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Moody's changes NRG Energy's outlook to negative; affirms ratings

Mon, 19 Nov 2007 19:09:46 -0000

Highlights and Sticky Notes:

following the announcement that the company had entered into a series of transactions with counterparties to reset and extend existing power and gas hedges at market prices, requiring a payment to counterparties of around $1.35 billion.

the negative outlook considers the $1.1 billion of permanent indebtedness added to the capital structure, at a time when share repurchases and future capital requirements have increased and are expected to stay at an elevated level

Tags: moodys nrg work-related

Posted by: atthemoney

Moody's affirms NRG's ratings; outlook remains negative

Fri, 09 Nov 2007 20:48:43 -0000

Highlights and Sticky Notes:

NRG's negative rating outlook reflects, in Moody's opinion, a trend by management to steadily implement shareholder friendly initiatives within the past year. Since August 2006, NRG has amended financing documents and has executed financings to return more capital to the shareholders either by increasing the restricted payments basket or by structuring financings that allow capital to flow to shareholders outside of the restricted payments basket.

the rating outlook could stabilize if the company makes meaningful progress towards using free cash flow to permanently reduce debt over the next several years, and/or if the company finances its anticipated large capital investment program in a relatively conservative manner resulting in a adjusted cash flow (CFO pre-W/C) to total adjusted debt rising to the mid-teens level on a sustainable basis.

The rating could be downgraded if the degree of shareholder initiatives further accelerates over the next twelve to eighteen months without meaningful progress towards reducing consolidated debt or if the company chooses to finance its capital investment program with higher than anticipated levels of debt. Additionally, should margins compress across NRG's existing generation fleet or should additional leverage be incurred to finance shareholder rewards causing adjusted cash flow (CFO pre-W/C) to total adjusted debt to fall below 10% for an extended period, the rating could be downgraded.

Tags: moodys nrg work-related

Posted by: atthemoney

NRG Energy, Inc. Reports Second Quarter 2007 Results

Thu, 02 Aug 2007 05:05:41 -0000

Highlights and Sticky Notes:

On May 2, 2007, the Company announced its intention to form NRG Holdings, Inc., or Holdco to support and facilitate its Comprehensive Capital Allocation Plan. The financing on June 8, 2007, provided the Company with the right to call and convert $1 billion of the Term B loan and place it at Holdco. Doing so would increase the restricted payments (RP) capacity under the Senior Note indentures by a like amount and thereby provide sufficient RP capacity for the Company to initiate a common share annual dividend in the future. The formation of Holdco requires the approval of three regulatory bodies, two of which have since granted approval, with the final approval expected during the second half of 2007.

The Company's announced plan was to form and fund Holdco during the fourth quarter of 2007 and initiate the common dividend in the first quarter of 2008. If Holdco is formed, it will constitute a change in control under the Senior Note indentures and provide the right for bondholders to put the bonds back to the Company at 101% of par. If the current weakness in the credit markets persists into the fourth quarter and NRG's Senior Notes trade at levels below par, the Company will likely postpone implementation of the Holdco structure or allow the Holdco credit facility to expire on December 28, 2007. If this occurs, the Company will delay the introduction of an annual dividend and will in all likelihood increase common share repurchases in 2008 from previously stated targets.

Raising adjusted EBITDA guidance to $2.2 billion and cash flow from operations to $1.42 billion.

$533 million of adjusted EBITDA, excluding mark-to-market (MtM) adjustments;

Net income from continuing operations for the first half of this year was $214 million or $0.71 per common share, compared to $217 million or $0.72 per diluted common share, for the same period last year.

three months ended June 30, 2007 of $149 million or $0.51 per diluted common share, as compared to $202 million or $0.63 per diluted common share for the same period last year. These results include a $35 million non-cash, pre-tax charge related to the completion of the $4.4 billion refinancing of the Company's Senior Credit Facility in conjunction with our Comprehensive Capital Allocation Plan announced on May 2, 2007, while the 2006 period benefited from $15 million in pre-tax settlement agreements.

Long-term debt and capital leases 8,609 8,647

Current portion of long-term debt and capital leases $ 126 $ 130

Tags: 2q07 nrg work-related Earnings

Posted by: atthemoney

Moody's changes NRG Energy's outlook to negative; affirms ratings

Fri, 03 Nov 2006 09:21:22 -0000

Highlights and Sticky Notes:

"While the rating affirmation incorporates the increase in near-term cash flow and the reduction in cash flow volatility following the reset and extension of power and gas hedges, the negative outlook considers the $1.1 billion of permanent indebtedness added to the capital structure, at a time when share repurchases and future capital requirements have increased and are expected to stay at an elevated level,"

To that end, Moody's also notes that NRG intends to modify the terms of its secured credit agreement in a manner that will increase the restricted payments basket, increase the amount of permitted indebtedness, allow greater flexibility for the company to make capital investments, and reduce the existing cash sweep mechanism.

n light of the negative rating outlook as well as the company's capital investment plan and announced share repurchases, limited near-term prospects exist for the rating to be upgraded. However, the rating outlook could be stabilized if the company's credit if the company makes meaningful progress towards using free cash flow to permanently reduce debt by more than $1.0 billion over the next several years, and if the company finances its anticipated large capital investment program in a relatively conservative manner resulting in a adjusted FFO to total adjusted debt of 16% on a sustainable basis.

The rating could be downgraded if the level of share repurchases continues to increase materially over the next eighteen months without meaningful progress towards reducing consolidated debt or if the company chooses to finance its capital investment program with higher than anticipated levels of debt.

Tags: moodys nrg

Posted by: atthemoney