01—Abstract
Summary
Summary of the 8-K filed April 17, 2024. Cited figures are marked; the original filing is the authoritative source.
On April 16, 2024, NRG Energy, Inc. entered into the Eighth Amendment to its Second Amended and Restated Credit Agreement dated June 30, 2016, with Citicorp North America, Inc. as administrative agent and collateral agent, and a group of lenders.
The amendment establishes a new term loan B facility with borrowings of $875.0 milliona in aggregate principal amount, and makes other modifications to the credit agreement. Proceeds from the Term Loans will be used to repay existing NRG indebtedness, including its 3.750% senior secured first lien notes due 2024, and to fund a portion of the purchase price for previously announced repurchases from certain holders of its 2.75% convertible senior notes due 2048. The Term Loan Facility is guaranteed by the same subsidiaries that guarantee NRG's revolving credit facility and is secured on a first lien basis by substantially all assets of NRG and those subsidiaries, subject to customary exceptions.
The Term Loans carry a floating rate at NRG's election: either the highest of the New York Fed rate plus 0.50%b, the WSJ Prime Rate, or one-month Term SOFR plus 1.00%, or Term SOFR (floor of 0%) plus 2.00% for a one-, three- or six-month interest period. The loans mature April 16, 2031 and amortize at 1% per annum, and include customary asset sale mandatory prepayments and negative covenants.
02—Key points
Key Highlights
- NRG entered into the Eighth Amendment to its Second Amended and Restated Credit Agreement on April 16, 2024, creating a new term loan B facility.
- The new Term Loan Facility totals $875.0 million in aggregate principal amount.
- Proceeds will repay existing indebtedness, including 3.750% senior secured first lien notes due 2024, and partly fund repurchases of 2.75% convertible senior notes due 2048.
- Term Loans bear interest at either a base rate plus 2.00%-equivalent margin structure via Term SOFR plus 2.00%, or an alternate base rate plus 1.00% or 0.50% spread, at NRG's election.
- The Term Loans mature April 16, 2031 and amortize at 1% per annum.
- The facility is guaranteed by the subsidiaries that guarantee NRG's revolving credit facility and secured on a first lien basis by substantially all assets of NRG and those subsidiaries.
- The facility includes customary asset sale mandatory prepayments, reporting covenants, and negative covenants on dividends, investments, and indebtedness.
03—Questions
Frequently Asked Questions
How large is the new term loan and what is it being used for?
The new Term Loan Facility has borrowings of $875.0 million in aggregate principal amount. Proceeds will repay existing NRG indebtedness, including its 3.750% senior secured first lien notes due 2024, and a portion of the purchase price for previously announced repurchases of its 2.75% convertible senior notes due 2048.
What interest rate will NRG pay on the Term Loans?
At NRG's election, the Term Loans bear interest either at a fluctuating rate equal to the highest of the New York Fed rate plus 0.50%, the WSJ Prime Rate, or one-month Term SOFR plus 1.00%, or at Term SOFR (not less than 0%) for a one-, three- or six-month period, plus 2.00%.
When do the Term Loans mature and how do they amortize?
The Term Loans have a final maturity date of April 16, 2031 and amortize at a rate of 1% per annum.
What collateral and guarantees support the Term Loan Facility?
The facility is guaranteed by each NRG subsidiary that guarantees its revolving credit facility and is secured on a first lien basis by substantially all assets of NRG and those subsidiaries, subject to customary exceptions and limitations in the Credit Agreement.
What happens if an event of default occurs?
If an event of default occurs under the Term Loan Facility, the entire outstanding principal, accrued unpaid interest and other amounts may be declared immediately due and payable, subject in certain instances to applicable cure periods.
04—Continue