SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 27, 2000
______________________________
RELIANT ENERGY, INCORPORATED
(Exact name of registrant as specified in its charter)
TEXAS 1-3187 74-0694415
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-3000
______________________________
RELIANT ENERGY RESOURCES CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13265 76-0511406
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-3000
______________________________
This combined current report on Form 8-K is separately filed by Reliant Energy,
Incorporated (Reliant Energy) and Reliant Energy Resources Corp. (Resources
Corp.). Information contained herein relating to Resources Corp. is filed by
Reliant Energy and separately by Resources Corp. on its own behalf. Resources
Corp. makes no representation as to information relating to Reliant Energy
(except as it may relate to Resources Corp.) and its subsidiaries, or any other
affiliate of Reliant Energy. References herein to the businesses and operations
of Reliant Energy include the businesses and operations of Reliant Energy's
subsidiaries, including Resources Corp.
ITEM 5. OTHER EVENTS.
On July 27, 2000, Reliant Energy announced that it plans to file a
business separation plan with the Texas Public Utility Commission under which it
would divide into two publicly traded companies in order to separate its
unregulated businesses from its regulated businesses. Upon receipt of necessary
regulatory approvals, Reliant Energy plans an initial public offering (IPO) of
approximately 20 percent of the common stock of a subsidiary that will hold its
unregulated operations late this year or early in 2001, assuming market
conditions remain favorable. Reliant Energy expects the IPO to be followed by a
distribution to Reliant Energy's shareholders of the remaining stock of the
unregulated company within twelve months after the IPO.
The unregulated company is expected to own Reliant Energy's:
. domestic unregulated power generation and energy trading and marketing
operations,
. retail electric, telecommunications and internet services businesses,
and
. European power generation and energy trading and marketing operations.
These businesses are expected to include the trading and marketing and certain
electric and gas retail operations of Resources Corp., which are expected to be
merged into wholly owned subsidiaries of the unregulated company. The business
separation plan also contemplates that in 2004 the unregulated company will
receive from the regulated company cash equal to the market value of the
regulated company's interest in its Texas regulated generation operations. In
addition, the unregulated company will have an option to purchase the regulated
company's interest in these operations at a price equal to the market value.
Under the business separation plan, Reliant Energy would restructure
its regulated operations into a holding company structure in which a new
corporate entity would be formed as the parent with Reliant Energy's regulated
businesses as subsidiaries. The regulated company is expected to own Reliant
Energy's:
. electric transmission and distribution operations, its natural gas
distribution businesses and, initially, its regulated electric
generating assets in Texas,
. U.S. interstate pipelines and gas gathering operations, and
2
. interests in energy distribution companies in Latin America.
In connection with the formation of the new holding company for
regulated businesses, Reliant Energy would transfer the stock of all of its
subsidiaries to the new holding company and would transfer its regulated
electric generating assets in Texas to a separate subsidiary of the new holding
company until the stranded costs associated with those assets are valued in
2004. At that time, the unregulated company will have the right to exercise the
option discussed above. As a result of the stock and asset transfers described
above, Reliant Energy would become solely a transmission and distribution
company, with its other businesses transferred to separate subsidiaries of the
new holding company. Reliant Energy expects that the regulated holding company
would be required to assume all of Reliant Energy's debt other than its first
mortgage bonds, which would remain with Reliant Energy. The indebtedness of
Reliant Energy's FinanceCo financing subsidiaries is expected to initially
remain in place and be refinanced by the regulated holding company by the end of
2002.
For additional information, please refer to Reliant Energy's press
release filed with this current report as Exhibit 99.1 and the simplified
organizational chart of the proposed business separation plan filed with this
current report as Exhibit 99.2, which press release and organizational chart are
incorporated herein by reference.
The IPO and ultimate distribution of the stock of the unregulated
company are subject to the development of definitive separation terms, further
corporate approvals, market and other conditions, and government actions,
including approval of the business separation plan by the Texas Public Utility
Commission and receipt of a favorable Internal Revenue Service ruling that the
distribution of stock would be tax-free to Reliant Energy and its shareholders
for U.S. federal income tax purposes, as applicable. Aspects of the
restructuring of Reliant Energy's regulated businesses would be subject to the
approval of Reliant Energy's shareholders and approvals from the Securities and
Exchange Commission under the Public Utility Holding Company Act and from the
Nuclear Regulatory Commission. There can be no assurance that the IPO, the
separation of Reliant Energy's unregulated and regulated businesses or the
ultimate restructuring of Reliant Energy's regulated businesses will be
completed as described or within the time periods outlined above.
