e425
Filed by RRI Energy, Inc.
Pursuant to Rule 425 of the Securities Act of 1933, as amended, and
deemed filed pursuant to Rule 14a12 of the Securities Exchange Act of 1934, as amended
RRI Energy, Inc. (File No.: 116455)
Subject Company: Mirant Corporation (File No: 333167192)
Excerpts of certain information from financing offering documents.
On April 11, 2010, RRI Energy, Inc. (RRI Energy), Mirant Corporation (Mirant), and RRI
Energy Holdings, Inc., a direct wholly-owned subsidiary of RRI Energy (Merger Sub), entered into
an Agreement and Plan of Merger (the Merger Agreement). Upon the terms and subject to the
conditions set forth in the Merger Agreement, Merger Sub will merge with and into Mirant (the
Merger), with Mirant continuing as the surviving corporation and a wholly-owned subsidiary of RRI
Energy. Additionally, upon the closing of the Merger, RRI Energy will be renamed GenOn Energy,
Inc. (GenOn). The Merger is conditioned on, among other things, GenOn obtaining debt financing
in amounts and on terms that satisfy conditions set forth in the Merger Agreement.
As part of this financing, RRI Energy and Mirant currently plan to commence syndication of a
new senior secured term loan and revolving credit facility of GenOn (the credit facilities) and
an offering of notes in a private placement.
The information herein shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of notes in any
state in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities laws of any such state.
The attached information is disclosed in a preliminary information memorandum that is being
furnished to potential lenders in connection with the syndication of the credit facilities and a
preliminary offering memorandum that is currently expected to be furnished to investors in the
private placement.
Glossary of Certain Defined Terms
CAISO California Independent System Operator
GAAP United States generally accepted accounting principles
ISONE Independent System Operator-New England
MISO Midwest Independent Transmission System Operator
MW Megawatt
NYISO New York Independent System Operator
PJM PJM Interconnection, LLC
SECUnited States Securities and Exchange Commission
In these excerpts, unless the context otherwise requires, (i) we, us, our and the combined
company refer collectively to GenOn Energy, Inc. and its subsidiaries (including RRI and Mirant
and its subsidiaries) after the completion of the transactions, including the merger, (ii) RRI
refers to RRI Energy, Inc. and its subsidiaries and (iii) Mirant refers to Mirant Corporation and
its subsidiaries.
Summary unaudited pro forma condensed combined consolidated financial data
Under GAAP, Mirant will be treated as the acquirer for accounting purposes and the merger will be
accounted for under the acquisition method of accounting as a purchase by Mirant of RRI.
The following table sets forth summary unaudited pro forma condensed combined consolidated
financial data of Mirant. The pro forma information has been derived from, and should be read in
conjunction with, the Unaudited pro forma condensed combined consolidated financial statements
and related notes, which are included in the Form S-4 filed by RRI with the SEC on May 28, 2010, as
amended on July 6, 2010 and August 12, 2010 and as may be amended from time to time, and give pro
forma effect to the transactions.
The following summary unaudited pro forma condensed combined consolidated statements of operations
data of Mirant for the six months ended June 30, 2009 and 2010, the year ended December 31, 2009
and for the twelve months ended June 30, 2010, have been prepared to give effect to the
transactions as if the transactions had been completed on January 1, 2009. The unaudited pro forma
condensed combined consolidated balance sheet data at June 30, 2010, of Mirant has been prepared to
give effect to the transactions as if the transactions had been completed on June 30, 2010. The
pro forma financial information presented herein for the twelve months, or LTM, period ended June
30, 2010 has been obtained by subtracting the pro forma data for the six months ended June 30, 2009
from the pro forma data for the year ended December 31, 2009 and then adding the pro forma data for
the six months ended June 30, 2010. The merger will be accounted for as a reverse acquisition of
RRI by Mirant under the acquisition method of accounting of GAAP.
