GenOn announces $314 million agreement for sale of NRG Choctaw assets

By Caroline Salls

Pittsburgh, Aug. 22 – GenOn Energy, Inc. wholly owned subsidiary NRG Wholesale Generation LP and guarantor GenOn entered into an asset purchase agreement with Entergy Mississippi, Inc. for the $314 million sale of all assets, real property and interests owned, used or held by NRG and its affiliates for use primarily in the operation of the Choctaw facility.

According to an 8-K filed Wednesday with the Securities and Exchange Commission, the purchase price is subject to adjustment for the value of the inventory of the business and the outcome of performance tests of the facility determined as of the closing date.

In addition, GenOn said the closing of the sale is subject to the U.S. Bankruptcy Court for the Southern District of Texas entering a final order approving modification of the company’s confirmed plan of reorganization and confirming that the purchase agreement constitutes a third-party sale transaction for purposes of the plan.

The company said holders of more than 50% of its notes have consented to the sale transaction.

Closing is also subject to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the approvals of the Federal Energy Regulatory Commission and the Mississippi Public Service Commission.

In addition, an existing long-term service agreement between NRG and GE International, Inc. related to the Choctaw facility will be amended. GenOn has agreed to pay on Sept. 25 $35.6 million to reduce the current amounts owed under the existing service agreement for upgrades and conversions.

As of June 30, GenOn held on its balance sheet a liability of $76.6 million related to the upgrades and conversions.

The transaction is expected to close in the third quarter of 2019.

Credit Suisse Securities (USA) LLC acted as exclusive financial adviser to GenOn in connection with the sale.

In a separate 8-K filed on Wednesday, GenOn said it has performed due diligence in connection with a successor or acquirer of all or a part of its assets under the plan.

Based in part on the outcome of that due diligence, the company said it currently expects that reorganized GenOn would not constitute a U.S. Real Property Holding Corporation (USRPHC) for purposes of the Foreign Investment in Real Property Tax Act.

Since the act requires a fact-intensive analysis, GenOn said it cannot know for sure whether the reorganized company will be a USRPHC on the plan effective date or become a USRPHC in the future.

GenOn, a Princeton, N.J.-based power producer, filed for bankruptcy on June 14, 2017. The Chapter 11 case number is 17-33695.

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