NRG opposes board expansion, says Exelon's proposal could affect debt facilities

By Lisa Kerner

Charlotte, N.C., March 26 - NRG Energy, Inc. asked Exelon Corp. to withdraw its previously announced proposal to expand NRG's board of directors.

According to NRG, Exelon wants to enlarge the Princeton, N.J.-based power generation company's board to up to 19 directors and "pack it with five more of its nominees" at NRG's annual meeting.

Exelon has also proposed electing four of its nominees to replace four of NRG's incumbent board members up for re-election, according to an NRG news release.

Electing all of Exelon's nominees to NRG's board could trigger an acceleration of its approximately $8 billion of outstanding corporate-level debt under the terms of the company's debt facilities, NRG said.

"NRG believes that the board expansion element of Exelon's proposal is imprudent and carries with it the risk of occurrence of an unintended event with serious value destructive consequences that would not be in the interest of NRG stockholders; nor is it clear what is gained for Exelon stockholders by Exelon management risking such an outcome," NRG chairman Howard Cosgrove said in the release.

If Exelon does not withdraw its slate, Cosgrove said NRG will add an additional director to reduce the risk of an unintended triggering of NRG's debt facilities.

As previously reported, Exelon is nominating for election as class III directors independent candidates Betsy S. Atkins, Ralph E. Faison, Coleman Peterson and Thomas C. Wajnert.

Exelon recommends that to fill five of the seven vacancies it hopes to create, shareholders elect John M. Albertine, Marjorie L. Bowen, Donald DeFosset Jr., Richard H. Koppes and Ralph G. Wellington.

No date has been set for NRG's 2009 annual meeting. Under Delaware law, the meeting is required to take place within 13 months after NRG's last meeting held May 14, 2008, according to Exelon.

In October, Exelon, a Chicago-based electric company, proposed acquiring NRG at a fixed exchange ratio of 0.485 of a share of Exelon common stock for each share of NRG common stock. Exelon said it brought the offer directly to NRG shareholders on Nov. 12 after the company twice rejected the offer.

The exchange offer was extended to 5 p.m. ET on June 26 from Feb. 25 to allow Exelon time to obtain regulatory approvals and to solicit proxies for the election of NRG directors.

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