|NRG ENERGY, INC. filed this Form 8-K on 11/08/2018|
Capital Allocation Update
During the third quarter of 2018, NRG executed on its second $500 million share repurchase commitment through an Accelerated Share Repurchase program. This brings the total amount of shares to be repurchased in 2018 to $1 billion. In addition, the Board of Directors of the Company has authorized an additional $500 million share repurchase program to be executed into 2019.
To remain leverage-neutral in connection with the $575 million convertible senior notes issued in second quarter of 2018, NRG completed the repurchase of $575 million of its 2022, 2027 and 2028 senior unsecured notes during the third quarter of 2018, generating approximately $20 million of annual interest expense savings7.
Additionally, the Company has completed its targeted $640 million of debt reduction through the redemption of $485 million of its outstanding 6.250% senior notes due 2022 and the prepayment of $155 million of Term Loans, and is on track to achieve a target net debt to Adjusted EBITDA ratio of 3.0x for 2018.
On October 17, 2018, NRG declared a quarterly dividend on the Company's common stock of $0.03 per share, payable November 15, 2018, to stockholders of record as of November 1, 2018, representing $0.12 on an annualized basis.
The Company’s common stock dividend, debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.
Board of Directors
C. John Wilder informed the Board of Directors that he will retire from the Board, effective November 8, 2018. Mr. Wilder joined the Board in February 2017 and served on the Company’s Business Review Committee (dissolved in July 2017) and Finance and Risk Management Committee. In connection with Mr. Wilder’s resignation, the size of the Board will be reduced from eleven (11) to ten (10) members.
According to C. John Wilder, Independent Director of the Board, “Today, I am announcing my retirement from the NRG Board of Directors.” Mr. Wilder continues, “I applaud the advancements made by the company in the culture and strategy since Mauricio Gutierrez took over as CEO, and most recently with the adoption and execution of the Transformation Plan. This has been a critical year in the Company’s transformation and I am proud of the course charted by my fellow directors and management in rightsizing the business, strengthening the balance sheet, achieving cost excellence and adopting capital allocation principles. I believe NRG has the right team in place to continue its relentless execution that will create significant long-term value and I am excited to remain a long-term shareholder.”
Larry Coben, Chairman of the Board, continued, "On behalf of the Board of Directors, I want to thank John for his outstanding service on the Board and valued direction on all Board matters, particularly the Company's Transformation Plan. Going forward, the Board will continue to assess our size and composition to ensure the proper level of expertise and oversight on behalf of our shareholders."
Mr. Gutierrez added, “John has provided valuable insights and thoughtful counsel as a member of the Board. I want to thank him for his service, and look forward to having him as a valued long-term shareholder."
7 Interest savings assumes average 6.2% interest rate on $575 million debt retired in 2018