Energy

NRG to Shift Green Energy to Separate Company

Three years after spinning out a yieldco to operate its green energy assets, NRG Energy Inc. (NYSE: NRG) said Friday morning that it now plans to create another new company, called “Greenco” for current purposes. NRG’s yieldco, NRG Yield Inc. (NYSE: NYLD), would presumably acquire assets from Greenco as it currently does from NRG.

NRG is trying  to solve its problems of access to and cost of capital. Forming a new company to focus on its green energy business simplifies the parent company’s management and cost structure to help NRG shrink its balance sheet by reducing operating and capital expenses. At the end of the June quarter, NRG’s long-term debt totaled $19.7 billion

According to the company’s presentation, beginning January 1, 2016, NRG’s financial commitment to Greenco is limited to $125 million. That is expected to save NRG $150 million annually. NRG also stands to post a one-time gain of $210 million in a drop-down transaction of its Edison Mission Wind portfolio to NRG Yield.

NRG expects to cut its cash requirement for 2015 from a prior forecast of $250 million to a new total of $168 million.

The company also expects to spend approximately $1.3 billion by the end of 2016 on reducing debt and an additional $250 million buying back shares this year. Share buybacks in 2015 are expected to total $437 million and the company expects to pay $195 million in dividends. Under its NRG Reset program, the company expects to save about $500 million in cost reductions, fuel conversions and targeted non-recourse financing, and to take in another $500 million in asset dispositions.

Investors are wary. NRG’s stock price traded down about 5% in the noon hour Friday, at $18.21 in a 52-week range of $17.69 to $33.92.

ALSO READ: JPMorgan Says ‘Rent to Own’ 3 High-Yielding Clean Energy Yieldcos

The #1 Thing to Do Before You Claim Social Security (Sponsor)

Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.

A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.