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Debt and Capital Leases | 12 Months Ended
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Dec. 31, 2018
Debt Disclosure [Abstract] |
Debt and Capital Leases | Debt and Capital Leases Long-term debt and capital leases consisted of the following:
(In millions, except rates) | December 31, 2018 |  | December 31, 2017 |  | December 31, 2018 interest rate %(a)
Recourse debt: |  |  |  |  |
Senior Notes, due 2022 | $ | — |  |  | $ | 992 |  |  | 6.250
Senior Notes, due 2024 | 733 |  |  | 733 |  |  | 6.250
Senior Notes, due 2026 | 1,000 |  |  | 1,000 |  |  | 7.250
Senior Notes, due 2027 | 1,230 |  |  | 1,250 |  |  | 6.625
Senior Notes, due 2028 | 821 |  |  | 870 |  |  | 5.750
Convertible Senior Notes, due 2048 | 575 |  |  | — |  |  | 2.750
Term loan facility, due 2023 | 1,698 |  |  | 1,872 |  |  | L+1.75
Tax-exempt bonds | 466 |  |  | 465 |  |  | 4.125 - 6.00
Subtotal recourse debt | 6,523 |  |  | 7,182 |  |  |
Non-recourse debt: |  |  |  |  |
Ivanpah, due 2033 and 2038(b) | — |  |  | 1,073 |  |  | 2.285 - 4.256
Agua Caliente, due 2037(c) | — |  |  | 818 |  |  | 2.395 - 3.633
Agua Caliente Borrower 1, due 2038 | 86 |  |  | 89 |  |  | 5.430
Midwest Generation, due 2019 | 48 |  |  | 152 |  |  | 4.390
Other (d) | 34 |  |  | 180 |  |  | various
Subtotal all non-recourse debt | 168 |  |  | 2,312 |  |  |
Subtotal long-term debt (including current maturities) | 6,691 |  |  | 9,494 |  |  |
Capital leases | 1 |  |  | 5 |  |  | various
Subtotal long-term debt and capital leases (including current maturities) | 6,692 |  |  | 9,499 |  |  |
Less current maturities | (72 | ) |  | (204 | ) |  |
Less debt issuance costs | (70 | ) |  | (103 | ) |  |
Discounts | (101 | ) |  | (12 | ) |  |
Total long-term debt and capital leases | $ | 6,449 |  |  | $ | 9,180 |  |  |
(a) As of December 31, 2018, L+ equals 1-month LIBOR plus 1.75% (b) The Company deconsolidated Ivanpah during the second quarter of 2018 (c) The Company deconsolidated Agua Caliente solar facility during the third quarter of 2018 (d) Guam was reclassified to held for sale during the fourth quarter of 2018 Debt includes the following discounts:
|  | As of December 31,
|  | 2018 |  | 2017
|  | (In millions)
Term loan facility, due 2023 |  | $ | (4 | ) |  | $ | (7 | )
Midwest Generation, due 2019 |  | (1 | ) |  | (5 | )
Convertible Senior Notes, due 2048 |  | (96 | ) |  | — |
Total discounts |  | $ | (101 | ) |  | $ | (12 | )
Consolidated Annual Maturities As of December 31, 2018, annual payments based on the maturities of NRG's debt and capital leases are expected to be as follows:
| (In millions)
2019 | $ | 74 |
2020 | 26 |
2021 | 27 |
2022 | 25 |
2023 | 1,635 |
Thereafter | 4,905 |
Total | $ | 6,692 |
Recourse Debt Issuance of 2048 Convertible Senior Notes During the second quarter of 2018, NRG issued $575 million in aggregate principal amount of 2.75% Convertible Senior Notes due 2048, or the Convertible Notes. The Convertible Notes are convertible, under certain circumstances, into the Company's common stock, cash or a combination thereof (at NRG's option) at an initial conversion price of $47.74 per common share, which is equivalent to an initial conversion rate of approximately 20.9479 shares of common stock per $1,000 principal amount of Convertible Notes. Interest on the Convertible Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2018. The Convertible Notes mature on June 1, 2048, unless earlier repurchased, redeemed or converted in accordance with their terms. The Convertible Notes are guaranteed by certain NRG subsidiaries. Prior to the close of business