Xcel May Cut Value of NRG Assets

Xcel Energy Inc. on Sunday said it expects to report a $2-billion third-quarter write-down of assets at its wholesale power-generating unit, NRG Energy.

NRG has been struggling to avoid bankruptcy since July, when a downgrade in the company’s credit rating triggered a requirement that NRG post up to $1.3 billion in cash collateral for its main line of credit.

NRG has about $9 billion in total debt.

“We are aggressively addressing the financial difficulties facing NRG and are continuing to make progress,” said Wayne H. Brunetti, Xcel’s chairman, president and chief executive officer.

On Friday, bankers and other lenders of NRG gave it more time to convert about $1 billion in assets to cash, which it was forced to raise as collateral after a downgrade to its credit rating in July triggered tighter restrictions in its borrowing agreements.

Its stock closed Friday down 21 cents at $9.02 on the New York Stock Exchange.

NRG has until Nov. 15 to come up with the cash. That’s more than three months after the original mid-August deadline and two months after its first extension.

On Wednesday, NRG missed a deadline to pay $25 million in principal and interest to owners of some of its bonds. And earlier this month, it missed a $47-million payment on $800 million in bonds.

Also Sunday, Minneapolis-based Xcel reported third-quarter earnings, excluding NRG’s operations, of $174 million, or 44 cents per share.

The mean forecast of analysts surveyed by Thomson First Call was for earnings of 52 cents a share.

Xcel earned $167 million, or 48 cents per share, in the same period a year earlier, excluding NRG.

Xcel also excluded “all effects of NRG” in its forecast to earn from $1.45 to $1.55 per share in 2002. Analysts were expecting $1.52 per share.

The company’s electric utility operations had sales of $1.56 billion in the third quarter, down from $1.89 billion a year ago.

NRG would be included in Xcel’s final third-quarter earnings after the Minneapolis-based subsidiary is reviewed Nov. 14 and NRG presents a restructuring plan to creditors by the end of October.

For its utilities, Xcel reported earnings of $196 million, or 49 cents per share, compared with $182 million, or 53 cents, for third quarter 2001.

Xcel spun off NRG as a separate company in 2000, believing it would help the company raise money from investors to fuel its growth. But investors soured on independent producers.

Xcel bought back the public stake in NRG in June and said it would scale back NRG operations, particularly overseas.