NEW YORK, March 26 (Reuters) - NRG Energy Inc on Thursday said a proposal by utility owner Exelon Corp to expand NRG's board could put it in violation of its debt covenants and force it to refinance $8 billion in debt.
As part of Exelon's hostile bid worth more than $5 billion for NRG, it has filed a proxy asking NRG shareholders to expand NRG's board by five members to a total of 19.
If shareholders approve the expansion and four other of Exelon's nominees for the board, it would hold 50 percent of the enlarged board NRG said, which would trigger an acceleration of the $8 billion in debt.
'Refinancing such a substantial amount of debt, whether done by NRG or Exelon, in the current capital market environment would, at best, be prohibitively expensive and, at worst, impossible to achieve,' NRG said in a statement.
Exelon said in a statement sent by email that NGR misread its own indentures and was misleading its shareholders.
'The fact is that an NRG board of nine NRG incumbent directors and the nine independent nominees proposed by Exelon would not result in a change of control under the NRG indentures or credit agreement,' Exelon wrote.
NRG has rejected Exelon's offer of 0.485 Exelon share per NRG share as too low and declined to enter into formal negotiations around a potential deal.
Shares of NRG closed up 1.4 percent at $17.37, while Exelon rose 2.9 percent at $45.89.
(Reporting by Matt Daily; Editing by Bernard Orr) Keywords: NRG/EXELON (Reuters Messaging: matt.daily.reuters.com@reuters.net; E-mail: matt.daily@reuters.com; +1 646 223 6121) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
As part of Exelon's hostile bid worth more than $5 billion for NRG, it has filed a proxy asking NRG shareholders to expand NRG's board by five members to a total of 19.
If shareholders approve the expansion and four other of Exelon's nominees for the board, it would hold 50 percent of the enlarged board NRG said, which would trigger an acceleration of the $8 billion in debt.
'Refinancing such a substantial amount of debt, whether done by NRG or Exelon, in the current capital market environment would, at best, be prohibitively expensive and, at worst, impossible to achieve,' NRG said in a statement.
Exelon said in a statement sent by email that NGR misread its own indentures and was misleading its shareholders.
'The fact is that an NRG board of nine NRG incumbent directors and the nine independent nominees proposed by Exelon would not result in a change of control under the NRG indentures or credit agreement,' Exelon wrote.
NRG has rejected Exelon's offer of 0.485 Exelon share per NRG share as too low and declined to enter into formal negotiations around a potential deal.
Shares of NRG closed up 1.4 percent at $17.37, while Exelon rose 2.9 percent at $45.89.
(Reporting by Matt Daily; Editing by Bernard Orr) Keywords: NRG/EXELON (Reuters Messaging: matt.daily.reuters.com@reuters.net; E-mail: matt.daily@reuters.com; +1 646 223 6121) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.