NRG ENERGY,INC. (NYSE:NRG) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.
On May24, 2018, NRG Energy,Inc. (“NRG”) completed the sale of $575 million aggregate principal amount of 2.75% convertible senior notes due 2048 (the “Senior Notes”) to the terms of the purchase agreement, dated May21, 2018 (the “Purchase Agreement”), among NRG, the guarantors named therein (the “Guarantors”), and the initial purchasers named therein (the “Initial Purchasers”). to the Purchase Agreement, the Initial Purchasers exercised their option to purchase an additional $75,000,000 aggregate principal amount of the Senior Notes. The Senior Notes were issued under an Indenture, dated May24, 2018 (the “Indenture”), among NRG, the Guarantors and Delaware Trust Company, as trustee (the “Trustee”). Interest is payable on the Senior Notes on June1 and December1 of each year beginning on December1, 2018 until their maturity date of June1, 2048, unless earlier repurchased or converted in accordance with their terms.
The Senior Notes will be convertible, under certain circumstances, into cash, shares of NRG’s common stock, par value $0.01 per share (“common stock”) or a combination thereof at NRG’s election. The initial conversion rate will be 20.9479 shares of NRG’s common stock per $1,000 principal amount of Senior Notes (representing an initial conversion price of approximately $47.74 per share of common stock), subject to customary adjustments.
Noteholders may convert their Senior Notes at their option only in the following circumstances: (1)during any calendar quarter commencing after the calendar quarter ending on September30, 2018, if the last reported sale price per share of NRG’s common stock, exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2)during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of NRG’s common stock on such trading day and the conversion rate on such trading day; (3)upon the occurrence of certain corporate events or distributions on NRG’s common stock; (4)if NRG calls such Senior Notes for redemption; and (5)at any time (i)from, and including, December1, 2024 until the close of business on the second scheduled trading day immediately before June1, 2025; and (ii)from, and including, December1, 2047 until the close of business on the second scheduled trading day immediately before the maturity date. If a “make-whole fundamental change” (as defined in the Indenture) occurs on or before June1, 2025, then NRG will in certain circumstances increase the conversion rate for a specified period of time.
NRG will have the option to redeem the Senior Notes, in whole or in part, at any time, on or after June1, 2025, at a cash redemption price equal to the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest. Unless NRG has previously called all outstanding Senior Notes for redemption, holders of the Senior Notes may require NRG to repurchase their Senior Notes on each of September1, 2025, June1, 2033 and June1, 2040, at a cash repurchase price equal to the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest. In addition, if certain corporate events that constitute a “fundamental change” (as defined in the Indenture) occur before the Senior Notes mature, then holders of the Senior Notes may require NRG to repurchase their Senior Notes at a cash repurchase price equal to the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest.
The terms of the Indenture, among other things, limit the ability of NRG and certain of its subsidiaries to consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries.
The Indenture provides for customary events of default, which include (subject in certain cases to customary grace and cure periods), among others: nonpayment of principal or interest; breach of other agreements in the Indenture; defaults in failure to pay certain other indebtedness; the rendering of judgments to pay certain amounts of money against NRG and its subsidiaries; the failure of certain guarantees to be enforceable; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs and is not cured within the time periods specified in the Indenture, the Trustee or the holders of at least 25% in principal amount of the then outstanding series of Senior Notes may declare all the Senior Notes of such series to be due and payable immediately.
The Senior Notes were sold to the Initial Purchasers for resale to qualified institutional buyers under Rule144A of the Securities Act of 1933, as amended (the “Securities Act”). The Senior Notes were issued in a transaction exempt from registration under the Securities Act or any state securities laws. Therefore, Senior Notes may not be offered or sold in the