NRG Energy, Inc. Announces Exchange Offer and Consent Solicitation for any and all of APX Group, Inc.’s outstanding 5.75% Senior Notes due 2029

Rhea-AI Summary

NRG Energy, Inc. (NYSE:NRG) has announced an exchange offer for all outstanding 5.75% Senior Notes due 2029 issued by APX Group, Inc. The offer includes exchanging the existing notes for new NRG Exchange Notes and cash. NRG is also conducting a consent solicitation to amend the indenture governing the existing notes, aiming to eliminate most restrictive covenants and certain affirmative covenants.

The exchange offer details include:

• $1,000 principal amount of New NRG Exchange Notes and $1.00 in cash for each $1,000 of existing notes
• Early Tender Premium available until October 28, 2024
• Exchange offer expires on November 13, 2024

The offer is to qualified institutional buyers and non-U.S. persons outside the United States. The New NRG Exchange Notes have not been registered under the Securities Act and may not be offered or sold in the U.S. without registration or exemption.

Positive

• Opportunity for noteholders to exchange existing APX notes for new NRG notes
• Early Tender Premium offers additional incentive for quick participation
• Potential simplification of debt structure through elimination of restrictive covenants

Negative

• New NRG Exchange Notes are not registered under the Securities Act, limiting their tradability
• Exchange offer may result in increased debt obligations for NRG

Insights

Financial Analyst

NRG Energy's exchange offer for APX Group's $800 million of 5.75% Senior Notes due 2029 is a strategic financial maneuver with several implications:

• Debt Consolidation: NRG is effectively bringing APX's debt under its own umbrella, which could streamline financial management and potentially improve overall credit profile.
• Attractive Terms: Offering $1,000 in new notes plus $1.00 cash for every $1,000 of existing notes, with an early tender premium, incentivizes quick participation.
• Covenant Relief: The consent solicitation to remove restrictive covenants could provide NRG with more operational flexibility post-exchange.
• Market Perception: This move suggests NRG's confidence in its ability to manage the additional debt load, which could be viewed positively by investors.

However, the lack of intention to redeem remaining notes soon may indicate a measured approach to debt management. Overall, this transaction appears aimed at optimizing NRG's capital structure following its acquisition of Vivint Smart Home.

Legal Expert

The exchange offer and consent solicitation present several legal considerations:

• Securities Regulation: The new notes are not registered under the Securities Act, relying on exemptions for qualified institutional buyers and non-U.S. persons. This limits the potential investor base and secondary market liquidity.
• Disclosure Requirements: NRG must ensure all material information is accurately presented in the offering memorandum to avoid potential liability.
• Consent Thresholds: The success of covenant amendments will depend on reaching required consent levels, typically a majority or supermajority of noteholders.
• Regulatory Compliance: The transaction must navigate complex securities laws across multiple jurisdictions, as indicated by the careful wording around offer restrictions.

The structured approach, including the use of an information agent and clear eligibility criteria, demonstrates a focus on legal compliance. However, the lack of registration for the new notes may have long-term implications for their transferability and liquidity.

HOUSTON--(BUSINESS WIRE)-- NRG Energy, Inc. (NYSE:NRG) announced today the commencement of an offer to exchange (the “Exchange Offer”) any and all outstanding 5.75% Senior Notes due 2029 (the “Existing APX Unsecured Notes”) issued by APX Group, Inc. (“APX”) for new notes to be issued by NRG (the “New NRG Exchange Notes”) and cash, as set forth in the table below.

In conjunction with the Exchange Offer, NRG is also soliciting consents (the “Consent Solicitation”) to adopt certain proposed amendments to the indenture governing the Existing APX Unsecured Notes to eliminate substantially all of the restrictive covenants and certain affirmative covenants and events of default and related provisions therein.

The Exchange Offer and the Consent Solicitation are being made pursuant to the terms and subject to the conditions set forth in the offering memorandum and consent solicitation statement, dated October 15, 2024 (the “Offering Memorandum and Consent Solicitation Statement”).

Certain information regarding the Existing APX Unsecured Notes and the terms of the Exchange Offer is summarized below.

Title of Existing APX Unsecured Notes			CUSIP/ISIN Numbers		Principal Amount Outstanding		Exchange Consideration(1)	+	Early Tender Premium(1)	=	Total Exchange Consideration(1)(2)
5.75% Senior Notes due 2029			CUSIP: 00213M AW4 (144A); U0385P AP1 (Reg S) / ISIN: US00213MAW47 (144A); USU0385PAP19 (Reg S)		$800 Million		$950 principal amount of New NRG Exchange Notes		$50 principal amount of New NRG Exchange Notes and $1.00 in cash		$1,000 principal amount of New NRG Exchange Notes and $1.00 in cash

(1) For each $1,000 principal amount of the Existing APX Unsecured Notes accepted for exchange.
(2) Includes the Early Tender Premium.

