NRG enters into cooperation agreements with two activist investors, makes board changes

Written By: Stratton Report
February 13, 2017

NRG

On February 13, NRG Energy, Inc. announced that it has entered into cooperation agreements with affiliates of each of Elliott Management Corporation and Bluescape Energy Partners LLC.

According to NRG, funds affiliated with Elliott have a 6.9% stake in the company’s common stock and funds affiliated with Bluescape own an aggregate of 2.5% of the common stock.

Pursuant to the terms of the cooperation agreements, Howard Cosgrove and Edward R. Muller have announced their retirement from the NRG board of directors and have stepped down from the board. Lawrence Coben, a director of the Company, was named chairman of the board as Cosgrove’s successor.

Per NRG, C. John Wilder, Bluescape Energy Partners’ Executive Chairman, and Barry Smitherman, former Chair of the Public Utility Commission of Texas, have been appointed to the board.

Chief Executive Officer Mauricio Gutierrez noted:

Over the past year, NRG has made strides in streamlining our business, reducing costs, strengthening our balance sheet, selling non-core assets and exiting unprofitable business lines. We remain committed to building on that progress and I look forward to the contributions of our new directors and the new committee as we take further steps to improve performance and build shareholder value. I personally want to express my deep appreciation to Howard and Ed for their dedicated service to the Company and its stakeholders. 

Chair Coben observed: “John and Barry bring broad experience across all areas of our business and we look forward to benefiting from their expertise and participation in the boardroom. We welcome them to the NRG Board. I also want to thank Howard and Ed for their stewardship through their time on the Board.”

New board member Wilder remarked: “We have tremendous confidence in Mauricio and his management team, and I look forward to working together with his team and the Board on a comprehensive high-performance plan for the benefit of all NRG stakeholders. I believe the Committee is the ideal way to take a fresh approach and conduct a comprehensive, fact-based performance assessment. I pledge to my fellow shareholders that the Business Review Committee will leave no stone unturned in our review. I believe a focus on a relentless execution of this plan will have the long-term benefit of furthering NRG as the preeminent integrated power company.”

Jeff Rosenbaum, Portfolio Manager at Elliott commented: “I want to thank Mauricio and his team for the collaborative, constructive approach they have taken in reaching today’s agreement. We are confident that the new additions to NRG’s Board and the newly formed Business Review Committee, tasked with developing and overseeing the high-performance plan, will lead to tremendous value creation for all NRG stakeholders. As shareholders, we look forward to supporting the Board in its work to enable NRG to thrive in any market environment.”

Pursuant to the cooperation agreements, Elliott and Bluescape have each agreed to customary standstill, voting, and other provisions. The full cooperation agreement between NRG and Elliott and the full cooperation agreement between NRG and Bluescape will be filed on a Form 8-K with the Securities and Exchange Commission.

Morgan Stanley & Co. LLC and Goldman, Sachs and Co. are serving as financial advisors to the Company and Latham & Watkins is serving as legal counsel.