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Reliant Terminates Retail Working Capital Facility

^{Published on 2008-12-05 17:04:42 - Market Wire}
 

HOUSTON--([ BUSINESS WIRE ])--Reliant Energy (NYSE:RRI) today announced that it has terminated its $300 million retail working capital facility with Merrill Lynch Capital Corporation.

Reliant had received a waiver of the retail working capital facility's minimum adjusted EBITDA covenant through December 5. The company has concluded that terminating the facility is an appropriate way to address any possible issues that might be raised regarding compliance with this covenant.

"We are continuing to pursue longer term arrangements to unwind our credit-enhanced retail structure with Merrill Lynch," said Mark Jacobs, president and chief executive officer, Reliant Energy. "During this process, we expect Merrill Lynch to continue to perform under the terms of the agreement and believe that we have adequate liquidity to operate our business going forward."

In November, the company made the decision to exit its commercial and industrial business, significantly reducing its long-term capital requirements. As of November 28, Reliant had available liquidity of approximately $1.6 billion, comprised of approximately $1.2 billion in cash on hand and available credit of $421 million. Reliant had drawn upon the working capital facility only once since December 2006, its effective date. It is not included in the company's most recent liquidity projections.

As previously announced, Reliant's board of directors is conducting a full review of strategic alternatives. The objective of this process is to consider a full range of possible strategic actions to determine the best alternative for enhancing stockholder value. The possible strategic actions include, but are not limited to, the sale of all or substantially all of Reliant Energy as well as the sale of some or all of its retail business.

Reliant Energy, Inc. (NYSE: RRI) based in Houston, provides electricity and energy services to retail and wholesale customers in the United States. The company provides service to approximately 1.8 million retail electricity customers primarily in Texas, including residential and small business customers. Reliant also serves commercial, industrial, governmental and institutional customers in Delaware, Illinois, Maryland, New Jersey, New York, Pennsylvania and Washington, D.C.

The company is one of the largest independent power producers in the nation with more than 14,000 megawatts of power generation capacity across the United States. These strategically located generating assets use natural gas, fuel oil and coal. For more information, visit [ http://www.reliant.com ]. Reliant routinely posts all important information on its Web site.

This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that contain projections, assumptions or estimates about our revenues, margins, capital structure and other financial items, our plans and objectives for future operations or about our future economic performance, transactions and dispositions, financings or offerings. In many cases you can identify forward-looking statements by terminology such as "estimate," "believe," "may," "plan(s)," "should," "will," "expect," "outlook," "commitment(s)," "taking steps," "efforts" and other similar words. However, the absence of these words does not mean that the statements are not forward-looking.

Actual results may differ materially from those expressed or implied by forward-looking statements as a result of many factors or events, including, but not limited to, ongoing negotiations with Merrill Lynch, the outcome of strategic alternatives review, legislative, regulatory and/or market developments, the outcome of pending lawsuits, governmental proceedings and investigations, the effects of competition, financial market conditions, access to capital, the timing and extent of changes in commodity prices and interest rates, weather conditions and other factors we discuss or refer to in the "Risk Factors" section of our filings with the Securities and Exchange Commission.

Each forward-looking statement speaks only as of the date of the particular statement and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.