues, NRG prefers to maintain its focus on maximizing shareholder value," NRG said.

In addition, the Princeton, N.J.-based power company said it "reserves all rights to contest any substantive and procedural defects in any proposal or nomination Exelon might make."

It was previously reported that in addition to launching an unsolicited exchange offer for the outstanding shares of NRG, Exelon or its subsidiary, Exelon Xchange Corp., planned to propose expanding NRG's 11-member board to up to 15 members and filling the resulting vacancies with Exelon nominees.

The directors to be elected at the meeting would constitute not less than 50% of the NRG board, according to Exelon's letter sent to NRG.

Exelon began an exchange offer for all of the outstanding shares of NRG at a fixed exchange ratio of 0.485 Exelon shares for each NRG share.

NRG's board of directors unanimously rejected an Oct. 19 unsolicited offer from Exelon to exchange NRG shares for Exelon shares at the same 0.485 exchange ratio for a value of approximately $26.43 per share.

Exelon, a Chicago-based electric company, also filed a lawsuit in the Delaware Chancery Court against NRG and its directors alleging a breach of fiduciary duty by NRG's directors for reasons including the failure of the NRG directors to give appropriate consideration to, and take appropriate action on, the Oct. 19 proposal from Exelon.

In the lawsuit, Exelon seeks relief requiring the NRG board to exempt Exelon's exchange offer from the Delaware business combination statute and enjoining the board from taking any actions to frustrate the exchange offer.

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