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Acquisitions and Dispositions | 3 Months Ended
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Mar. 31, 2021
Business Combinations [Abstract] |
Acquisitions and Dispositions | Acquisitions and Dispositions Acquisitions Direct Energy Acquisition On January 5, 2021 (the "Acquisition Closing Date"), the Company acquired all of the issued and outstanding common shares of Direct Energy, a North American subsidiary of Centrica. Direct Energy is a leading retail provider of electricity, natural gas, and home and business energy related products and services in North America, with operations in all 50 U.S. states and 8 Canadian provinces. The acquisition increased NRG's retail portfolio by over 3 million customers and strengthens its integrated model. It also broadens the Company's presence in the Northeast and into states and locales where it did not previously operate, supporting NRG's objective to diversify its business. The Company paid an aggregate purchase price of $3.625 billion in cash and an initial purchase price adjustment of $77 million. The Company funded the purchase price using a combination of $715 million of cash on hand, $166 million from a draw on its Revolving Credit Facility (of which $107 million was used to fund acquisition costs and financing fees that are not included in the aggregate purchase price above), as well as approximately $2.9 billion in secured and unsecured corporate debt issued in December 2020. The final purchase price adjustment resulted in a reduction of $38 million. The Company expects to receive this payment from Centrica during the second quarter of 2021. The Company also increased its collective liquidity and collateral facilities by $3.4 billion as of the Acquisition Closing Date to meet the additional liquidity requirements related to the acquisition, as detailed in the following table:
| (In millions)
Available on Acquisition Closing Date |
Revolving Credit Facility commitment increase | $ | 802 |
Revolving Credit Facility new tranche | 273 |
Facility agreement in connection with the sale of pre-capitalized trust securities | 874 |
Available as of December 31, 2020 |
Credit default swap facility | 150 |
Revolving accounts receivable financing facility | 750 |
Repurchase facility | 75 |
Bilateral letter of credit facilities | 475 |
Total Increases to Liquidity and Collateral Facilities | $ | 3,399 |
For further discussion see Note 9, Long-term Debt and Finance Leases, and also Note 13, Receivables Securitization and Repurchase Facility, to the Company's 2020 Form 10-K. Acquisition costs were $22 million for the three months ended March 31, 2021 and are included in acquisition-related transaction and integration costs in the Company's consolidated statement of operations. The acquisition has been recorded as a business combination under ASC 805 with identifiable assets acquired and liabilities assumed provisionally recorded at their estimated fair values on the acquisition date. The initial accounting for the business combination is not complete because the evaluation necessary to assess the fair value of certain net assets acquired and the amount of goodwill to be recognized are still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The purchase price is provisionally allocated as follows:
| (In millions)
Current Assets |
Cash and cash equivalents | $ | 152 |
Funds deposited by counterparties | 21 |
Restricted cash | 9 |
Accounts receivable, net | 1,802 |
Inventory | 106 |
Derivative instruments | 1,014 |
Cash collateral paid in support of energy risk management activities | 233 |
Prepayments and other current assets | 181 |
Total current assets | 3,518 |
Property, plant and equipment, net | 178
Other Assets |
Goodwill(a)(b) | 990 |
Intangibles assets, net(b) | 2,559 |
Derivative instruments | 531
Other non-current assets | 31
Total other assets | 4,111 |
Total Assets | $ | 7,807 |
Current Liabilities |
Accounts payable | $ | 1,390 |
Derivative instruments | 1,266 |
Cash collateral received in support of energy risk management activities | 21 |
Accrued expenses and other current liabilities | 440 |
Total current liabilities | 3,117 |
Other Liabilities |
Derivative instruments | 562 |
Deferred income taxes | 433 |
Other non-current liabilities | 31 |
Total other liabilities | 1,026 |
Total Liabilities | $ | 4,143 |
Direct Energy Purchase Price | $ | 3,664 |
(a) Goodwill arising from the acquisition is attributed to the value of the platform acquired and the synergies expected from combining the operations of Direct Energy with NRG's existing businesses. Goodwill expected to be deductible for tax purposes is $337 million. (b) The allocation of goodwill and intangible assets to the Company's reportable segments is anticipated to be completed in the second quarter of 2021 The Company recorded revenue from Direct Energy of $4,161 million and income before income tax of $134 million during the three months ended March 31, 2021. Pro forma comparative financial information for the Direct Energy acquisition has not been included for the three months ended March 31, 2021 and 2020, as the computation of such information is impracticable due to pre-acquisition financial statements for the reporting periods not being prepared in accordance with GAAP. Dispositions On February 28, 2021, the Company entered into a definitive purchase agreement with Generation Bridge, an affiliate of ArcLight Capital Partners, to sell approximately 4,850 MW of fossil generating assets from its East and West regions of operations for total proceeds of $760 million, subject to standard purchase price adjustments and certain other indemnifications. As part of the transaction, NRG is entering into a tolling agreement for its 866 MW Arthur Kill plant in New York City through April 2025. The transaction is expected to close in the fourth quarter of 2021 and is subject to various closing conditions, approvals and consents, including FERC, NYSPSC, and antitrust review under the Hart-Scott-Rodino Act. As of March 31, 2021, the following is classified as held for sale in the Consolidated Balance Sheet:
| (In millions)(a)
Current assets(b) | $ | 55 |
Property, plant and equipment, net | 385 |
Other non-current assets | 3 |
Total non-current assets(c) | 388 |
Total assets held for sale | $ | 443 |
Current liabilities(d) | 27 |
Non-current liabilities(e) | 60 |
Total liabilities held for sale | $ | 87 |
(a) Property, plant and equipment, net for the East and West/Services/Other segments was $237 million and $148 million, respectively. The remaining assets and liabilities were primarily in the East segment (b) Included in prepayments and other current assets in the Consolidated Balance Sheet (c) Included in other non-current assets in the Consolidated Balance Sheet (d) Included in accrued expenses and other current liabilities in the Consolidated Balance Sheet (e) Included in other non-current liabilities in the Consolidated Balance Sheet On February 3, 2021, the Company closed on the sale of its 35% ownership in the Agua Caliente solar project to Clearway Energy, Inc. for $202 million. NRG recognized a gain on the sale of $17 million, including cash disposed of $7 million. The Company completed other asset sales for cash proceeds of $2 million and $15 million during the three months ended March 31, 2021 and 2020, respectively.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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