Date:
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February 27, 2009 | |
To:
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All Staff | |
From:
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David CranePresident and CEO | |
Subject:
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Exelon Q&A |
1. | What did Exelon announce yesterday? | ||
Exelon announced the second round of results in its unsolicited offer to exchange 0.485 of its shares for each outstanding share of NRG stock. According to Exelon, as of February 25, 51.3% of the outstanding NRG shares were tendered into Exelons exchange offer. Exelon also announced that it has extended the expiration date of its exchange offer to June 26, 2009. | |||
2. | What does the announcement mean? | ||
First, we want to be clear that no shares change hands as a result of yesterdays exchange offer results. Some reporters dont understand that so it warrants emphasizing. Secondly, in this extraordinarily challenging market environment, we recognize that the majority of NRG stockholders, including those who tendered, and some who did not, wish to see the Exelon process continue. Although the increase from the last tender results is minimal, we think the results support NRGs management and Board of Directors remaining open to considering a transaction with Exelon at a fair exchange rate and on reasonable terms which we have not seen to date. | |||
Exelon has said that its exchange offer is merely an attempt to apply pressure to NRGs Board of Directors. It is also likely aimed at getting a sense of whether it will prevail in the proxy contest. |
3. | What are the approvals Exelon must meet for any deal to go through? | ||
Exelon cant buy a single share of NRG stock through the exchange offer until all conditions are satisfied or waived, and these include NRG and Exelon shareholder approval as well as federal approvals from the Department of Justice, Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC), and approval from the states of California, New York, Pennsylvania and Texas. | |||
4. | What is a proxy contest? | ||
Exelon has announced its intention to try to seat the maximum amount of directors on our Board without actually having a majority. Exelon is seeking to accomplish this by proposing to expand our Board with new directors nominated by Exelon, while also seeking to replace four of our existing Directors whose terms are up at the 2009 annual meeting. In the election, stockholders cast their votes, or proxies, for directors. The proxy contest will culminate at our 2009 Annual Meeting. | |||
5. | Why is this situation taking so long? | ||
Stockholders can only bring up proxy proposals that coincide with our annual meeting. So Exelons proxy contest needs to occur at our annual meetingnot at any other time during the year. Exelon launched its hostile takeover attempt in October, which means this would be a long process as long as they continued to pursue the Company. | |||
The approval process also can take a long time. The Federal Energy Regulatory Commission reviews can take up to six months, and the Nuclear Regulatory Commission (NRC) reviews can take many months. The U.S. Department of Justice antitrust approvals can also take many months, depending on the difficulty of issues theyre reviewing. | |||
6. | So what can we expect next? | ||
NRG will continue to engage in a market discovery process to determine the greatest value option available for NRG stockholders. As we have said before, we believe in industry consolidation and remain open to being a seller at an appropriate price that compensates NRG stockholders for the value and risks of a transaction. We will also continue to focus on building upon our track record of delivering on our business objectivesdriving strong free cash flow off the existing business while growing core areas of value through intrinsic and extrinsic opportunities. | |||
7. | Will I get cards in the mail from Exelon and/or NRG regarding the upcoming proxy contest? If so, what will they look like? | ||
If you own vested shares in NRG, you can expect to receive mailings from both NRG and Exelon. Each mailing from NRG and Exelon will contain a voting card, and NRGs cards will be WHITE. Its too early to say what color Exelons will be, but we will provide more details about the proxy contest and mailings in a future employee communication. In addition, further details regarding voting mechanics and process will be provided in our proxy statement. | |||
8. | Has the date for our 2009 Annual meeting of shareholders been set yet? | ||
No, it has not been set yet. We will keep you informed when a date is set. |
9. | Exelon had said it would sell off some of our assets if a deal goes through. Is that because of regulatory issues or simply a business decision? | ||
To obtain regulatory approval on any deal, Exelon must show regulators that it does not own too much market share in any particular region, so the proposal it made in its filings was to try to satisfy state and federal requirements. Exelon has said it would sell our Indian River, Dover and Vienna facilities if a deal were to go through in order to keep its ownership in the PJM market from increasing significantly. However, earlier this month, Delawares Department of Natural Resources and Environmental Control and Public Service Commission said that Exelon has not met its burden of showing that the contemplated transaction is consistent with a large percentage of the public interest that will be affected. | |||
10. | What can I do to help? | ||
As we have said before, the most important thing you can do is remain focused on the day-to-day demands of our business and continuing to produce solid financial results as we did in 2008. Above all, continue to work safely and ensure that those around you do so as well. | |||
11. | Are this weeks announcements about eSolar and the MIBRAG sale examples of NRGs plan to drive shareholder value? | ||
We are moving forward with business as usual and that includes RepoweringNRG, new no- and
low-carbon initiatives and our day-to-day business. Our transaction with eSolar signifies a big step forward in our efforts to be a leader in solar development in the United States, and it represents the biggest step forward by our Low Carbon Technology development group, which we started last year. |
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Selling our 50% ownership in the MIBRAG coal mining and power generating business in central Germany is an example of our willingness to sell assets in a manner and at a time that creates maximum value for NRG shareholders. |