Blackstone Buys Dynergy

RINCETON, N.J., Aug 13, 2010 (BUSINESS WIRE) -- NRG Energy, Inc. (NRG 21.96, +0.01, +0.05%) has signed a definitive agreement with an affiliate of The Blackstone Group L.P. to purchase 3,884 megawatts (MW) of Dynegy Inc. assets in California and Maine for $1.36 billion, or $351/kilowatt. In a separate transaction, NRG has agreed to acquire the Cottonwood Generating Station, a 1,279 MW natural gas-fueled plant in the Entergy zone of east Texas, from Kelson Limited Partnership for $525 million, or $410/kilowatt. The Company intends to fund both acquisitions with a combination of cash and other funding sources. Both acquisitions are expected to close by year end.

The assets strengthen NRG's regional and dispatch diversity by greatly expanding the Company's load following mid-merit generation profile. The addition of combined cycle plants in northern California expands capabilities across the state, advances the Company's ability to "firm" renewable resources with highly efficient gas generation, while lowering the overall carbon intensity of NRG's fleet. NRG currently contracts with Cottonwood, one of the newest and most efficient plants in the region, to support current long-term contracts in Louisiana, Arkansas and East Texas. Owning Cottonwood will allow for future contracting opportunities and will enable NRG to provide additional balancing and ancillary services. The Company expects the transactions will be accretive to adjusted EBITDA and free cash flow immediately.

"We've sought for many years to fill the gap in our combined cycle gas portfolio in our core markets,'' said David Crane, President and CEO of NRG Energy. "With these acquisitions of ideally located assets, we are filling that gap in three of our four core regions while furthering our long-standing strategy of being a regionally focused, multi-fuel scale generator with the ability to dispatch our assets efficiently across the merit order in each of our core markets."

Blackstone Senior Managing Director David Foley said, "Blackstone's relationship with NRG began with NRG's acquisition of Texas Genco five years ago and we are pleased to continue that partnership by working together on an exclusive basis to structure this innovative transaction involving the simultaneous sale of certain Dynegy assets to NRG with the closing of Blackstone's acquisition of Dynegy."

Strategic and Financial Benefits

-- Enhances Geographic Diversity and Builds Scale in Core Regions These acquisitions build greater balance across the Company's core operating regions. Capacity in the West region would more than double, constituting 19% of the overall domestic fleet, from 9% currently. South Central region capacity increases from 12% to 14% of the Company's overall installed megawatts in the United States.

-- Improves Emission Intensity and Dispatch Level Diversity By adding 2,839 MW of modern, high-efficiency, combined cycle generation, the Company enhanced its ability to firm renewables, increased mid-merit profile and improved the NRG fleet's fuel diversity. In terms of total fleet output, the Company increased the share of generation from gas- or oil-fueled plants from 11% to 23% (based on 2009 data).

-- Accretes to EBITDA The new asset portfolio is expected to contribute between $175 and $225 million in annualized adjusted EBITDA. Key drivers regarding that contribution are: the high dispatch profile for Casco Bay and Moss Landing 1& 2 due to their favorable merit-order position, location and interconnection to load; a significant portion of the portfolio in California is contracted with highly credit-worthy entities for the next several years; and portfolio synergies provided by Cottonwood to the South Central region's load-following capability.