NRG Announces $1.75 Billion Asset Sale, To Parent Of Retail Supplier

NRG Energy, Inc. today announced that it has entered into a definitive agreement to sell its 44% equity interest in South Texas Project Electric Generating Station (STP) to Constellation Energy for a purchase price of $1.75 billion, subject to customary purchase price adjustments.

The purchase price represents an implied valuation multiple of 11.7x EV/EBITDA and 17.5x Free Cash Flow, NRG said

Constellation said that the transaction is valued at $1.75 billion, with an effective purchase price of $1.4 billion after taking into consideration the present value of tax benefits to Constellation. Constellation said that the transaction will be financed with a combination of cash and debt.

STP is a 2,645 MW nuclear facility located about 90 miles southwest of Houston in Bay City, Texas. NRG’s current 44% interest represents approximately 1,100 MWs of output.

"Today’s announcement is the continuation of our strategy to optimize our portfolio while creating significant shareholder value," said Mauricio Gutierrez, NRG President and Chief Executive Officer. "The work on this transaction over the last several months will release significant capital to be deployed at value-accelerating and upsizing our current share repurchase program while achieving our balance sheet targets."

Upon closing, the sale exceeds NRG's previously disclosed 2023 asset sale target of $500 million. The sale is expected to be leverage neutral with net cash proceeds, after $500 million of deleveraging, to be used primarily for share repurchases, NRG said

The transaction is targeted to close by the end of 2023, subject to regulatory approvals by the United States Nuclear Regulatory Commission, Hart-Scott-Rodino, and the Public Utility Commission of Texas.

Constellation said that its existing operations in Texas includes owning and operating 3,520 megawatts of natural gas-fired generation at its Colorado Bend II, Wolf Hollow II and Handley generating stations, in addition to 169 megawatts of wind energy at the Whitetail and Sendero wind projects.

Constellation also is a supplier in Texas' competitive retail energy market, supplying electricity, natural gas, energy efficiency and other services to approximately 200,000 residential and commercial customers statewide.

Separately, NRG Energy Inc. today announced that Bruce Chung will succeed Alberto Fornaro as NRG's Chief Financial Officer, effective June 1, 2023. Fornaro will be pursuing other interests but will remain with NRG as a strategic advisor during this transition period until September 1, 2023, NRG said

Chung has served as NRG's Head of Strategy and M&A since 2016. Previously, Chung held numerous positions across various areas of NRG focused on new business development since joining in 2008. Prior to NRG, Chung served in the investment banking division of Citigroup and its predecessor firms providing capital markets and advisory services to regulated and unregulated power and gas companies.