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NRG Energy To Acquire Edison Mission For $2.64 Bln.

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Electric utility NRG Energy Inc. (NRG: Quote), said Friday it will acquire most of the assets of bankrupt independent power producer Edison Mission Energy for an aggregate price of $2.635 billion. The deal also involves the acquisition of Edison Mission's equity interests in certain subsidiaries.

NRG said the deal follows a plan sponsor agreement with Edison Mission, certain of its subsidiaries, the unsecured creditors committee, some of Edison Mission's unsecured noteholders, among others.

The purchase price of $2.635 billion (including $1.063 billion of acquired cash) implies transaction enterprise value of about $2.844 billion after including $1.272 billion of adjusted non-recourse debt assumed, NRG clarified. In addition, about $350 million of the purchase price will be paid in the form of 12.7 million shares of NRG common stock.

NRG intends to fund the cash portion of the purchase price using a combination of cash on hand and newly issued corporate debt.

The purchase price is subject to certain post-closing adjustments.

In December 2012, Energy Mission filed for Chapter 11 Bankruptcy Protection with a proposal to transfer control of the company to holders of $3.7 billion in unsecured bonds.

NRG and Edison Mission entered into an asset purchase agreement as of today and the deal will be consummated as part of an Energy Mission Chapter 11 plan of reorganization to be sponsored by NRG. Each of Energy Mission's major stakeholders has agreed to support the move. The assets to be acquired include Energy Mission's generation portfolio, which consists of nearly 8,000 net MW of generation capacity located throughout the US.

On completion of the deal, NRG and its affiliates will become the 3rd largest US-based renewable energy generator with over 2,900 net MW of wind and solar capacity in operation or under construction. The deal will substantially increase both the scale and geographic diversity of NRG's renewable generation portfolio by almost quadrupling its existing wind generation capacity with the addition of 1,700 net MW of wind capacity.

Energy Mission plans to seek approval of the plan with the US Bankruptcy Court for the Northern District of Illinois on October 18 and a hearing is expected within a week after that.

NRG expects full year 2014 Adjusted EBITDA of $330 million (or $140 million of pre-tax income) of which $185 million (or $39 million of pre-tax income) is attributable to assets that are suitable for drop-down to NRG Yield Inc. (NYLD).

NRG shares are trading at $29.79, up $1.83 or 6.55%, on a volume of 4.8 million shares on the NYSE.

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by RTT Staff Writer

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