On Monday, Houston's Reliant Energy Inc. announced it would
seek strategic alternatives to enhance stockholder value, which could mean a sale of all or parts of the business. One week ago, Reliant lowered its 2008 outlook to reflect the financial impact of Hurricane Ike and lower commodity prices in its wholesale business.
Also, Reliant agreed with Merrill Lynch & Co. to
end its credit-enhanced retail structure and switch to a new retail strategy aimed at lowering collateral requirements and providing more consistent earnings. Reliant obtained commitments for $1 billion in new capital. It will get a $650 million term loan from GS Loan Partners and agreed to issue $350 million of convertible preferred stock to energy private equity firm First Reserve Corp.
To consider its strategic alternatives, Reliant hired Morgan Stanley and Goldman, Sachs & Co. financial advisers and Skadden, Arps, Slate, Meagher & Flom LLP as counsel. The board has formed a special committee that comprises Evan Silverstein, the committee's chair, Steven Miller, Joel Staff and William Transier, to oversee the process. In addition, Staff will serve as executive chairman of the board.
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Baz HiralalSee Reliant press releases:
Strategic alternatives2008 forecast and new credit structureGo to the story from Reuters
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