NRG Energy Asks Exelon To Withdraw Board Expansion Plan
NRG Energy Inc.’s (NRG) board and management asked Exelon Corp. (EXC) to withdraw its proposal to expand NRG’s board, saying changes could cause the acceleration of the company’s debt.
NRG, which has been fending off a $5.15 billion hostile-takeover effort from Exelon, also said a larger board would be unwieldy and inconsistent with best corporate practices.
Most troubling, such a restructuring of the board could accelerate about $8 billion of outstanding corporate-level debt under the terms of its debt facilities, NRG said, adding that refinancing would be very expensive or even impossible with the credit crisis. If NRG directors won even a one-vote majority, the debt-acceleration provision could be triggered by the departure of one NRG director, the company said.
Last month, Exelon, the largest nuclear power operator in the U.S., said more than 51% of NRG shareholders had tendered their shares. Exelon took its bid directly to shareholders in November, after NRG’s board rejected the same offer, saying it undervalued the company.
