DEFA14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
NRG Energy, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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statement number, or the Form or Schedule and the date of its filing. |
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On June 24, 2009, NRG Energy, Inc. (NRG) issued the following letter to NRG stockholders:
[NRG ENERGY, INC. LETTERHEAD]
June 24, 2009
Dear NRG Stockholders:
NRG STOCKHOLDERS ARE REJECTING EXELONS INADEQUATE OFFER
Exelon recently announced that only 12% of NRG shares were tendered into its exchange offer as of
June 16, 2009, as compared with 51% tendered on February 26, 2009. The inescapable conclusion
derived from the hemorrhage of support for Exelons offer, in our opinion, is that Exelons
exchange offer, as inadequate as it was when first proposed on October 19, 2008, is even more
inadequate today because of NRGs dramatic value creation over the past eight months.
Whatever Exelon has said to date, we think they clearly recognize the vast erosion of support for
their current proposal. Exelon has indicated it intends to make a decision at its June 30th Board
meeting regarding its hostile offer for NRG. While uncertain, Exelon may decide to withdraw its
offer or it may decide to increase the offer price. If Exelon increases its offer, we believe such
a step would be intended to try to persuade you to replace some of the very directors who have
overseen the significant value creation at NRG with directors handpicked by Exelon in the hope that
the new directors nominated by Exelon would look favorably upon whatever Exelons offer is on the
table at the time.
DONT LET EXELON PUT ITS PEOPLE ON THE NRG BOARD
We urge you to use the WHITE proxy card to continue to send the message to Exelon that its proposal
was and is inadequate, and the merit of any proposal made by Exelon is best and most impartially
assessed by NRGs highly experienced Board of Directors as presently constituted, by voting:
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FOR NRGs four highly qualified INDEPENDENT directors; and |
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AGAINST Exelons proposal to expand your Board and thereby reject the
Exelon expansion slate of nominees. |
YOU SHOULD ASSESS ANY OFFER FROM EXELON AGAINST THE VALUE OF
NRGS EXISTING PORTFOLIO, TAKING INTO ACCOUNT NRGS CONTINUING
TRACK RECORD OF ADDITIONAL VALUE CREATION BEGINNING WITH TEXAS. . .
Texas is the most attractive competitive energy market in the nation, with healthy prices for
baseload power in addition to higher than national average demand growth prospects. When the
current economic recession begins to subside in Texas, which has historically rebounded faster and
more strongly than Exelons areas of concentration in the Midwest and PJM, we expect NRG
stockholders will realize greater benefit from the Companys strong position there than they would
if their Texas position was severely diluteda natural consequence of the Exelon proposal.
Moreover, the strong correlation that exists between natural gas and wholesale electricity prices
in Texas is a critical element of NRGs highly successful forward contracting program which has
proven instrumental in insulating NRGs current financial performance from the effects of the
economic downturn.
NRGs low-cost baseload assets in Texas, totaling 5,340 megawatts (MW) of generating capacity,
consist of: NRGs existing nuclear plant, South Texas Project 1&2 (STP 1&2), and two modern and
environmentally compliant coal plants. Additionally, NRG maintains a wellpositioned 5,475MW
natural gas fleet in the greater Houston area.
In June 2006, NRG launched its RepoweringNRG initiative to develop new, highly efficient and
principally low and no carbon, generating facilities across our fleet. The centerpiece of
RepoweringNRG is South Texas Project (STP 3&4,) two new advanced nuclear units, totaling 2,700MW of
nameplate capacity, in Matagorda Country, Texas. NRGs STP 3&4 project was recently chosen as one
of only four nuclear development projects advanced by the Department of Energy in its loan
guarantee program (out of 18 total applications, one of which was Exelons), positioning NRG at the
forefront of US nuclear development. In addition, this week, NRG is bringing on line (on time and
under budget) Cedar Bayou 4, a state-of-the-art gas-fired combined cycle plant (550MW gross).
Finally, we finished our second Texas wind project (Elbow Creek) in December and began construction
of our third wind farm (Langford) in the first quarter of 2009.
On top of NRGs demonstrated value creation in its Texas generation business, on May 1, 2009, NRG
acquired Reliant Energy, the leading retail electricity provider in the ERCOT market. Reliants
retail business, which is highly complementary to NRGs wholesale generation business in Texas, was
acquired by NRG at a very attractive price: NRG paid $287.5 million plus working capital for a
business which we now project to be a $250 million EBITDA/year (midcycle) business over the next
several years.
What value does Exelon, in its original offer, propose to award to NRG stockholders for all of
these assets and businesses in Texas?
