LOS ANGELES Oct 18 Power company NRG Energy Inc
said on Friday it would pay $2.64 billion to acquire the
assets of bankrupt unregulated power producer Edison Mission
Energy, adding nearly 8,000 megawatts of coal, gas and wind
generation to its business.
NRG's stock closed up 4.8 percent at $29.30 following the
announcement. It reached $30.17 earlier in the session, its
highest level since 2008.
The purchase price includes 12.7 million shares of NRG
common stock, valued at $350 million, with the rest to be paid
in cash. Princeton, New Jersey-based NRG will also assume $1.55
billion of EME's non-recourse debt.
EME's assets include four coal-fired plants in Illinois,
about 10 gas-fired plants in California and more than 30 wind
projects in 11 states. It also has a trading and asset
The assets are located outside NRG's core territories of
Texas and the Eastern United States, said Morningstar analyst
Travis Miller, adding that coal-fired plants in the Midwest,
which make up more than half of the generation capacity NRG will
be acquiring, are challenged due to the region's low power
prices and competition from cheap natural gas.
"These aren't great assets, but they didn't pay much for
them," Miller said.
But the deal will nearly quadruple NRG's wind generation
capacity, the company said, making it the nation's third largest
U.S.-based producer of renewable energy. Most of the wind
capacity and a 500 MW gas-fired plant could be "dropped down" to
NRG's NRG Yield Inc subsidiary, which was formed to
operate and acquire power assets under long-term contracts. NRG
Yield debuted on the public markets this year.
"Edison Mission Energy is a great fit with NRG, as virtually
100 percent of their assets, their particular expertises and the
balance of their technologies deployed complement NRG`s own
assets, personnel and businesses," NRG Chief Executive David
Crane said in a statement.
NRG expects to close the deal, which is subject to approval
by the U.S Bankruptcy Court for the Northern District of
Illinois, in the first quarter of 2014.
EME, a unit of Edison International based in Santa
Ana, California, filed for Chapter 11 bankruptcy protection in
December, citing heavy debts, weak power prices and high fuel
The company is one of many in the energy space to suffer as
a result of the 2007-2009 recession, which cut power demand, and
the glut of cheaper natural gas, which caused wholesale power
prices to fall.
Dynegy went bankrupt in July 2012, emerging from
Chapter 11 later that year after handing almost all of its
equity to unsecured creditors. Patriot Coal declared
bankruptcy in 2012 under the weight of pension obligations its
shrinking workforce could no longer support. And Texas power
giant Energy Future Holdings is in negotiations with creditors
to try to restructure $40 billion in debt, and may declare
bankruptcy by the end of the month.