on the business day immediately preceding December 1, 2024, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter during specified periods as follows: •from December 1, 2024 until the close of business on the second scheduled trading day immediately before June 1, 2025; and •from December 1, 2047 until the close of business on the second scheduled trading day immediately before the maturity date. The Convertible Notes are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options. Under ASC 470-20, issuers of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, are required to separately account for the liability (debt) and equity (conversion option) components. The carrying amount of the liability component at issuance date of $472 million was calculated by estimating the fair value of similar liabilities without a conversion feature. The residual principal amount of the notes of $103 million was allocated to the equity component with offset to debt discount. The debt discount will be amortized to interest expense using the effective interest method over seven years which is determined to be the expected life of the Convertible Notes. The Company incurred approximately $12 million in transaction costs in connection with the issuance of the notes. These costs were allocated to the liability and equity components in proportion to the allocation of proceeds. Transaction costs of $10 million, allocated to the liability component, were recognized as deferred financing costs and are amortized over the seven years. Transaction costs of $2 million, allocated to the equity component, were recognized as a reduction of additional paid-in capital. Issuance of 2028 Senior Notes On December 7, 2017, NRG issued $870 million of aggregate principal amount at par of 5.75% senior unsecured notes due 2028. The 2028 Senior Notes are senior unsecured obligations of NRG and are guaranteed by certain of its subsidiaries. Interest is paid semi-annually beginning on July 15, 2018, until the maturity date of January 15, 2028. The proceeds from the issuance of the 2028 Senior Notes were utilized to redeem the Company's 6.625% Senior Notes due 2023. 2018 Senior Note Repurchases During the year ended December 31, 2018 the Company completed senior note repurchases, as detailed in the table below. In addition, during the year ended December 31, 2018, a $38 million loss on debt extinguishment was recorded for these repurchases, which included the write-off of previously deferred financing costs of $7 million.
| Principal Repurchased |  | Cash Paid (a) |  | Average Early Redemption Percentage
In millions, except percentages |  |  |  |  |
5.750% senior notes due 2028 | $ | 29 |  |  | $ | 30 |  |  | 99.24 | %
6.250% senior notes due 2022 | 14 |  |  | 15 |  |  | 103.25 | %
Total at June 30, 2018 | $ | 43 |  |  | $ | 45 |  |  |
6.250% senior notes due 2022 | 493 |  |  | 512 |  |  | 103.13 | %
5.750% senior notes due 2028 | 20 |  |  | 20 |  |  | 99.13 | %
6.625% senior notes due 2027 | 20 |  |  | 21 |  |  | 103.06 | %
Total at September 30, 2018 | $ | 576 |  |  | $ | 598 |  |  |
6.250% senior notes due 2022 | 485 |  |  | 508 |  |  | 103.13 | %
Total at December 31, 2018 | $ | 1,061 |  |  | $ | 1,106 |  |  |
(a) Includes accrued interest of $14 million 2017 Senior Note Redemptions During the year ended December 31, 2017, the Company redeemed $1.5 billion in aggregate principal of its Senior Notes for $1.5 billion. In connection with the redemptions, a $49 million loss on debt extinguishment was recorded, which included the write-off of previously deferred financing costs of $7 million.