Holders who validly tender (and do not validly withdraw) their Existing APX Unsecured Notes at or prior to 5:00 p.m., Eastern Standard Time, on October 28, 2024, unless extended (the “Early Tender Date”), will be eligible to receive the Total Exchange Consideration as set forth in the table above. The Total Exchange Consideration includes the Early Tender Premium as set forth in the table above, for all such Existing APX Unsecured Notes that are accepted for exchange. The early settlement date is expected to be within three business days after the Early Tender Date or as promptly as practicable thereafter. Holders who validly tender their Existing APX Unsecured Notes after the Early Tender Date but prior to 5:00 p.m., Eastern Standard Time, on November 13, 2024, unless extended (the “Expiration Date”), will not be eligible to receive the Early Tender Premium as set forth in the table above. Those holders will only be eligible to receive the Exchange Consideration as set forth in the table above on the settlement date. The final settlement date is expected to be within three business days after the Expiration Date or as promptly as practicable thereafter. NRG and APX currently do not intend to redeem in the near future any Existing APX Unsecured Notes remaining after the settlement of the Exchange Offer.

Documents relating to the Exchange Offer and the Consent Solicitation will only be distributed to eligible holders of Existing APX Unsecured Notes who certify that they are either (a) a “Qualified Institutional Buyer,” as that term is defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or (b) a person that is outside the “United States” and is (i) not a “U.S. person,” as those terms are defined in Rule 902 under the Securities Act and (ii) a “non-U.S. qualified offeree” (as defined in the Offering Memorandum and Consent Solicitation Statement). The complete terms and conditions of the Exchange Offer and the Consent Solicitation are described in the Offering Memorandum and Consent Solicitation Statement, a copy of which may be obtained by contacting D.F. King & Co., Inc., the exchange agent and the information agent in connection with the Exchange Offer and the Consent Solicitation, at (800) 949-2583 (toll free) or (212) 269-5550 (banks and brokers). The eligibility form is available at www.dfking.com/NRG or by emailing D.F. King & Co., Inc. at nrg@dfking.com.

This press release does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, any security. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation, purchase or sale would be unlawful. The Exchange Offer and the Consent Solicitation are being made solely pursuant to the Offering Memorandum and Consent Solicitation Statement and only to such persons and in such jurisdictions as is permitted under applicable law.

The New NRG Exchange Notes have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release does not constitute an offer to sell any security, including the New NRG Exchange Notes, nor a solicitation for an offer to purchase any security, including the New NRG Exchange Notes. NRG does not intend to file a registration statement for the resale of the New NRG Exchange Notes.

About NRG

NRG Energy is a leading energy and home services company powered by people and our passion for a smarter, cleaner, and more connected future. A Fortune 500 company operating in the United States and Canada, NRG delivers innovative solutions that help people, organizations, and businesses achieve their goals while also advocating for competitive energy markets and customer choice.

Forward-Looking Statements

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 subject to certain risks, uncertainties and assumptions and typically can be identified by the use of words such as “expect,” “estimate,” “should,” “anticipate,” “forecast,” “plan,” “guidance,” “outlook,” “believe” and similar terms. Although NRG believes that the expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially.

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect NRG’s future results included in NRG’s filings with the SEC at www.sec.gov.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241015188712/en/

Media

Chevalier Gray

832.763.3454



Investors

Brendan Mulhern

609.524.4767

Source: NRG Energy, Inc.

FAQ

What is NRG Energy offering in exchange for APX Group's 5.75% Senior Notes due 2029?

NRG Energy is offering $1,000 principal amount of New NRG Exchange Notes and $1.00 in cash for each $1,000 of existing APX Group 5.75% Senior Notes due 2029.

When does the Early Tender Premium for NRG's exchange offer expire?

The Early Tender Premium for NRG's exchange offer expires on October 28, 2024, at 5:00 p.m. Eastern Standard Time.

What is the expiration date for NRG Energy's exchange offer and consent solicitation?

The expiration date for NRG Energy's exchange offer and consent solicitation is November 13, 2024, at 5:00 p.m. Eastern Standard Time, unless extended.

Are the New NRG Exchange Notes being offered registered under the Securities Act?

No, the New NRG Exchange Notes have not been registered under the Securities Act and may not be offered or sold in the U.S. without registration or an applicable exemption.