UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------------
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): December 5, 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.)
1000 MAIN STREET
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 497-3000
------------------------------
In this Form 8-K, and in the Exhibit included as part of the Form 8-K, "Reliant
Resources" 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.
Texas Genco Option
On December 5, 2003, we announced that it is unlikely that we will exercise our
option to purchase CenterPoint Energy, Inc.'s 81% percent ownership interest in
Texas Genco Holdings, Inc. The option is exercisable between January 10, 2004
and January 24, 2004.
Texas Genco, which owns approximately 13,900 MW of aggregate net generation
capacity in Texas, produces approximately 20% of the total generation capacity
of the Electric Reliability Council of Texas (ERCOT).
Supply Arrangements
As of December 5, 2003, we have purchased generation capacity from Texas Genco
that averages 5,176 megawatts (MW) per month in 2004 and 923 MW per month in
2005. Based on current market conditions and current load forecasts, we estimate
that these capacity entitlements represent 48% of the current capacity
requirements of our Texas retail energy business in 2004. In total, we have
contracted for approximately two-thirds of our capacity requirements for 2004
and a significant portion of our estimated 2005 requirements, in part by
purchasing entitlements to generation capacity from Texas Genco.
In the future, we expect to continue to contract for a significant portion of
the supply requirements of our Texas retail energy business, but over time we
are likely to supplement our market-based purchases with the acquisition of
individual generation assets.
Unless otherwise extended, Texas Genco's obligation to sell 85% of its
generation capacity in auctions and the master purchase agreement governing
purchases of capacity and/or energy from Texas Genco will terminate on January
24, 2004, the expiration date of the Texas Genco option. The termination of
these contractual arrangements will have no impact on existing purchase
commitments with Texas Genco entered into prior to that date.
The master power purchase agreement is secured by a lien against our rights in
accounts receivable and related assets of certain of our subsidiaries. The
master power purchase agreement does not require us to post cash collateral or
letters of credit to secure our obligations so long as Texas Genco's credit
exposure to us under the contract does not exceed $250 million from May 1 to
August 31 and $200 million from September 1 through April 30. For additional
information on our contractual agreements with Texas Genco, see note 4 to the
interim financial statements in our Form 10-Q for the nine months ended
September 30, 2003.
Impact on Escrow Account in Credit and Debt Agreements
Pursuant to the terms of our credit and debt agreements, we have established an
escrow account to repay indebtedness under our credit facility and for general
corporate purposes or for possible use in the acquisition of CenterPoint's
holdings of common stock of Texas Genco.
After giving effect to the receipt of net cash proceeds expected to be received
from the sale of our European energy segment, we expect that the total amount of
cash on deposit in the escrow account will be approximately $917 million.
If as expected, we do not exercise the Texas Genco option, our credit and debt
agreements entitle us to maintain the funds in the restricted escrow account for
the possible subsequent purchase of CenterPoint's holdings of common stock of
Texas Genco (at a price not to exceed the option price) until the earlier of
September 15, 2004 or the date that CenterPoint sells more than 20% of the
outstanding common stock of Texas Genco to someone other than us.
Upon the occurrence of the earlier of those events, we would be required under
the terms of our March 2003 credit facilities to apply the funds in the escrow
account to collateralize the $300 million senior priority loan commitment and to
prepay term indebtedness under our March 2003 credit facilities. Once the senior
priority commitment has terminated, we would be permitted to use 50% of the
funds from our offering of convertible debt securities for general corporate
purposes.
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; and
o The resolution of the refusal by certain California market participants
to pay our receivables balances and the resolution of the refund
methodologies.
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 Press Release issued by Reliant Resources, Inc. dated
December 5, 2003.
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: December 9, 2003 By: /s/ THOMAS C. LIVENGOOD
--------------------------------------
Thomas C. Livengood
Vice President and
Controller
EXHIBIT INDEX
Exhibit
Number Exhibit Description
------- -------------------
99.1 Press Release issued by Reliant Resources, Inc. dated December 5, 2003.