Reliant shares plunge on commodity price worries

NEW YORK (AP) — Shares of Reliant Energy Inc. on Thursday plunged after an analyst cut his 2009 earnings estimate to reflect the company's sale of its Texas retail business to NRG Energy Inc., and expressed concern that depressed commodity prices and economic weakness will hurt the energy provider.

Reliant shares slid to $2.24 per share, a new 52-week low and its lowest point since 2002. By midday the shares had dropped 38 cents, or 14 percent, to $2.38.

On Monday Houston-based Reliant said it agreed to sell its Texas retail business for $287.5 million in cash plus working capital to merchant power generator NRG Energy, and plans to use the proceeds to reduce outstanding debt. The deal is expected to close in the second quarter and will resolve litigation regarding the company's credit arrangements with Merrill Lynch, Reliant said. In December Merrill Lynch sued Reliant for terminating a $300 million credit agreement.

BMO Capital Markets analyst Michael Worms slashed his estimate for 2009 earnings before interest, taxes, depreciation and amortization to $183 million from $685 million, an estimate that excludes the retail supply segment and incorporates lower commodity prices.