GenOn Energy's CEO Presents At NRG And GenOn To Merge Conference (Transcript)

GenOn Energy, Inc. (GEN)

NRG and GenOn to Merge Conference Call

July 23, 2012 9:00 am ET

Executives

Chad Plotkin – Investor Relations, NRG Energy, Inc.

David Crane – President and Chief Executive Officer, NRG Energy, Inc.

Edward R. Muller – Chairman and Chief Executive Officer, GenOn Energy, Inc.

Anne M. Cleary – Senior Vice President, Asset Management, GenOn Energy, Inc.

Kirkland Andrews – Executive Vice President and Chief Financial Officer, NRG Energy, Inc.

Analysts

Greg Gordon – ISI Group

Neil Mehta – Goldman Sachs Group Inc.

Angie Storozynski – Macquarie Research

Steve Fleishman – Bank of America/Merrill Lynch

Julien Dumoulin-Smith – UBS

Paul Patterson – Glenrock Associates LLC

Michael J. Lapides – Goldman Sachs & Co.

Keith T. Stanley – Deutsche Bank Securities, Inc.

Ali Agha – Suntrust Robinson Humphrey

James L. Dobson – Wunderlich Securities, Inc.

Brian Russo – Ladenburg Thalmann & Company

Presentation

David Crane

I’m sorry that there are not enough chairs, it’s hard to know how (inaudible) to show up on, morning on short notice in the middle of summer. But we appreciate everyone taking the time to join us today, because we’re very excited about today. We really think this is – we’re here today to talk about the transaction that we announced yesterday, which we really think is a seminal transaction in the history of our industry, a very significant milestone in that. We think between GenOn and NRG, we’ve created the leading competitive energy provider in the industry with the largest and best portfolio multi-fuel across the merit order, exceptionally strong asset portfolios in the three premier regional competitive markets in the United States and for us, it creates a foundation of conventional generation, which is going to allow us to grow the business in a way that is without equal in the industry.

So, we're very excited about this and I hope that – we've got a presentation for you – for the people listening via phone, I assume that this is available online as well. We are going to go through it fairly quickly because we want to be able to answer everyone’s questions. And certainly if there are any concerns or comments you want to make, we will look forward to hearing that. So (inaudible) if you want to – we have a Safe Harbor statement here or an (inaudible) either way, I'm not going to read it, but I may assume that everyone is familiar with the contents of it.

Let's go to the – so it's time for me to introduce my current colleagues and our future colleagues first to all. Obviously the man that needs no introduction, he is my partner in this transaction, Ed Muller, the chairmen and CEO of GenOn. Next to Ed, Anne Cleary – if and I'm sorry if I get people [tails wrong] National Asset Manager for GenOn who will be joining the combined company in a newly created role and very important role of the Chief Integration Officer, where she will be singularly responsible for achieving the synergies which are such a valuable driver at this transaction for both companies sets of shareholders.

Kirk Andrews, Chief Financial Officer of NRG will also be presenting today about the transaction. Bill Holden, next to him, the Chief Financial Officer of GenOn, who is available to answer any questions that you have; likewise next to him Mauricio Gutierrez, the Chief Operating Officer of NRG.

There are other Senior Executives from GenOn and from NRG in the audience and I’d like to just – both acknowledge them for the work they’ve done, but also to point them out to you in case you have any questions for them. First of all, Lee Davis, who will run the East region, we claim that Lee Davis is actually an NRG Executive because he (inaudible) former Mirant Executive, so he comes to this transaction from both sides of the party.

Next to him is Patti Helfer who would be the Chief Administrative Officer of the company. I’m going to skip over to Murphy, because he performs the secretive role of the M&A person for NRG and we never acknowledge for his presence and he – Gary Garcia is the Treasurer of GenOn; and whereas Dennis and Chad, Investor Relations for GenOn and NRG respectively.

So with that, moving on to the next page, just the highlights and I think everyone is familiar with these highlights. As I mentioned, if you put these two companies together and we believe that there is $300 million in total of free cash flow benefits that we can achieve and we feel we can achieve them with 2013. So setting up with the timing of this transaction, it makes 2014 the first full-year of this transaction and certainly the goal of us in this transition under Anne’s leadership is, we want to get all the cost out of the system in the course of 2013. So on January 1, 2014, we can realize the full amount of this $300 million of benefits. I think everyone recognize that that size of synergy benefits for two companies of this size is truly extraordinary and has a great value driver for both sets of shareholders.

The transaction not surprisingly in light of those comments is significantly accretive in the first full year of operations and you put the projected earnings power of GenOn with the projected earning power of NRG and then you add this on top and you see where we expect 2013 and 2014 to be from a point of view of adjusted EBITDA and free cash flow, and they’re very powerful numbers. And this is even in the low gas price environment that we find ourselves in today.

So moving to the next slide, these are the terms of the transaction. The transaction is actually a very straightforward transaction, it’s very simple to understand, stock for stock, fixed exchange ratio 0.1216 NRG shares per GenOn shares, which represents a 20.6% premium to the close of GenOn at the close of business on Friday. the combined company will be 71% owned by NRG shareholders and 29% by GenOn Board and Management responsibles will be shared as listed there sort of in percentages they are roughly commensurate with the ownership.

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