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NRG Energy Inc.'s decision to exit GenOn Energy Inc. and its affiliates through Chapter 11 bankruptcy marks the first action emanating out of the company's strategic review, signaling management's resolve to simplify the business by paring down its assets.
Terms of the restructuring support agreement, or RSA, will see NRG impart a 100% equity interest in GenOn Energy Inc. to its bondholders, and pay 92 cents on the dollar in principal and accrued interest to GenOn Americas Generation LLC bondholders, consistent with terms of the preliminary agreement made public on May 23. NRG also agreed to make a $261.3 million cash payment to GenOn, an increase from the $243 million payment stated in the initial terms.
After a string of extensions to negotiations, which formally began on May 15, NRG management finalized terms for bankruptcy on June 12, before filing for Chapter 11 in U.S. Bankruptcy Court for Southern District of Texas on June 14, just one day before the maturity of $690 million in senior unsecured notes. Over a roughly month-long period of negotiations, bondholder consent to the GenOn Energy terms rose to 93% from approximately 60% in late May, with 93% of GenOn America's bondholders consenting to their recovery terms from roughly 66% over the same period.
On June 12, GenOn also exercised...