The pro forma adjustments related to the transactions are preliminary and based upon information
obtained to date and assumptions that we think are reasonable. The actual adjustments will be made
as of the closing date of the transactions and may differ from those reflected in the summary
unaudited pro forma condensed combined consolidated financial data presented below. Such
differences may be material.
The summary unaudited pro forma condensed combined consolidated financial information is provided
for illustrative purposes only and does not purport to represent what the actual consolidated
results of operations or the consolidated financial position of Mirant would have been had the
transactions occurred on the dates assumed, nor are they necessarily indicative of future
consolidated results of operations or consolidated financial position. Future results may vary
significantly from the results reflected because of various factors, including those discussed in
the section entitled Risk factors.
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Pro forma year |
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Pro forma |
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Pro forma |
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Pro forma |
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ended |
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six months |
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six months |
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twelve months |
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December 31, |
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ended |
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ended |
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ended June 30, |
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(Dollars in millions) |
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2009 |
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June 30, 2009 |
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June 30, 2010 |
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2010 |
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Statements of operations data: |
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Operating revenues |
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$ |
4,111 |
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$ |
2,218 |
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$ |
2,117 |
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$ |
4,010 |
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Gross margin (excluding depreciation and
amortization) |
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2,290 |
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1,199 |
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1,122 |
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2,213 |
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Depreciation and amortization |
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(330 |
) |
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(163 |
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(199 |
) |
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(366 |
) |
Total operating expenses |
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(1,952 |
) |
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(761 |
) |
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(1,148 |
) |
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(2,339 |
) |
Operating income (loss) |
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338 |
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438 |
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(26 |
) |
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(126 |
) |
Income (loss) from continuing operations |
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(42 |
) |
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253 |
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(233 |
) |
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(528 |
) |
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Balance sheet data (at period end): |
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Cash and cash equivalents(a) |
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$ |
2,489 |
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Working capital |
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2,554 |
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Total assets |
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14,490 |
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Total debt(b) |
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4,568 |
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Total net debt(c) |
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2,079 |
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Total stockholders equity |
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6,422 |
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Other financial data: |
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Capital expenditures |
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$ |
(866 |
) |
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$ |
(493 |
) |
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$ |
(210 |
) |
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$ |
(583 |
) |
EBITDA(d) |
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661 |
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600 |
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174 |
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235 |
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Adjusted EBITDA(d) |
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931 |
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350 |
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335 |
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916 |
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Cash paid for interest(e) |
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268 |
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129 |
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137 |
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276 |
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Ratio of earnings to fixed charges(f) |
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1.78 |
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Ratio of Adjusted EBITDA to cash paid for
interest |
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3.47 |
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2.71 |
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2.45 |
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3.32 |
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Ratio of total net debt to Adjusted EBITDA |
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n/a |
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n/a |
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n/a |
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2.27 |
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(a) |
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Includes $75 million of cash to be paid for merger-related expenses. |
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(b) |
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Includes fair value adjustment of $38 million. |
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(c) |
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Calculated as total debt less cash and cash equivalents. |
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(d) |
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EBITDA is defined as net income before interest, taxes, depreciation and amortization. Pro
forma combined Adjusted EBITDA is calculated by adjusting EBITDA with the adjustments
identified in the reconciliation table below. Adjusted EBITDA is a measure commonly used in
the combined companys industry. Management of the combined company views Adjusted EBITDA as
an operating performance measure that provides investors and analysts with a measure of
operating results unaffected by differences in capital structures, capital investment cycles
and ages of related assets among otherwise comparable companies. In addition, management of
the combined company thinks that Adjusted EBITDA eliminates the volatility created by
significant shifts in the value of derivative financial instruments and inventories between
periods. |
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(e) |
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See footnote 5 of Unaudited pro forma condensed combined consolidated financial statements
and related notes, which are included in the Form S-4 filed by RRI with the SEC on May 28,
2010, as amended on July 6, 2010 and August 12, 2010 and as may be amended from time to time. |
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(f) |
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For 2009, for the six months ended June 30, 2010 and for the twelve months ended June 30,
2010, pro forma combined earnings were insufficient to cover fixed charges by $155 million,
$256 million and $620 million, respectively. |
Pro forma combined Adjusted EBITDA is reconciled to income (loss) from continuing operations,
