SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 11, 2003
RELIANT RESOURCES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-16455 76-0655566
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1111 LOUISIANA STREET
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 497-3000
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In this Form 8-K, and in the Exhibit included as part of the Form 8-K, "Reliant
Resources" or "Reliant" refers to Reliant Resources, Inc., and "we," "us" and
"our" refer to Reliant Resources, Inc. and its subsidiaries, unless we specify
or the context indicates otherwise.
ITEM 5. OTHER EVENTS
NMA ANNOUNCEMENT OF SECOND PHASE REVIEW
On September 11, 2003, the Dutch competition authority (NMa) issued a press
release regarding the outcome of its first phase review of the proposed
acquisition of our European energy operations by n.v. Nuon (Nuon), a
Netherlands-based electricity distribution company.
In its press release, the NMa informed the parties that a second phase
investigation of the proposed acquisition would be required in light of the
possibility of a negative impact on competition in the Dutch electricity market
caused by increased concentration in the electricity production sector following
the acquisition.
The NMa noted that Nuon had submitted proposals intended to address the NMa's
concerns and that, as part of the second phase review, the NMa would examine
these proposals in detail. The NMa further noted that, if the proposals appear
to be effective, the duration of the second phase could be shortened.
On September 16, 2003, the parties submitted to the NMa a "license application"
as required under the Dutch Competition Act to initiate the second phase review.
Under the Dutch regulatory system, the NMa has a maximum of 13 weeks in which to
reach a decision on the license application. Assuming no interruption in the
second phase review period, the deadline for the NMa to reach a decision on the
transaction is December 16, 2003.
During the second phase review, the NMa typically undertakes a more in-depth
investigation of the impact of the proposed acquisition. The NMa can request
additional information or ask additional questions of Reliant and Nuon. While
requests or questions are outstanding, the 13-week phase second period is
interrupted. In certain circumstances, the NMa also has the right to initiate
hearings regarding the proposed acquisition or solicit third-party comments
regarding any proposed condition to its approval of an acquisition.
Any final decision of the NMa would be subject to appeal through the Dutch
courts or, in cases of extraordinary reasons of public interest, by application
to the Minister of Economic Affairs of the Netherlands.
On September 25, 2003, the NMa released for publication a formal order outlining
the basis for the second phase review. For additional information, reference is
made to the unofficial English translation of the NMa's order filed as Exhibit
99.2 to the Form 8-K.
IMPACT OF SECOND PHASE REVIEW
Reliant and Nuon are engaged in ongoing discussions with the NMa to address the
concerns identified in its order. These discussions are centered on various
proposals submitted by Nuon to the NMa regarding possible post-closing
conditions to the NMa's approval of the acquisition. Under the Dutch Competition
Act, conditions to regulatory approval by the NMa may include structural
undertakings (e.g., a post-closing commitments by the purchaser to divest
specified assets) and/or behavioral undertakings (e.g., post-closing commitments
by the purchaser with respect to the operation of the acquired assets). Based on
our understanding of applicable regulatory precedents and the status of the
NMa's investigation, and subject to the outcome of the ongoing discussions among
the parties with the NMa, we continue to believe that NMa approval and closing
should occur prior to the end of 2003.
Under our Share Purchase Agreement and related agreements (Share Purchase
Agreement), Nuon has agreed to use its best efforts to obtain NMa regulatory
approval, including, where required to do so, to make or agree to any proposal
or action and comply with all requirements of the NMa, including divestitures or
any other commitment, undertakings or conditions, unless such would have a
material adverse effect (as defined) on Nuon or the companies comprising our
European energy operations.
As defined in our Share Purchase Agreement, a "material adverse effect"
generally means "any change, circumstance, event or effect that individually or
jointly is materially adverse to the business, assets, condition, or results of
operations of" Nuon, the companies comprising our European energy operations or
any of their affiliates and their respective businesses "that individually or
jointly result in an economic loss to" Nuon, the companies comprising our
European energy operations or any of their affiliates "equal to or in excess of
an aggregate amount of one hundred million Euros (EUR 100,000,000)."
If a material adverse effect were deemed to exist, Nuon would be entitled, but
not obligated, to consummate the transaction on the terms provided in the Share
Purchase Agreement. The Share Purchase Agreement contains a provision allowing
each of the parties to terminate the proposed acquisition if regulatory approval
is not received on or prior to November 28, 2003.
While we continue to believe that the sale of our European operations to Nuon
will be consummated, given the uncertainties inherent in any regulatory process,
we can provide no assurance (a) that the transaction will be approved by the
NMa, (b) that such approval can be obtained in a timely manner or (c) that the
terms and conditions under which such approval are granted will not be deemed by
Nuon to result in a material adverse effect (as defined under the Share Purchase
Agreement).
To address the possibility of an extended delay in the consummation of the
proposed sale of our European energy operations, or a possible termination of
our Share Purchase Agreement with Nuon due to failure to receive timely NMa
approval, we are preparing for discussions with our lenders regarding possible
extensions of the maturity dates of the credit facilities associated with
our European energy operations, as described below. For purposes of this Report
on Form 8-K, we have calculated United States dollar amounts assuming a foreign
currency exchange rate of 1.1288 U.S. dollars to the Euro, which was the
exchange rate in effect at September 19, 2003.
Reliant Energy Capital (Europe), Inc. (RECE), a subsidiary of Reliant Resources,
is a borrower under a Euro 600 million (approximately $677 million) term loan
facility (RECE Facility) originally entered into in connection with the
acquisition of our European energy operations. Under its terms, the RECE
Facility will mature on the earlier of (a) completion of the sale to Nuon or (b)
December 31, 2003.