| Principal Repurchased |  | Cash Paid (a) |  | Average Early Redemption Percentage
Amount in millions, except percentages |  |  |  |  |
7.625% senior notes due 2018 | $ | 398 |  |  | $ | 411 |  |  | 101.42 | %
7.875% senior notes due 2021 | 206 |  |  | 218 |  |  | 102.63 | %
6.625% senior notes due 2023 | 869 |  |  | 915 |  |  | 103.57 | %
Total | $ | 1,473 |  |  | $ | 1,544 |  |  |
(a) Includes accrued interest of $29 million Senior Notes Early Redemption As of December 31, 2018, NRG had the following outstanding issuances of senior notes with an early redemption feature, or Senior Notes: i.6.250% senior notes, issued April 21, 2014 and due November 1, 2024, or the 2024 Senior Notes; ii.7.250% senior notes, issued May 23, 2016 and due May 15, 2026, or the 2026 Senior Notes; iii.6.625% senior notes, issued August 2, 2016 and due January 15, 2027, or the 2027 Senior Notes; and iv.5.750% senior notes, issued December 7, 2017 and due January 15, 2028, or the 2028 Senior Notes. The Company periodically enters into supplemental indentures for the purpose of adding entities under the Senior Notes as guarantors. The indentures and the forms of notes provide, among other things, that the Senior Notes will be senior unsecured obligations of NRG. The indentures also provide for customary events of default, which include, among others: nonpayment of principal or interest; breach of other agreements in the indentures; defaults in failure to pay certain other indebtedness; the rendering of judgments to pay certain amounts of money against NRG and its subsidiaries; the failure of certain guarantees to be enforceable; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the Trustee or the Holders of at least 25% in principal amount of the then outstanding series of Senior Notes may declare all of the Senior Notes of such series to be due and payable immediately. The terms of the indentures, among other things, limit NRG's ability and certain of its subsidiaries' ability to return capital to stockholders, grant liens on assets to lenders and incur additional debt. Interest is payable semi-annually on the Senior Notes until their maturity dates. 2024 Senior Notes At any time prior to May 1, 2019, NRG may redeem up to 35% of the aggregate principal amount of the 2024 Senior Notes, at a redemption price equal to 100% of the principal amount, accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 103.125% of the note, plus interest payments due on the note from the date of redemption through May 1, 2019 computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50%. In addition, on or after May 1, 2019, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
May 1, 2019 to April 30, 2020 | 103.125 | %
May 1, 2020 to April 30, 2021 | 102.083 | %
May 1, 2021 to April 30, 2022 | 101.042 | %
May 1, 2022 and thereafter | 100.000 | %
2026 Senior Notes At any time prior to May 15, 2019, NRG may redeem up to 35% of the aggregate principal amount of the 2026 Senior Notes, at a redemption price equal to 107.25% of the principal amount of the notes redeemed, plus accrued and unpaid interest, with an amount equal to the net cash proceeds of certain equity offerings. At any time prior to May 15, 2021, NRG may redeem all or a part of the 2026 Senior Notes, at a redemption price equal to 100% of the principal amount, accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 103.625% of the note, plus interest payments due on the note from the date of redemption through May 15, 2021 computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50%. In addition, on or after May 15, 2021, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
May 15, 2021 to May 14, 2022 | 103.625 | %
May 15, 2022 to May 14, 2023 | 102.417 | %
May 15, 2023 to May 14, 2024 | 101.208 | %
May 15, 2024 and thereafter | 100.000 | %
2027 Senior Notes At any time prior to July 15, 2019, NRG may redeem up to 35% of the aggregate principal amount of the 2027 Senior Notes, at a redemption price equal to 106.625% of the principal amount of the notes redeemed, plus accrued and unpaid interest, with an amount equal to the net cash proceeds of certain equity offerings. At any time prior to July 15, 2021 NRG may redeem all or a part of the 2027 Senior Notes, at a redemption price equal to 100% of the principal amount, accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 103.313% of the note, plus interest payments due on the note from the date of redemption through July 15, 2021 computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50%. In addition, on or after July 15, 2021, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
July 15, 2021 to July14, 2022 | 103.313 | %
July 15, 2022 to July 14, 2023 | 102.208 | %
July 15, 2023 to July 14, 2024 | 101.104 | %
July 15, 2024 and thereafter | 100.000 | %
2028 Senior Notes At any time prior to January 15, 2021, NRG may redeem up to 35% of the aggregate principal amount of the 2028 Senior Notes, at a redemption price equal to 105.750% of the principal amount of the notes redeemed, plus accrued and unpaid interest, with an amount equal to the net cash proceeds of certain equity offerings. At any time prior to January 15, 2023 NRG may redeem all or a part of the 2028 Senior Notes, at a redemption price equal to 100% of the principal amount, accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 102.875% of the note, plus interest payments due on the note from the date of redemption through January 15, 2023 computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50%. In addition, on or after January 15, 2023, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
January 15, 2023 to January 14, 2024 | 102.875 | %
January 15, 2024 to January 14, 2025 | 101.917 | %
January 15, 2025 to January 14, 2026 | 100.958 | %
January 15, 2026 and thereafter | 100.000 | %
Senior Credit Facility On June 30, 2016, NRG replaced the previous senior credit facility, consisting of its Term Loan Facility and Revolving Credit Facility, with a new senior secured facility, or the Senior Credit Facility, which includes the following:
• | A $1.9 billion term loan facility, or the 2023 Term Loan Facility, with a maturity date of June 30, 2023, which will pay interest at a rate of LIBOR plus 2.75%, with a LIBOR floor of 0.75%. The debt was issued at 99.50% of face value; the discount will be amortized to interest expense over the term of the loan. Repayments under the 2023 Term Loan Facility will consist of 0.25% of principal per quarter, with the remainder due at maturity. On January 24, 2017, NRG repriced the 2023 Term Loan Facility, reducing the interest rate margin by 50 basis points to LIBOR plus 2.25%, the LIBOR floor remains 0.75%. On March 21, 2018, NRG again repriced the 2023 Term Loan Facility, reducing the interest rate margin by 50 basis points to LIBOR plus 1.75% and reducing the LIBOR floor to 0.00%.