the most directly comparable GAAP financial measure, as follows:
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Pro forma |
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Pro forma |
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Pro forma |
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Pro forma |
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year ended |
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six months |
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six months |
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twelve |
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December 31, |
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ended |
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ended |
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months ended |
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(Dollars in millions) |
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2009 |
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June 30, 2009 |
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June 30, 2010 |
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June 30, 2010 |
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Income (loss) from continuing operations |
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$ |
(42 |
) |
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$ |
253 |
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$ |
(233 |
) |
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$ |
(528 |
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Interest expense, net |
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366 |
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176 |
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207 |
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397 |
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Provision for income taxes |
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7 |
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8 |
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1 |
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Depreciation and amortization |
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330 |
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163 |
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199 |
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366 |
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EBITDA |
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661 |
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600 |
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174 |
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235 |
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Unrealized (gains) losses |
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(69 |
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(203 |
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(73 |
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61 |
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Western states litigation and similar settlements |
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17 |
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17 |
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Merger-related costs |
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19 |
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19 |
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Severance and bonus plan for dispositions |
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22 |
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18 |
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2 |
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6 |
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Impairment charges |
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432 |
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248 |
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680 |
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Debt extinguishments (gains) losses |
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8 |
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(1 |
) |
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9 |
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Bankruptcy charges and legal contingencies |
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(62 |
) |
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(62 |
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1 |
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1 |
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Lower of cost or market inventory adjustments,
net |
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(37 |
) |
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(1 |
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(11 |
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(47 |
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Postretirement benefit curtailment gain |
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(3 |
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(37 |
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(40 |
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Lovett shut down costs |
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5 |
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5 |
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Fair value adjustments for various contracts and
other assets and liabilities |
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5 |
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5 |
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(4 |
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(4 |
) |
Pension and postretirement benefit amounts
previously recognized in accumulated other
comprehensive loss |
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(9 |
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(3 |
) |
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(1 |
) |
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(7 |
) |
Cash emission costs |
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(23 |
) |
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(6 |
) |
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(17 |
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Other |
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1 |
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3 |
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(2 |
) |
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Adjusted EBITDA |
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$ |
931 |
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$ |
350 |
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$ |
335 |
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$ |
916 |
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Business of Combined Company
Generating facilities. With over 24,600 MW of electric generating capacity, we will
operate across various fuel and technology types, operating characteristics and regional power
markets. At June 30, 2010, our generating capacity would have been 50% in PJM, 23% in CAISO, 10%
in the Southeast, 7% in MISO and 10% in NYISO and ISONE. The net generating capacity of
these facilities would have consisted of approximately 34% baseload, 44% intermediate and 22%
peaking capacity. The charts below illustrate the composition and diversity of our portfolio by
geography and fuel type:
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(1) |
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Approximately 1,300 MW of our generating capacity will move from MISO to PJM in
June 2011. |
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(2) |
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Pro forma capacity by geography and pro forma capacity by fuel are calculated as of June 30,
2010. Pro forma generation is calculated based on RRIs and Mirants reported results for the year
ended December 31, 2009. |
Cautionary Language Regarding Forward-Looking Statements
Some of the statements included herein involve forward-looking
information. These statements may include statements for the period after completion of the
merger. These forward-looking statements relate to outlooks or expectations for earnings,
revenues, expenses, asset quality or other future financial or business performance, strategies or
expectations, or the effect of legal, regulatory or supervisory matters on business, results of
operations or financial condition, and include, among others:
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statements relating to the benefits of the merger, including anticipated synergies and cost
savings estimated to result from the merger; |
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statements relating to future business prospects, revenue, income, liquidity and financial
condition; and |
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statements preceded by, followed by or that include the words estimate, plan,
project, forecast, intend, expect, anticipate, believe, think, view, seek,
target or similar expressions. |
Forward-looking statements reflect managements judgment based on currently available information
and involve a number of factors, risks and uncertainties that could cause actual results to differ.
