Attached files
| file | filename |
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| 8-K - 8-K - GenOn Energy, Inc. | a18-16219_18k.htm |
GENON ENERGY, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated Financial Statements of GenOn Energy, Inc. and its consolidated subsidiaries (the “Registrant”) are presented for informational purposes only to provide an understanding of the Registrant’s historical financial results as adjusted for the sale of the Canal Units 1 and 2 electricity generating facilities (“Canal”) to Stonepeak Kestrel Holdings LLC (the “Buyer”) that was completed on June 29, 2018. The Unaudited Pro Forma Condensed Consolidated Financial Statements of the Registrant are also adjusted for the sale of the Hunterstown generation station and certain third party gas interconnection contracts (collectively, Hunterstown) to Kestrel Acquisition, LLC that occurred on June 1, 2018. The Unaudited Pro Forma Condensed Consolidated Financial Statements presented in this report are for illustrative purposes only, and are not necessarily indicative of the results of operations that would have been achieved had the pro forma events taken place on the dates indicated, or the Registrant’s future consolidated results of operations.
The Unaudited Pro Forma Condensed Consolidated Balance Sheets as of March 31, 2018 give pro forma effect to the sales of Canal and Hunterstown as if they had occurred on March 31, 2018. The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and for the year ended December 31, 2017 give effect to the sales of Canal and Hunterstown as if they had occurred on January 1, 2017, the beginning of the earliest period presented.
The pro forma adjustments are based on currently available information, estimates and assumptions that the Registrant believes are reasonable in order to reflect, on a pro forma basis, the impact of the sales of Canal and Hunterstown on its historical financial information. Differences between these preliminary estimates and the final divestiture accounting may occur and these differences could have a material effect on the accompanying Unaudited Pro Forma Condensed Consolidated Financial Statements and the Registrant’s future financial position and results of operations.
The Unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with:
· the accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements; and
· the condensed consolidated financial statements of the Registrant for the three months ended March 31, 2018 and the notes relating thereto, included in the Registrant’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018, and the consolidated financial statements of the Registrant for the year ended December 31, 2017, and the notes relating thereto, included in the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017.
GENON ENERGY, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2018
|
(In millions) |
|
March 31, 2018 |
|
Hunterstown Pro |
|
Canal Pro Forma |
|
March 31, 2018 |
| ||||
|
|
|
|
|
|
|
|
|
|
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|
ASSETS |
|
|
|
|
|
|
|
|
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Current Assets |
|
|
|
|
|
|
|
|
| ||||
|
Cash and cash equivalents |
|
$ |
687 |
|
$ |
498 |
(b) |
$ |
334 |
(c) |
$ |
1,519 |
|
|
Restricted cash |
|
1 |
|
— |
|
— |
|
1 |
| ||||
|
Accounts receivable |
|
86 |
|
— |
|
— |
|
86 |
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|
Inventory |
|
259 |
|
— |
|
— |
|
259 |
| ||||
|
Derivative instruments |
|
22 |
|
— |
|
— |
|
22 |
| ||||
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Derivative instruments — affiliate |
|
1 |
|
— |
|
— |
|
1 |
| ||||
|
Cash collateral posted in support of energy risk management activities |
|
63 |
|
— |
|
— |
|
63 |
| ||||
|
Cash collateral posted in support of energy risk management activities — affiliate |
|
28 |
|
— |
|
— |
|
28 |
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Current assets held-for-sale |
|
29 |
|
(4 |
)(b) |
(25 |
)(d) |
— |
| ||||
|
Prepaid rent and other current assets |
|
148 |
|
— |
|
(15 |
)(c) |
133 |
| ||||
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Total current assets |
|
1,324 |
|
494 |
|
294 |
|
2,112 |
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Property, plant and equipment, net |
|
1,626 |
|
— |
|
— |
|
1,626 |
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Other Assets |
|
|
|
|
|
|
|
|
| ||||
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Intangible assets, net |
|
17 |
|
— |
|
— |
|
17 |
| ||||