• | A $289 million revolving senior credit facility, or the Tranche A Revolving Facility, with a maturity date of July 1, 2018 and a $2.2 billion revolving senior credit facility, or the Tranche B Revolving Facility, with a maturity date of June 30, 2021, which both pay interest at a rate of LIBOR plus 2.25%. On May 7, 2018, NRG entered into the third amendment agreement extending the maturity date of the Tranche A revolving facility to June 30, 2021, for the Tranche A accepting lender.
In accordance with the terms of the Credit Agreement, on October 5, 2018, the Company initiated an asset sale offer to purchase a portion of its Term Loan following the sale of NRG Yield and the Renewables Platform. The offer expired on November 5, 2018 and $260 million of Term Loan holders accepted the offer. As a result, the Company prepaid $155 million of Term Loans as part of its de-leveraging plan, as well as established an incremental first lien secured term loan facility under the Senior Credit Facility in the aggregate principal amount of $105 million on the same terms and conditions to stay within its debt reduction target. In addition, a $3 million loss on debt extinguishment was recorded, which included the write-off of previously deferred financing costs of $2 million. In accordance with the terms of the credit agreement, upon the consummation of the sales of the South Central Portfolio and Carlsbad, the Company will initiate asset sale offers to purchase a portion of its Term Loan. The Company has one year from the dates of each sale to initiate the offer. Tax Exempt Bonds
|  | As of December 31, |  |
|  | 2018 |  | 2017 |  | Interest Rate %
Amount in millions, except rates |  |  |  |  |  |
Indian River Power, tax exempt bonds, due 2040 |  | $ | 57 |  |  | $ | 57 |  |  | 6.000
Indian River Power LLC, tax exempt bonds, due 2045 |  | 190 |  |  | 190 |  |  | 5.375
Dunkirk Power LLC, tax exempt bonds, due 2042 |  | 59 |  |  | 59 |  |  | 5.875
City of Texas City, tax exempt bonds, due 2045 |  | 33 |  |  | 32 |  |  | 4.125
Fort Bend County, tax exempt bonds, due 2038 |  | 54 |  |  | 54 |  |  | 4.750
Fort Bend County, tax exempt bonds, due 2042 |  | 73 |  |  | 73 |  |  | 4.750
Total |  | $ | 466 |  |  | $ | 465 |  |  |
Non-Recourse Debt The following are descriptions of certain indebtedness of NRG's subsidiaries that are outstanding as of December 31, 2018. All of NRG's non-recourse debt is secured by the assets in the respective project subsidiaries as further described below. Midwest Generation On April 7, 2016, Midwest Generation, LLC, or MWG, entered into an agreement to sell certain quantities of unforced capacity that has cleared various PJM Reliability Pricing Model auctions to a trading counterparty for net proceeds of $253 million. MWG will continue to operate the applicable generation facilities and remains responsible for performance penalties and eligible for performance bonus payments, if any. Accordingly, MWG will continue to account for all revenues and costs as before; however, the proceeds will be recorded as a financing obligation while capacity payments by PJM to the counterparty will be reflected as debt amortization and interest expense through the end of the 2018/19 delivery year. MWG will amortize the upfront discount to interest expense, at an effective interest rate of 4.39%, over the term of the arrangement, through June 2019. As of December 31, 2018, $48 million was outstanding. Agua Caliente Borrower I On January 22, 2019, the lenders of the Agua Borrower I debt notified the Company of certain defaults under the financing agreement as it relates to the bankruptcy filing made by PG&E on January 29, 2019. PG&E is the offtaker of the underlying contracts, which are material. The financing was entered into along with Agua Caliente Borrower 2, LLC, a subsidiary of Clearway Energy Inc., which is joint and several to the parties. The Company is working with the lenders to determine a path forward.

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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