8-KOther Events

XCEL ENERGY INC 8-K Report (Feb 22, 2002)

Filed February 22, 2002For Securities:XELXELLL

Summary

This 8-K filing from Xcel Energy Inc. (XEL) addresses inquiries regarding potential collateral requirements for its subsidiary, NRG Energy, Inc. (NRG), should NRG's unsecured credit rating fall below investment grade. As of December 31, 2001, approximately $960 million in collateral would be required if NRG were downgraded by Moody's, which had placed NRG's rating on review for potential downgrade in December 2001. This collateral is spread across NRG's project-level financings, power marketing activities, and a significant contingent equity guarantee related to its construction/acquisition revolver.

Key Highlights

  • 1Xcel Energy is disclosing potential collateral needs for its subsidiary NRG Energy due to a credit rating review by Moody's.
  • 2As of Dec 31, 2001, approximately $960 million in collateral would be required if NRG's credit rating drops below investment grade.
  • 3The potential collateral is allocated across debt service reserve accounts ($200M), power marketing ($400M), and a contingent equity guarantee ($360M).
  • 4NRG's credit ratings are BBB- (S&P) and Baa3 (Moody's), with Moody's rating on review for potential downgrade.
  • 5NRG plans to meet potential collateral obligations using cash, existing credit lines, liquidity support from Xcel Energy, and potential debt issuance.
  • 6NRG's revolving credit line is expected to increase from $500M to $1B in March 2002, with total credit facilities planned to reach $1.25B in 2002.
  • 7The potential collateral requirement could increase to approximately $1.45 billion by the end of 2002 as NRG utilizes its construction/acquisition revolver further.

Frequently Asked Questions

This filing is to address investor inquiries about the cash or collateral Xcel Energy's subsidiary, NRG Energy, might need to provide if NRG's unsecured credit rating falls below investment grade. Moody's had placed NRG's rating on review for potential downgrade.

As of December 31, 2001, the estimated collateral required would be approximately $960 million. This amount could increase to around $1.45 billion by the end of 2002.

NRG Energy expects to meet these obligations using its cash on hand, available credit lines (including an expected increase to its revolving credit facility), liquidity support from Xcel Energy, and potentially by issuing new debt in the capital markets.

NRG Energy's unsecured credit rating is BBB- from Standard & Poor's and Baa3 from Moody's Investors Service. Moody's has placed its rating on review for a potential downgrade.