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Derivative instruments |
|
4 |
|
— |
|
— |
|
4 |
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Long-term deposits |
|
130 |
|
— |
|
— |
|
130 |
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Prepaid rent — non-current |
|
324 |
|
— |
|
— |
|
324 |
| ||||
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Non-current assets held-for-sale |
|
559 |
|
(525 |
)(b) |
(34 |
)(d) |
— |
| ||||
|
Other non-current assets |
|
133 |
|
— |
|
— |
|
133 |
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|
Total other assets |
|
1,167 |
|
(525 |
) |
(34 |
) |
608 |
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|
Total Assets |
|
$ |
4,117 |
|
$ |
(31 |
) |
$ |
260 |
|
$ |
4,346 |
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY |
|
|
|
|
|
|
|
|
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Current Liabilities |
|
|
|
|
|
|
|
|
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Current portion of long-term debt and capital leases |
|
$ |
1 |
|
$ |
— |
|
$ |
— |
|
$ |
1 |
|
|
Current portion of long-term debt — affiliate |
|
125 |
|
— |
|
— |
|
125 |
| ||||
|
Accounts payable |
|
95 |
|
(8 |
)(b) |
— |
|
87 |
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|
Accounts payable — affiliate |
|
10 |
|
4 |
(b) |
11 |
(e) |
25 |
| ||||
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Derivative instruments |
|
16 |
|
— |
|
— |
|
16 |
| ||||
|
Derivative instruments — affiliate |
|
5 |
|
— |
|
— |
|
5 |
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Current liabilities held-for-sale |
|
6 |
|
(5 |
)(b) |
(1 |
)(d) |
— |
| ||||
|
Accrued expenses and other current liabilities |
|
104 |
|
— |
|
— |
|
104 |
| ||||
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Total current liabilities |
|
362 |
|
(9 |
) |
10 |
|
363 |
| ||||
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Liabilities Subject to Compromise |
|
2,479 |
|
— |
|
— |
|
2,479 |
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Other Liabilities |
|
|
|
|
|
|
|
|
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|
Long-term debt and capital leases |
|
39 |
|
— |
|
— |
|
39 |
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Derivative instruments — affiliate |
|
3 |
|
— |
|
— |
|
3 |
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|
Out-of-market contracts |
|
603 |
|
— |
|
— |
|
603 |
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Non-current liabilities held-for-sale |
|
166 |
|
(161 |
)(b) |
(5 |
)(d) |
— |
| ||||
|
Other non-current liabilities |
|
274 |
|
— |
|
— |
|
274 |
| ||||
|
Total non-current liabilities |
|
1,085 |
|
(161 |
) |
(5 |
) |
919 |
| ||||
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Total Liabilities |
|
3,926 |
|
(170 |
) |
5 |
|
3,761 |
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|
Commitments and Contingencies |
|
|
|
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|
|
|
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Total Stockholder’s Equity |
|
191 |
|
139 |
|
255 |
|
585 |
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|
Total Liabilities and Stockholder’s Equity |
|
$ |
4,117 |
|
$ |
(31 |
) |
$ |
260 |
|
$ |
4,346 |
|
GENON ENERGY, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2018
|
(In millions) |
|
Three Months Ended |
|
Hunterstown Pro |
|
Canal Pro Forma |
|
Three Months Ended |
| ||||
|
|
|
|
|
|
|
|
|
|
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|
Operating Revenues |
|
|
|
|
|
|
|
|
| ||||
|
Operating revenues |
|
$ |
573 |
|
$ |
(69 |
)(b) |
$ |
(49 |
)(d)(e) |
$ |
455 |
|
|
Total operating revenues |
|
573 |
|
(69 |
) |
(49 |
) |
455 |
| ||||
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
| ||||
|
Cost of operations |
|
246 |
|
3 |
(b) |
(18 |
)(d) |
231 |
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|
Cost of operations — affiliate |
|
90 |
|
(38 |
)(b) |
(1 |
)(d) |
51 |
| ||||
|
Depreciation and amortization |
|
37 |
|
(6 |
)(b) |
(2 |
)(d) |
29 |
| ||||
|
General and administrative |
|
12 |
|
— |
|
— |
|
12 |
| ||||
|
General and administrative — affiliate |
|
19 |
|
— |
|
— |
|
19 |
| ||||
|
Restructuring and transition-related costs |
|
23 |
|
— |
|
— |
|
23 |
| ||||
|
Total operating costs and expenses |
|
427 |
|
(41 |
) |
(21 |
) |
365 |
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|
Operating Income |
|
146 |
|
(28 |
) |
(28 |
) |
90 |
| ||||
|
Other Income/(Expense) |
|
|
|
|
|
|
|
|
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Other income, net |
|
6 |
|
— |
|
— |
|
6 |
| ||||
