NRG Energy secures $1.6 billion funding for stock deal with GenOn

By Lisa Kerner

Charlotte, N.C., July 23 - NRG Energy, Inc. will use cash on hand and new debt, if necessary, to fund its stock-for-stock tax-free transaction with GenOn Energy, Inc.

The two companies announced a merger agreement in which GenOn shareholders will receive 0.1216 of a share of NRG common stock in exchange for each GenOn share.

NRG said it will use funds available at both companies, including funds under existing credit facilities, to finance the deal, in addition to new debt on an as-needed basis, according to a form 8-K filing with the Securities and Exchange Commissions.

The company has commitment letters from Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding, Inc. for up to $1.6 billion under a new senior secured term loan facility.

The transaction is expected to close in the first quarter of 2013, subject to regulatory and other approvals.

Once the transaction is completed, NRG shareholders will own 71% of the combined company and GenOn shareholders will own 29%.

The expected $300 million per year in expected free cash flow resulting from the merger, beginning in 2014, would be used for debt repayment, share repurchases and infrastructure investment, company executives said during a conference call on Monday.

NRG Energy is a Princeton, N.J.-based wholesale power generation company. GenOn is a Houston-based power producer.

The combined company will have financial and commercial headquarters in Princeton and operational headquarters in Houston.

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