Reliant Energy Power Generation Benelux B.V. (REPGB), the principal operating
subsidiary of our European energy operations, is a borrower under two credit
facilities: (a) a Euro 150 million (approximately $169 million) revolving credit
facility (REPGB Revolver) and (b) a letter of credit facility for $400 million
(REPGB Letter of Credit Facility). The REPGB Revolver will mature on December
31, 2003, and the REPGB Letter of Credit Facility will mature on January 5,
2004.
For additional information regarding the terms and conditions of these credit
facilities (all of which are non-recourse to Reliant Resources), as well as
information regarding the sale transaction, reference is made to Note 18 to our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2003. As in the
case of any financing, there can be no assurance that efforts to extend the
maturity dates will be successful or that we can extend the facilities under
terms commercially acceptable to us. For example, as a condition to any
extension of the maturity dates of these facilities, it is possible that the
lenders may require different terms and conditions, including a possible
increase in interest rates or fees.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
When we make statements containing projections about our revenues, income,
earnings and other financial items, our plans and objectives for the future,
future economic performance, transactions for the sale of parts of our
operations and financings related thereto, when we make statements containing
any other projections or estimates about our assumptions relating to these types
of statements, we are making "forward-looking statements." These statements
usually relate to future events and anticipated revenues, earnings, business
strategies, competitive position or other aspects of our operations or operating
results. In many cases you can identify forward-looking statements by
terminology such as "anticipate," "estimate," "believe," "continue," "could,"
"intend," "may," "plan," "potential," "predict," "should," "will," "expect,"
"objective," "projection," "forecast," "goal," "guidance," "outlook" and other
similar words. However, the absence of these words does not mean that the
statements are not forward-looking. Although we believe that the expectations
and the underlying assumptions reflected in our forward-looking statements are
reasonable, there can be no assurance that these expectations will prove to be
correct. Forward-looking statements are not guarantees of future performance or
events. Such statements involve a number of risks and uncertainties, and actual
results may differ materially from the results discussed in the forward-looking
statements.
In addition to the matters described in this report and the exhibits attached
hereto, the following are some of the factors that could cause actual results to
differ materially from those expressed or implied in our forward-looking
statements:
o Changes in laws and regulations, including deregulation, re-regulation
and restructuring of the electric utility industry, changes in or
application of environmental and other laws and regulations to which
we are subject, and changes in or application of laws or regulations
applicable to other aspects of our business, such as hedging
activities;
o The outcome of pending lawsuits, governmental proceedings and
investigations;
o The effects of competition, including the extent and timing of the
entry of additional competitors in our markets;
o Liquidity concerns in our markets;
o Our pursuit of potential business strategies;
o The timing and extent of changes in commodity prices and interest
rates;
o The availability of adequate supplies of fuel, water, and associated
transportation necessary to operate our portfolio of generation
assets;
o Weather variations and other natural phenomena, which can affect the
demand for power from or our ability to produce power at our
generating facilities;
o Financial market conditions and our access to capital, including
availability of funds in the capital markets for merchant generation
companies;
o The creditworthiness or bankruptcy or other financial distress of our
counterparties;
o Actions by rating agencies with respect to us or our competitors;
o Acts of terrorism or war;
o The availability and price of insurance;
o Political, legal, regulatory and economic conditions and developments;
o The successful operation of deregulating power markets; the
reliability of the systems, procedures and other infrastructure
necessary to operate our retail electric business, including the
systems owned and operated by the independent system operator in
ERCOT;
o The resolution of the refusal by certain California market
participants to pay our receivables balances and the resolution of the
refund methodologies; and
o The outcome of regulatory approval processes relating to the pending
sale of our European energy operations (including the impact of these
processes under the terms and conditions of the Share Purchase
Agreement relating to the disposition of these operations) and the
consequences of a significant delay in the consummation of, or the
termination of, the Share Purchase Agreement relating to these
operations.
Each forward-looking statement speaks only as of the date of the particular
statement and we undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1 Unofficial English translation of press release of NMa
dated September 11, 2003
99.2 Unofficial English translation of decision released
September 25, 2003, of the director-general of NMa
within the meaning of article 37, first paragraph, of
the Dutch Competition Act.
99.3 Share Purchase Agreement, dated as of February 28, 2003,
among Reliant Energy Europe Inc., Reliant Energy
Wholesale (Europe) Holdings B. V., n.v. Nuon and Reliant
Resources, Inc.
99.4 Results of Submission of Matters to a Vote of Security
Holders at Annual Meeting on June.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RELIANT RESOURCES, INC.
(Registrant)
Date: September 25, 2003 By: /s/ Thomas C. Livengood
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Thomas C. Livengood
Vice President and
Controller
EXHIBIT INDEX
Exhibit
Number Exhibit Description
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99.1 Unofficial English translation of press release of NMa dated
September 11, 2003
99.2 Unofficial English translation of decision released on September
25, 2003, of the director-general of the NMa within the meaning of
article 37, first paragraph, of the Dutch Competition Act.
99.3 Share Purchase Agreement, dated as of February 28, 2003, among
Reliant Energy Europe Inc., Reliant Energy Wholesale (Europe)
Holdings B. V., n.v. Nuon and Reliant Resources, Inc.
99.4 Results of Submission of Matters to a Vote of Security Holders for
the Quarterly Period.