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Interest expense |
|
(3 |
) |
(1 |
)(b) |
— |
|
(4 |
) | ||||
|
Interest expense — affiliate |
|
(3 |
) |
— |
|
— |
|
(3 |
) | ||||
|
Total other expense |
|
— |
|
(1 |
) |
— |
|
(1 |
) | ||||
|
Income Before Reorganization Items and Income Taxes |
|
146 |
|
(29 |
) |
(28 |
) |
89 |
| ||||
|
Reorganization items |
|
(33 |
) |
— |
|
— |
|
(33 |
) | ||||
|
Income Before Income Taxes |
|
113 |
|
(29 |
) |
(28 |
) |
56 |
| ||||
|
Income tax |
|
— |
|
— |
|
— |
|
— |
| ||||
|
Net Income |
|
$ |
113 |
|
$ |
(29 |
) |
$ |
(28 |
) |
$ |
56 |
|
GENON ENERGY, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2017
|
(In millions) |
|
Year Ended |
|
Hunterstown Pro |
|
Canal Pro Forma |
|
Year Ended |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Operating Revenues |
|
|
|
|
|
|
|
|
| ||||
|
Operating revenues |
|
$ |
1,525 |
|
$ |
(192 |
)(b) |
$ |
(85 |
)(d)(e) |
$ |
1,248 |
|
|
Operating revenues — affiliate |
|
64 |
|
— |
|
— |
|
64 |
| ||||
|
Total operating revenues |
|
1,589 |
|
(192 |
) |
(85 |
) |
1,312 |
| ||||
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
| ||||
|
Cost of operations |
|
878 |
|
(13 |
)(b) |
(41 |
)(d) |
824 |
| ||||
|
Cost of operations — affiliate |
|
297 |
|
(86 |
)(b) |
(3 |
)(d) |
208 |
| ||||
|
Depreciation and amortization |
|
168 |
|
(25 |
)(b) |
(7 |
)(c) |
136 |
| ||||
|
Impairment losses |
|
274 |
|
— |
|
— |
|
274 |
| ||||
|
General and administrative |
|
37 |
|
— |
|
— |
|
37 |
| ||||
|
General and administrative — affiliate |
|
130 |
|
— |
|
— |
|
130 |
| ||||
|
Total operating costs and expenses |
|
1,784 |
|
(124 |
) |
(51 |
) |
1,609 |
| ||||
|
Operating (Loss)/Income |
|
(195 |
) |
(68 |
) |
(34 |
) |
(297 |
) | ||||
|
Other Income/(Expense) |
|
|
|
|
|
|
|
|
| ||||
|
Other income, net |
|
11 |
|
— |
|
— |
|
11 |
| ||||
|
Interest expense |
|
(86 |
) |
4 |
(b) |
— |
|
(82 |
) | ||||
|
Interest expense — affiliate |
|
(11 |
) |
— |
|
— |
|
(11 |
) | ||||
|
Other expense |
|
(18 |
) |
— |
|
— |
|
(18 |
) | ||||
|
Total other expense |
|
(104 |
) |
4 |
|
— |
|
(100 |
) | ||||
|
(Loss)/Income Before Reorganization Items and Income Taxes |
|
(299 |
) |
(64 |
) |
(34 |
) |
(397 |
) | ||||
|
Reorganization items, net |
|
11 |
|
— |
|
— |
|
11 |
| ||||
|
(Loss)/Income Before Income Taxes |
|
(288 |
) |
(64 |
) |
(34 |
) |
(386 |
) | ||||
|
Income tax expense |
|
7 |
|
— |
|
— |
|
7 |
| ||||
|
Net (Loss)/Income |
|
$ |
(295 |
) |
$ |
(64 |
) |
$ |
(34 |
) |
$ |
(393 |
) |
GENON ENERGY, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) Amounts represent historical financial information from the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 or from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017.
(b) Amounts represent the pro forma adjustments related to the sale of Hunterstown to Kestrel Acquisition, LLC that was completed on June 1, 2018. The pro forma adjustments were previously disclosed in the Form 8-K that was filed on June 4, 2018 in connection with the closing of the Hunterstown sale and include the closing purchase price of $498 million, but exclude fees paid related to the sale or amounts expected to be received for post-closing working capital adjustments.
(c) Amount represents the closing purchase price of $320.0 million. In addition, NRG Energy, Inc. (“NRG”) was obligated to reimburse the Registrant $13.5 million of the $15 million one-time payment that the Registrant made to NRG in December 2017 as compensation for a purchase option with respect to NRG’s Canal 3 power generation development project. The $15 million payment was previously recorded in prepaid rent and other current assets as of March 31, 2018 and is removed from the pro forma balance sheet. Pro forma adjustments for cash and cash equivalents do not include fees paid related to the sale or amounts expected to be received for post-closing working capital adjustments.
(d) Amounts represent the assets, liabilities and operating results associated with the disposition of Canal. Canal’s assets and liabilities were classified as held-for-sale on the Registrant’s consolidated balance sheets as of March 31, 2018.
(e) Adjustments relate to intercompany transactions and balances between the Registrant and Canal, which as a result of the deconsolidation would no longer be eliminated in consolidation. These adjustments primarily reflect certain accounts receivable — affiliate and accounts payable — affiliate balances between Canal and affiliates of the Registrant that will be assumed by the Buyer in connection with the Canal sale.