NRG Energy, Inc.
) announced that it has priced $1.1 billion of 6.25% senior
notes. The notes will mature on Jul 15, 2022. The company expects
to close the note offering on Jan 27, 2014. Initially, NRG Energy
had planned to offer senior notes, worth $0.7 billion, due 2022.
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The company intends to utilize a portion of the net proceeds of
the issue to finance the Edison Mission Energy ("EME")
acquisition. NRG Energy also plans to allocate a part of the
proceeds to redeem its 8.50% senior notes and 7.625% senior
notes, worth up to $0.4 billion, due 2019, and also pay the
allied costs and expenses. The rest will be utilized for general
NRG Energy made full use of the prevailing market conditions and
decided to issue new notes bearing a lower coupon rate. This will
enable the company to reduce its cost of capital and extend its
NRG Energy issues senior notes from time to time to refinance its
existing debts and for other corporate purposes. On Sep 10, 2012,
the company issued and priced 6.625% senior notes worth $0.99
billion, due 2023. The company utilized the net proceeds along
with the cash balance to repurchase its existing 7.375% senior
notes, due 2017.
NRG Energy's cash in hand as of Sep 30, 2013 was $2.13 billion
versus $2.09 billion as of Dec 31, 2012. Strong cash position
along with systematic financial plans enable the company expand
as well as diversify its portfolio through inorganic as well as
organic growth strategy. In Oct 2013, the company entered into an
agreement to acquire all assets of EME for $2.6 billion. This
acquisition is expected to provide substantial financial as well
as operational synergies to the company.
At the end of third-quarter 2013, the company's long term
debt-to-equity ratio was 145.2%, up from 139.0% at the end of the
prior-year quarter. With the completion of the debt refinancing
plan, NRG Energy's long-term debt-to-equity ratio is expected to
increase in the future.
NRG Energy currently has a Zacks Rank #5 (Strong Sell). However,
some better-ranked stocks in the same sector include
Wisconsin Energy Corp.
The AES Corporation
). While Wisconsin Energy holds a Zacks Rank #1 (Strong Buy), The
AES Corp. and ALLETE carry a Zacks Rank #2 (Buy).