NRG Energy Inc. is actively negotiating with GenOn Energy Inc. creditors over a potential restructuring, though the NRG's services agreement with GenOn has come under fire.
The generator on Dec. 13 said it is negotiating with advisors to GenOn Energy and GenOn Americas Generation LLC, collectively the GenOn entities, on a potential restructuring, hastened by what the creditors contend is an imminent deadline to file certain claims on outstanding senior notes, according to the filing.
The GenOn Energy debt includes nearly $692 million of 7.875% senior notes with a maturity date of June 15, 2017, $650 million of 9.5% senior notes due Oct. 15, 2018, and $489 million of 9.875% senior notes due Oct. 15, 2020.
Additionally, GenOn Americas Generation debt includes $366 million in 8.50% senior notes due Oct. 1, 2021, and $329 million in 9.125% senior notes due May 1, 2031.
The filing also points out that certain creditors have filed a complaint in the Superior Court of the State of Delaware alleging certain claims against the $192.6 million annual services agreement between NRG and GenOn, which UBS Securities LLC in November flagged as a likely source of tension among the parties. Under the services agreement, NRG provides GenOn Energy with management, personnel and other services, including regulatory and public affairs, accounting, tax, legal, commercial operations and asset management.
"Certain indenture trustees for the GenOn Notes, along with certain of the Noteholders, filed a complaint ... against NRG and GenOn alleging certain claims related to a services agreement between NRG and GenOn," the filing stated.
The complaint, however, appears to be an effort by the creditors to keep the services agreement as a source of leverage in the negotiations.
"NRG understands that the Noteholders have asserted the claims as a measure to preserve them during pending negotiations with NRG," the filing added.
Under terms of the services agreement, NRG is permitted to terminate the services agreement in the event that GenOn becomes bankrupt or if the company is dissolved and liquidated.
NRG acknowledged in the filing that it cannot assure it will reach a resolution with the GenOn creditors, to which the company said it, "intends to vigorously defend the suit in the event that the current discussions between NRG and the Noteholders prove unsuccessful."