UPDATE 1-Merrill sues Reliant over $300 mln facility
(Adds details from lawsuit, share price)
HOUSTON, Dec 29 (Reuters) - Merrill Lynch is suing Reliant Energy (RRI.N) over the termination of a $300 million line of credit, a matter that may result in the investment bank foreclosing on assets from the independent power producer's retail business, according to a regulatory filing on Monday.
Merrill said in the lawsuit filed on Dec. 24 in New York State Supreme Court that a prompt resolution was essential because Reliant is in talks with one or more parties as part of its previously announced plan to explore strategic alternatives, including a sale of the company or some of its assets.
Reliant plans to oppose the lawsuit vigorously, it said in a filing with the U.S. Securities and Exchange Commission.
On Dec. 5, Reliant terminated the $300 million working capital facility with Merrill Lynch after a poor showing from its retail unit due to disruptions from Hurricane Ike and other factors.
But Merrill argued in its lawsuit that the termination of the credit facility without Merrill's consent constitutes a default under the agreement, which is secured by assets from Reliant's retail business.
Reliant operates more than 14,000 megawatts of generating capacity in the United States, markets energy commodities, and sells electricity to more than 1.8 million residential and business customers primarily in Texas.
Shares of Reliant fell 32 cents or 5.7 percent to $5.28 on the New York Stock Exchange at midday on Monday. (Reporting by Anna Driver in Houston, editing by Matthew Lewis)