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VALUE (BEING |
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OFFERED BY |
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TEXAS |
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EXC) |
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COMMENT |
Baseload |
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5340MW |
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73% of Replacement Cost based on Exelons own estimates |
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Gas Plants |
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5475MW |
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Zero |
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$50-100mm EBITDA/year |
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Cedar Bayou 4 & Wind |
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620MW |
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Zero |
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New, state-of-the-art facilities with total equity invested ~$850mm |
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Reliant retail |
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1.7M customers |
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Zero |
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$250mm EBITDA/year |
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STP 3&4 Nuclear Development |
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2700MW (gross) |
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Zero |
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One of four leading projects in nuclear renaissance |
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In a February 2, 2009 investor presentation, Exelon assigned to NRGs existing Texas baseload
assets (which only include STP 1&2 and our two coal plants) a replacement value of $3,000 per
kilowatt (KW). NRGs 5,340MW of baseload generation in Texas, based on Exelons $3,000/KW
replacement cost, are worth approximately $16 billion enterprise value. Subtracting out NRGs
approximate $7 billion of net corporate debt, that leaves an equity value for our baseload
assets of approximate $9 billion or $33/NRG share. Compare that with the $24/NRG share Exelon
is offering for all of NRG (the 0.485 exchange at closing price of Exelon on June 22 of
$48.99/ps). |
. . .BUT IN OUR VIEW THE REST OF TEXAS IS ONLY THE BEGINNING OF WHAT EXELON SEEKS TO TAKE FROM
NRG STOCKHOLDERS
NRGs non-Texas assets include:
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NRG Northeast: 7,020MW of generating capacity located close to load centers
throughout the Northeast. |
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NRG South Central: 2,845MW of natural gas and coal plants in Louisiana,
featuring long term off-take contracts with local rural cooperatives. |
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NRG West: 2,130MW of natural gas sites in California and Nevada with
exceptional repowering opportunities and site value. |
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NRGs International Assets: 1,005MW including the Gladstone coal plant in
Australia, as well as the Schkopau coal plant in Germany. |
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NRGs Thermal Assets: The Companys thermal and chilled water businesses
generate approximately 1,020MW thermal equivalents in five American cities. |
To give you an idea of the value of NRGs asset portfolio excluding Texas, in August 2005, a month
before NRG announced its acquisition of Texas Genco, the stock market ascribed a firm value to NRG
of approximately $6.4 billion, based on an asset portfolio that has not changed materially from the
one described above. As mentioned earlier, Exelons original offer does not even adequately
compensate you for the full value of our three baseload plants in Texas, much less the rest of our
valuable business in Texas. On top of that, Exelons proposal seeks to take for Exelons
stockholders 100% of the value of NRGs entire non-Texas business, more than 13,000MW of generating
facilities.
AS NRG HAS DEMONSTRATED EVEN DURING THIS RECESSION AND
WITH THE
EXELON HOSTILE TAKEOVER ATTEMPT PENDING, NRG NEVER STOPS
LAYING
THE FOUNDATION FOR FUTURE VALUE CREATION. . .
During the eight months since Exelon first announced its hostile takeover attempt, NRG:
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Completed the acquisition of the retail electricity business of Reliant Energy; |
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Sold the MIBRAG lignite business in Germany; |
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Acquired the principal advanced development assets of eSolar; |
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Completed the Elbow Creek wind project and the Cedar Bayou 4 CCGT project; |
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Began construction of the 150MW Langford Wind Project and the 400MW GenConn
peakers in Connecticut; |
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Advanced to the final due diligence phase for the DOE nuclear loan guarantee
for STP 3&4 while advancing other stimulus project applications as well; |
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Secured a $534 million nonrecourse debt financing for the GenConn projects; |
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Arranged $700 million of debt financing in anticipation of collapsing the ring
fence credit arrangements around the Reliant retail business; |
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Received a credit rating upgrade from Standard & Poors; and |
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Achieved record full-year EBITDA and free cash flow performance for 2008. |
During that same time, it is not apparent what if any comparable value creating measures Exelon has
engaged in.
The NRG Board strongly believes that the value of the strategic initiatives that the Company has
engaged in so successfully belong to you, not to the shareholders of Exelon. The Board also
believes future value creation by NRG should belong to you unless Exelon is willing to pay
appropriate value for all of NRGs assets and opportunities.
AS THE OWNERS OF NRG, YOU NEED AND DESERVE AN EXPERIENCED
AND
INDEPENDENT BOARD OF DIRECTORS, BEHOLDEN TO NO THIRD PARTY,
TO SUPERVISE AND ASSIST US AS WE MOVE FORWARD
WHILE PROTECTING THE VALUE OF YOUR INVESTMENT IN NRG
NRGs Board of Directors, working with and through NRGs management team, has positioned the
Company not only to survive, but to flourish in economic down cycles as well as in up cycles. Over
the past several months, under difficult economic and financial market conditions, the Company has
shown not only resilience and steadfastness butthrough the Reliant and other transactionsa
nimbleness to capture substantial value in the external market whenever and in whichever direction
the opportunity presents itself.
