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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (33971)	3/28/2009 6:46:06 PM
From: Dale Baker	Read Replies (1) \| Respond to of 78702

FYI from NRG's last conference call: "Of the $595 in repowering investments made during the year, $418 million was used to fund our Elbow Creek, Sherbino I, Cos Cob and Cedar Bayou 4 projects all of which are expected to contribute to the company’s earnings in 2009 and beyond. The $349 million change in cash accounted for over half of the liquidity build in 2008, which is outlined on slide 17. This together with a $300 million increase in letter of credit capacity, primarily due to the return of letters of credit from hedging counterparties migrating from the second lien programs to the first lien structure drove liquidity to an all time high of $3.36 billion. This however, does not include the $760 million deposited with us by our hedging counterparties, which is available for future cash collateral called by those counterparties should commodity prices rebound. Including these deposits, total liquidity available to the company at year-end exceeded $4.1 billion. Complementing this liquidity position is NRG’s long-term low cost corporate debt structure with no corporate maturities before 2013. There is no need to refinance this debt anytime soon, and with the weighted average cost of debt of approximately 6.6%, the cost of our existing financing is significantly below any comparable financings that could be done in today’s market even by an investment grade issuer. For any new growth oriented project level financing, we did not foresee any cost disadvantage as these projects, we continue to pursue such as the peaker projects in Connecticut will tend to be investment grade. Our 2009 adjusted EBITDA; cash flow and capital allocation guidance is outlined on slide 18. Considering our hedge position going into 2009, we are able to maintain our 2009 guidance for adjusted EBITDA at $2.2 billion and cash from operations at $1.5 billion. As previously disclosed, our guidance also includes the benefit of various tax strategies, which we expect will bolster cash flows in 2009 and 2010. While we historically estimated that our cash tax rate in those years would approach 30%, we now expected to be closer to 10%. For the year, we anticipate higher maintenance CapEx than in 2008 mainly attributable to normal planned activities at our baseload facilities in Texas and higher environmental spend as we complete back-end control projects primarily at our Dunkirk plant and initiate back in control work at Indian River. Repowering investments for 2009 include completion of Cedar Bayou 4, initiation of the Connecticut peaker projects with our partner United Illuminating and final payments on one set of GE wind turbines. We will also continue to aggressively pursue the development of STP 3 and 4. However, we expect this to be cash neutral to NRG in 2009 as partner contributions and other financing arrangements fully fund CapEx requirements. During the year, we also ancipitate repaying $426 million in debt, including a $197 million mandatory offer to the term loan B lenders in March, and $143 million to settle the CSF II structure in the fourth quarter this year. Regarding share repurchases, we remain committed to completing the share repurchases for both our 2008 and 2009 capital allocation programs totaling $330 million once we are clear to do so. With the company’s sizable liquidity position and restricted payments basket of approximately $530 million as of the filing of our 10-K. NRG has more than sufficient capacity to execute on these commitments. So as we look forward to the rest of 2009, the prospects for NRG remain solid."