Infrastructure
Reliant Energy Eliminates a Credit Facility (RRI, CEG, BRK.A)
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Late on Friday, Reliant Energy (NYSE:RRI) announced that it had terminated a $300 million retail working capital facility with Merrill Lynch. The company had failed to meet its EBITDA covenant on the agreement in the third quarter, and had received a waiver of the covenant through December 5th.
The company said that it terminated the facility because it "is anappropriate way to address any possible issues that might be raisedregarding compliance with this covenant." Yeah, like Reliant is likelyto miss the EBITDA target again.
Reliant noted that it has $1.6 billion in liquidity, about $421 millionof which is credit not including the terminated facility. Reliant hasalready said that it is pulling of of its wholesale and commercialmarkets, and that the company’s board is exploring "strategicalternatives" including selling of part or all of the company.
This story has been going on for a while now, but Reliant does not seemto be having any luck selling itself. Maybe once the Constellation(NYSE:CEG) deal with either Berkshire Hathaway (NYSE:BRK.A) or EDF is settled, a line will begin to form for Reliant.
Paul Ausick
December 8, 2008
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