NRG Energy terminates exchange offers, consent solicitations for 7¼%, 7 3/8% notes

By Jennifer Chiou

New York, Sept. 17 - NRG Energy, Inc. announced the termination of its private offers to exchange up to $2 billion of its 7¼% senior notes due 2014, 7 3/8% senior notes due 2016 and 7 3/8% senior notes due 2017 for new 8¼% senior notes due 2018.

The exchange offers were to have expired at 10 a.m. ET on Oct. 2.

"In this extraordinary financial environment, and given the response to the exchange offer so far, it is clear that now is not the ideal time for bondholders to give proper consideration to the merits of our offer," David Crane, president and chief executive officer, said in a news release.

"We remain committed both to fulfilling the company's previously stated objectives in terms of the return of capital to shareholders within the current constraints of our indenture and to finding ways to ease those constraints in a manner that is value enhancing to our shareholders and bondholders alike."

The company was also soliciting consents to proposed amendments that would have eliminated many of the restrictive covenants in the notes' indentures and make the indentures consistent with the indenture for the new notes.

As of 5 p.m. ET on Sept. 17, the consent deadline, the company said it had not received the necessary consents.

Before Wednesday, noteholders could deliver consents without tendering their notes for a consent fee of $2.50 per $1,000 principal amount.

The consent payment was to have been made in new notes for holders who participated in the exchange offers and in cash for all other consenting noteholders.

Modified Dutch auction

The exchange offers were being conducted as a modified Dutch auction. Eligible holders must have specified a bid price. The total amount payable for each series of notes was to be determined based on a formula consisting of a base price for that series plus a to-be-determined clearing premium applicable to all series of notes.

The total consideration was to be payable in the form of new notes.

Holders had to have tendered their notes by the consent date in order to receive the total consideration. Holders tendering after that date were to have received the total consideration less an early participation payment equal to $17.50 for each $1,000 principal amount and less the $2.50 consent fee.

The bid price must have been made in increments of $2.50 and could not have been more than $20.00 greater than the base price for that series of notes. The base price was to have been $1,005 for the 7¼% notes and $1,000 for the 7 3/8% notes.

The clearing premium for all series of notes was to be determined by consideration of the bid premiums - the amount by which the bid price exceeds the base price - of all tendered notes. The clearing premium was to be the lowest single premium such that for all tendered notes whose bid price resulted in a bid premium equal to or less than this lowest single premium, the total principal amount of all such tenders would have been not less than $2 billion principal amount of notes.

If less than the maximum amount was tendered, but NRG still had elected to proceed with the exchange offers, the clearing premium would have been the highest bid premium received.

If all notes tendered at a bid price that resulted in a bid premium equal to or less than the clearing premium had a total principal amount that exceeded the maximum amount, all holders who tendered with a bid premium at or below the clearing premium would have been accepted on a prorated basis using a single proration rate across all series of notes accepted.

Holders who exchanged were also to receive, in cash, accrued interest up to but excluding the settlement date.

The exchange offers and the consent solicitations were to be subject to the receipt of consents from a majority of all three series of notes and were being made only to qualified institutional buyers and to some non-U.S. investors located outside the United States.

Global Bondholder Services Corp. (866 387-1500 or 212 430-3774) was the information agent.

NRG is a Princeton, N.J.-based power company.

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