Energy generation company NRG Energy Inc. (NRG) stated it will issue $2 billion senior notes in two tranches to repurchase $2.4 billion of 7.375% senior notes due in 2016.
The $2 billion notes offering by the company will be segregated in two series. The first will have $0.8 billion 7.625% senior notes due in May 15, 2019 while the other will have $1.2 billion 7.875% senior notes due in May 15, 2021. The offering is expected to close on May 24, 2011, pending customary closing conditions.
The company intends to use the net proceeds of the issue and its cash in hand to buy back any and all of the outstanding $2.4 billion in aggregate principal amount of its 7.375% senior notes due 2016 and to pay fees and expenses incurred in connection with the repurchase of such notes. The company intends to use the balance for general corporate purposes.
NRG Energy has a strong cash balance, with the cash and cash equivalents as of March 31, 2011, totaling $2.71 billion. Long-term debt and capital leases of the company as of March 31, 2011, were $8.8 billion.
With this planned debt restructuring NRG Energy will be able to reduce its long-term debt by $400 million and extend its debt maturities. The company has undertaken an initiative to simplify its capital structure, refinancing of debts being a part of such an initiative. The ultimate goal of the company is to make opportune investments in future and retain the ability to return more efficiently to all investors.
In January this year, NRG Energy issued $1.2 billion 7.625% senior unsecured notes due January 15, 2018. The net proceeds were utilized to buy back its outstanding $1.2 billion 7.250% senior notes due 2014 and also to pay fees and expenses incurred in connection with the repurchase of such notes.
NRG Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term Neutral rating on the stock. The company competes with AES Corporation (AES) and Calpine Corp. (CPN).
Based in Princeton, New Jersey, NRG Energy Inc. operates as a wholesale power generation company. The company is also involved in the trade of fuel and transportation services, trade of energy, capacity, and related products in the United States and internationally.
AES CORP (AES): Free Stock Analysis Report
CALPINE CORP (CPN): Free Stock Analysis Report
Be the first to comment