NRG Energy Gets Board Approval For Transformation Plan Targets, Cuts Adj. EBITDA

(RTTNews) - NRG Energy Inc. (NRG) Wednesday said it received unanimous approval for its transformation plan from its board. Further the company said it maintains its guidance range for fiscal 2017 to both adjusted EBITDA and FCFbG investments. Adjusted EBITDA is now reduced to a range of $2.565 to $2.765 billion, while the prior guidance was $2.700 to $2.900 billion.

The company noted that the transformation plan would help strengthen earnings and cost competitiveness, lower risk and volatility, and create significant shareholder value.

The three-part, three-year plan is comprised of targets in the areas of operational and cost excellence, portfolio optimization, and capital structure and allocation enhancement.

Through operations and cost excellence, NRG plans to achieve $1.065 billion total annual cost and margin enhancement, including $855 million recurring, annual FCFbG accretive cost. Around 70 percent is expected to be achieved by year-end 2018. The total cost reduction also targets $210 million in permanent SG&A reduction associated with asset sales and divestments.

Portfolio optimization targets $2.5-$4.0 billion of asset sale net cash proceeds, including divestitures of 6 gigawatts of conventional generation and businesses and 50-100 percent of NRG's interest in NRG Yield and its leading renewables platform.

NRG is well underway in a process to explore strategic alternatives for its interest in NRG Yield and the renewables platform. Beyond creating value, NRG said it seeks to simplify its corporate and business structure while preserving the ability to provide comprehensive energy solutions to customers.

Capital structure and allocation enhancements will be a clearly prioritized capital allocation strategy that targets a reduction in consolidated net debt from approximately $18 billion to approximately $6 billion of consolidated net debt.