With respect to these forward-looking statements, each of RRI management and Mirant management has
made assumptions regarding, among other things, future demand and market prices for electricity,
capacity, fuel and emission allowances, operating, general and administrative costs, financial and
economic market conditions and legislative, regulatory and/or market developments. The future and
assumptions about the future cannot be ensured. Actual results may differ materially from those in
the forward-looking statements. Some factors, risks and uncertainties that could cause actual
results to differ include:
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the ability to obtain governmental approvals of the merger, or acceptable debt financing,
on the proposed terms and time schedule; |
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the risk that the businesses will not be integrated successfully; |
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expected cost savings from the merger may not be fully realized within the expected time
frames or at all; |
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revenues following the merger may be lower than expected; |
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changes in political or other factors such as monetary policy, legal and regulatory changes
or other external factors over which the companies have no control; |
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changes in general economic and market conditions, including demand and market prices for
electricity, capacity, fuel and emission allowances; and |
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those set forth in RRI Energys and Mirants most recent Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q. |
You are cautioned not to place undue reliance on any forward-looking statements, which speak only
as of the date of the particular statement. Except as required by law, neither RRI nor Mirant
undertakes any obligation to publicly update or release any revisions to these forward-looking
statements to reflect any events or circumstances after the date that they were made or to reflect
the occurrence of unanticipated events.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. In connection with the
proposed merger between RRI Energy and Mirant, on May 28, 2010, RRI Energy filed with the SEC a
Registration Statement on Form S-4 that includes a preliminary joint proxy statement of RRI Energy
and Mirant and that also constitutes a preliminary prospectus of RRI Energy. On July 6, 2010,
August 12, 2010 and September 8, 2010, RRI Energy amended these materials. These materials are not
yet final and will be further amended. RRI Energy and Mirant will distribute the final joint proxy
statement/prospectus to their respective shareholders. RRI Energy and Mirant urge investors and
shareholders to read the registration statement, and any other relevant documents filed with the
SEC, including the preliminary joint proxy statement/prospectus that is a part of the registration
statement, and the definitive joint proxy statement/prospectus, when available, because they
contain or will contain important information. You may obtain copies of all documents filed with
the SEC regarding this transaction, free of charge, at the SECs website (www.sec.gov). You may
also obtain these documents, free of charge, from RRI Energys website (www.rrienergy.com) under
the tab Investor Relations and then under the heading Company Filings. You may also obtain
these documents, free of charge, from Mirants website (www.mirant.com) under the tab Investor
Relations and then under the heading SEC Filings.
Participants in the Merger Solicitation
RRI Energy, Mirant, and their respective directors, executive officers and certain other members of
management and employees may be soliciting proxies from RRI Energy and Mirant shareholders in favor
of the merger and related matters. Information regarding the persons who may, under the rules of
the SEC, be deemed participants in the solicitation of RRI Energy and Mirant shareholders in
connection with the proposed merger is contained in the preliminary joint proxy
statement/prospectus and will be contained in the definitive joint proxy statement/prospectus when
it becomes available. You can find information about RRI Energys executive officers and directors
in its definitive proxy statement filed with the SEC on April 1, 2010. You can find information
about Mirants executive officers and directors in its definitive proxy statement filed with the
SEC on March 26, 2010 and supplemented on April 28, 2010. Additional information about RRI Energys
executive officers and directors and Mirants executive officers and directors can be found in the
above-referenced Registration Statement on Form S-4. You can obtain free copies of these documents
from RRI Energy and Mirant as described above.