HOUSTON, Sept. 24 /PRNewswire-FirstCall/ -- Reliant Energy announced
today that it has entered into an agreement with Merrill Lynch to create a
new credit-enhanced retail structure.
Under the terms of the agreement, Merrill Lynch will guarantee the
supply purchases and related transactions of Reliant's retail business. As
a consequence, Reliant will no longer be required to post collateral for
its retail supply purchases. In addition, Merrill Lynch will provide a
credit facility to finance some of the working capital needs of the retail
business.
"This agreement is an innovative and simple solution to reduce
liquidity requirements and substantially eliminate collateral postings for
the retail business," said Joel Staff, Reliant Energy's chairman and chief
executive officer. "Through this arrangement, Reliant will significantly
improve the flexibility of its retail business and is now in position to
substantially surpass the $1 billion collateral reduction target that we
set at the beginning of the year."
When the transaction closes, Reliant expects substantially all of the
collateral it has posted in connection with its retail business to be
returned over a period of several weeks, which should result in a gross
debt reduction of approximately $500 million.
The transaction, which is contingent on the receipt of consents from
certain of the company's bondholders and meeting the closing conditions,
which include a series of financing activities related to its bank credit
facilities, is expected to close in the fourth quarter of 2006.
Reliant Energy, Inc. (NYSE: RRI) based in Houston, Texas, provides
electricity and energy services to retail and wholesale customers in the
United States. In Texas, the company provides service to approximately 1.9
million retail electricity customers, including residential, small business
and commercial, industrial, governmental and institutional customers.
Reliant also serves commercial, industrial, governmental and institutional
customers in the PJM (Pennsylvania, New Jersey and Maryland) market.
The company is one of the largest independent power producers in the
nation with approximately 16,000 megawatts of power generation capacity
across the United States. These strategically located generating assets
utilize natural gas, fuel oil and coal. For more information, visit
http://www.reliant.com/corporate.
This news release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Act of 1934. Forward-looking statements are statements that
contain projections, estimates and assumptions about our revenues, income,
earnings and other financial items, our plans and objectives for the
future, future economic performance, or other projections or estimates
about our assumptions relating to these types of statements. These
statements usually relate to future events and anticipated revenues,
earnings, business strategies, competitive position or other aspects of our
operations or operating results. In many cases you can identify
forward-looking statements by terminology such as "anticipate," "estimate,"
"believe," "continue," "could," "intend," "may," "plan," "potential,"
"predict," "should," "will," "expect," "objective," "projection,"
"forecast," "goal," "guidance," "outlook", "effort", "target" and other
similar words. However, the absence of these words does not mean that the
statements are not forward-looking. We have based our forward-looking
statements on management's beliefs and assumptions based on information
available to management at the time the statements are made. Actual results
may differ materially from those expressed or implied by forward-looking
statements as a result of many factors or events, including legislative and
regulatory developments, the outcome of pending lawsuits, governmental
proceedings and investigations, the effects of competition, financial
market conditions, access to capital, the timing and extent of changes in
commodity prices and interest rates, weather conditions, changes in our
business plan and other factors we discuss in our other filings with the
Securities and Exchange Commission, including "Risk Factors" discussed in
our most recent Annual Report on Form 10-K, Item 1A. Each forward-looking
statement speaks only as of the date of the particular statement, and we
undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
SOURCE Reliant Energy, Inc.
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Related links:
http://www.reliant.com/corporate
CONTACT:
Dennis Barber, investors, +1-713-497-3042, or
Pat Hammond, media, +1-713-497-7723
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