|NRG ENERGY, INC. filed this Form 10-K on 02/29/2016|
The Company's board of directors authorized share repurchases of $481 million of its common stock, which were made as follows:
(a) The average price paid per share and amounts paid for shares purchased exclude the commissions of $0.015 per share paid in connection with the share repurchase.
2.822% Redeemable Preferred Stock
On December 23, 2014, NRG and the Credit Suisse Group amended and restated its 250,000 shares of 3.625% Convertible Perpetual Preferred Stock, or 3.625% Preferred Stock, which is treated as redeemable preferred stock, initially issued on August 11, 2005, to the Credit Suisse Group in a private placement. The amendment resulted in a reduction of the rate from 3.625% to 2.822% and is hereby referred to as the 2.822% Preferred Stock. The transaction was accounted for as an extinguishment of the 3.625% Preferred Stock and the issuance of new 2.822% Preferred Stock. The loss on extinguishment of the 3.625% Preferred Stock of $42 million represents the increase in redeemable preferred stock as the Company recorded the 2.822% Preferred Stock at a fair value of $291 million in connection with the amendment. The loss on extinguishment of $42 million as well as $5 million in consent fees paid to Credit Suisse, were recorded as a dividend on the preferred shares. This amount reduced net income to arrive at net income/(loss) available to NRG common stockholders in the calculation of earnings per share for the year ended December 31, 2014.
The 2.822% Preferred Stock amount is located after the liabilities but before the stockholders' equity section on the balance sheet, due to the fact that the preferred shares can be redeemed in cash by the stockholder. The 2.822% Preferred Stock has a liquidation preference of $1,378 per share. Holders of the 2.822% Preferred Stock are entitled to receive, out of legally available funds, cash dividends at the rate of 2.822% per annum, or $28.22 per share per year, payable in cash quarterly in arrears commencing on December 30, 2014.
Each share of the 2.822% Preferred Stock is convertible during the 90-day period beginning December 23, 2019, at the option of NRG or the holder. Holders tendering the 2.822% Preferred Stock for conversion shall be entitled to receive, for each share of 2.822% Preferred Stock converted, $1,378 in cash and a number of shares of NRG common stock equal in value to the product of (a) the greater of (i) the difference between the average closing share price of NRG common stock on each of the twenty consecutive scheduled trading days starting on the date thirty exchange business days immediately prior to the conversion date, or the Market Price, and $40.71 and (ii) zero, times (b) 50.7743. The number of shares of NRG common stock to be delivered under the conversion feature is limited to 16,000,000 shares. If upon conversion, the Market Price is less than $27.14, then the Holder will deliver to NRG cash or a number of shares of NRG common stock equal in value to the product of (i) $27.14 minus the Market Price, times (ii) 50.7743. NRG may elect to make a cash payment in lieu of delivering shares of NRG common stock in connection with such conversion, and NRG may elect to receive cash in lieu of shares of common stock, if any, from the Holder in connection with such conversion. The conversion feature is considered an embedded derivative per ASC 815 that is exempt from derivative accounting as it is excluded from the scope pursuant to ASC 815.
If a fundamental change occurs, including, among others, insolvency or a change of control, the holders will have the right to require NRG to repurchase all or a portion of the 2.822% Preferred Stock for a period of time after the fundamental change at a purchase price equal to 100% of the liquidation preference, plus accumulated and unpaid dividends. The 2.822% Preferred Stock is senior to all classes of common stock and junior to all of the Company's existing and future debt obligations and all of NRG subsidiaries' existing and future liabilities and capital stock held by persons other than NRG or its subsidiaries.