Energy generation company NRG Energy Inc. (NRG) issued $1.2 billion 7.625% senior unsecured notes due January 15, 2018, to qualified institutional buyers. The offering is expected to close on January 26, 2011.
NRG Energy intends to utilize the net proceeds of the issue to buy back its outstanding $1.2 billion 7.250% senior notes due 2014. The company will also pay fees and expenses incurred in connection with the repurchase of such notes.
NRG Energy ended the third quarter 2010 with long-term debts and current leases of $9.06 billion compared with $8.22 billion in the year-ago period. The levels of debt of the company are expected to remain unchanged after the issue. However, interest expenses of $169 million in the third quarter 2010 will go up with the new issue of high interest bearing notes.
The company from time to time has engaged in notes issuances to reorganize and meet its capital requirements. In August 2010, the company issued $1.1 billion of 8.25% senior notes due in August 2020, the proceeds of which would be used for repaying debts and to meet general corporate purposes.
During November 2010, the company lowered its 2010 and 2011 guidance due to rejection by Dynegy Inc.‘s (DYN) shareholders of Blackstone Group L.P.‘s (BX) buyout offer. The buyout offer included a separate agreement by which a portion of Dynegy’s Californian generation assets were to be sold to NRG Energy.
The company ended the third quarter 2010 with earnings per share of 87 cents, lower than the year-ago quarterly earnings of $1.02 per share. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are 31 cents per share, $2.53 per share and $1.02 per share, respectively.
NRG Energy currently retains a Zacks #3 Rank (short-term Hold rating).
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.
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