You should give careful consideration to what the Board candidates nominated by Exelon will focus
on and how they are likely to act should you elect them on to the NRG Board. We recommend you vote
against any such outcome and in favor of the current directors of NRG who have overseen significant
value creation at NRG and are in the best position to assess the reasonableness of any current or
future Exelon offer against the other opportunities available to optimize NRG value at the time.
VOTE FOR YOUR BOARDS NOMINEES ON THE WHITE PROXY
CARD TODAY AND AGAINST THE BOARD EXPANSION PROPOSAL
SPONSORED BY EXELON
We believe that Exelons proposals for the Annual Meeting are merely a means to force through an
inadequate and highly conditional exchange offer that would not properly compensate NRG
stockholders.
To vote against that potential outcome, please sign, date and return the enclosed WHITE proxy card
promptly after you receive it. You may also vote by phone or Internet by following the instructions
on your WHITE proxy card. Do not vote the Exelon proxy card at all as it may cancel your previous
vote for NRG.
Your vote is important, no matter how many shares you own. If you have any questions or need any
assistance voting your shares, please contact MacKenzie Partners, Inc., which is assisting NRG in
this matter, at 800.322.2885.
On behalf of NRGs Board of Directors, we thank you for your continued support.
Sincerely,
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David Crane
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Howard Cosgrove |
President and Chief Executive Officer
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Chairman of the Board |
Important Information
In connection with its 2009 Annual Meeting of Stockholders (the 2009 Annual Meeting), NRG Energy,
Inc. (NRG) has filed a definitive proxy statement on Schedule 14A with the Securities and
Exchange Commission (the SEC). INVESTORS AND STOCKHOLDERS OF NRG ARE URGED TO READ THE PROXY
STATEMENT FOR THE 2009 ANNUAL MEETING IN ITS ENTIRETY BECAUSE IT CONTAINS IMPORTANT INFORMATION. In
response to the exchange offer proposed by Exelon Corporation referred to in this communication,
NRG has filed with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9. STOCKHOLDERS
OF NRG ARE ADVISED TO READ NRGS SOLICITATION/ RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 IN ITS
ENTIRETY BECAUSE IT CONTAINS IMPORTANT INFORMATION. This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities of NRG.
Investors and stockholders will be able to obtain free copies of NRGs definitive proxy statement,
the Solicitation/Recommendation Statement on Schedule 14D-9, any amendments or supplements to the
proxy statement and/or the Schedule 14D-9, any other documents filed by NRG in connection with the
2009 Annual Meeting and/or the exchange offer by Exelon Corporation, and other documents filed with
the SEC by NRG at the SECs website at www.sec.gov. Free copies of the definitive proxy statement,
the Solicitation/ Recommendation Statement on Schedule 14D-9, and any amendments and supplements to
these documents can also be obtained by directing a request to Investor Relations Department, NRG
Energy, Inc., 211 Carnegie Center, Princeton, New Jersey 08540.
NRG and its directors and executive officers will be deemed to be participants in the solicitation
of proxies in connection with its 2009 Annual Meeting. Detailed information regarding the names,
affiliations and interests of NRGs directors and executive officers is available in the definitive
proxy statement for the 2009 Annual Meeting, which was filed with the SEC on June 16, 2009.
Forward-Looking Statements
This communication contains forward-looking statements that may state NRGs or its managements
intentions, hopes, beliefs, expectations or predictions for the future. Such forward-looking
statements are subject to certain risks, uncertainties and assumptions, and typically can be
identified by the use of words such as will, expect, estimate, anticipate, forecast,
plan, believe and similar terms. Although NRG believes that its expectations are reasonable, it
can give no assurance that these expectations will prove to have been correct, and actual results
may vary materially. Factors that could cause actual results to differ materially from those
contemplated above include, among others, risks and uncertainties related to the capital markets
generally.
The foregoing review of factors that could cause NRGs actual results to differ materially from
those contemplated in the forward-looking statements included herein should be considered in
connection with information regarding risks and uncertainties that may affect NRGs future results
included in NRGs filings with the SEC at www.sec.gov. Statements made in connection with the
exchange offer are not subject to the safe harbor protections provided to forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
Your vote is important, no matter how many or how few shares you own!
If you have any questions, require assistance with voting your WHITE proxy card,
or need additional copies of the NRG proxy materials, please contact:
proxy@mackenziepartner
s.com
(212) 929-5500 (Call Collect)
Or
TOLL-FREE (800) 322-2885
To vote your shares, please sign, date and return the enclosed WHITE proxy card by mailing it in
the enclosed preaddressed, stamped envelope. Or you may vote the WHITE proxy card via
phone or Internet by following the instructions on the card.
We encourage you to disregard and not return any blue proxy cards that you receive from Exelon.