The IPO of Reliant Energy's unregulated businesses will be registered
under the Securities Act of 1933 and such shares of common stock will only be
offered and sold by means of a prospectus. This current report does not
constitute an offer to sell or the solicitation of any offer to buy any
securities of Reliant Energy's unregulated businesses, nor will there be any
sale of any such securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of such state.
This current report includes forward-looking statements. Actual
events and results may differ materially from those projected. Factors that
could affect actual results include the timing and impact of future regulatory
and legislative decisions, changes in Reliant Energy's business plans, financial
market conditions and other factors discussed in Reliant Energy's filings with
the Securities and Exchange Commission.
3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith:
99.1 Press Release issued July 27, 2000
99.2 Simplified Organizational Chart of Reliant Energy's proposed
Business Separation Plan
4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RELIANT ENERGY, INCORPORATED
Date: July 27, 2000 By: /s/ Mary P. Ricciardello
___________________________________
Mary P. Ricciardello
Senior Vice President and
Chief Accounting Officer
5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RELIANT ENERGY RESOURCES CORP.
Date: July 27, 2000 By: /s/ Mary P. Ricciardello
_______________________________________
Mary P. Ricciardello
Senior Vice President
6
EXHIBIT INDEX
Exhibit
Number Exhibit Description
--------- -------------------
99.1 Press Release issued July 27, 2000
99.2 Simplified Organizational Chart of
Reliant Energy's proposed Business
Separation Plan
7
Exhibit 99.1
FOR FURTHER INFORMATION: (Media) Sandy Fruhman (713) 207-3123
(Investors) Randy Burkhalter (713) 207-3115
FOR IMMEDIATE RELEASE: Thursday, July 27, 2000
RELIANT ENERGY ANNOUNCES FILING OF BUSINESS SEPARATION PLAN
(Houston, TX) -- Reliant Energy announced today that it plans to file with
the Texas Public Utility Commission a business separation plan under which it
would divide into two publicly traded companies in order to separate its
unregulated businesses from its regulated businesses. Upon receipt of necessary
regulatory approvals, the company plans an initial public offering (IPO) of
approximately 20 percent of the common stock of its unregulated operations late
this year or early in 2001, assuming market conditions remain favorable. The
company expects the IPO to be followed by a distribution to shareholders of the
remaining stock of the unregulated company within 12 months. The remaining
businesses which are predominantly regulated will be structured as a holding
company.
The initiative is intended to satisfy regulatory requirements under Texas
restructuring legislation, to enhance shareholder value, to highlight the
specific investment appeals of each resulting entity, and to permit the
individual units to focus on their respective business and market opportunities.
The unregulated company will own Reliant Energy's unregulated power
generation and related energy trading and marketing operations, its unregulated
retail businesses, which currently include energy, telecommunications and
internet services and the company's European electric generating and
trading/marketing operations. The plan also contemplates that in 2004 the
unregulated company will receive from the regulated company cash equal to the
market value of the regulated company's interest in its Texas regulated
generation operations. In addition, the unregulated company will have an option
to purchase the regulated company's interest in these operations at a price
equal to the market value.
1
The regulated company will include Reliant Energy's electricity and natural
gas companies, which serve about four million customers in the U.S. and include
Reliant Energy HL&P/Entex, Reliant Energy Arkla, Reliant Energy Entex and
Reliant Energy Minnegasco. Other operations in the entity will include its U.S.
interstate pipelines, its interests in Latin America and, initially, its Texas
regulated generation.
"Reliant Energy has undergone a fundamental transformation from a Texas-
based utility into a leading energy services company," said Steve Letbetter,
chairman, president and CEO. "In addition to our successful regulated energy
delivery operations, we now have sizeable and very attractive growth businesses
operating in competitive markets. Our primary business objective is to create
shareholder value while also providing high-quality service to our customers.
The restructuring initiative we are announcing today is another step in meeting
that objective.
"Our growth businesses appeal to a different set of investors than do our
regulated activities," Letbetter explained. "We expect the regulated company to
be very similar to the company we have been for most of our history, and it
should appeal to our traditional type of investor. "As a growth company, the new
unregulated entity will be able to capitalize on existing and future investment
opportunities more effectively, and should appeal to investors who are more
growth-oriented and tolerant of risk," Letbetter continued. "Overall, this
restructuring will allow us to better align our businesses with the interests of
investors and allow the market to more effectively reflect the overall value of
Reliant Energy's expanded business portfolio."
Letbetter added that Reliant Energy is committed to maintaining its current
annual dividend of $1.50 per share until the time of the separation.
In addition to advancing shareholder interests, the initiative will satisfy
competitive market and restructuring requirements of the Texas electric
restructuring legislation, which calls for the Texas electric market to open to
full competition on January 1, 2002. The new structure is an integral part of a
separation plan which Reliant Energy HL&P will file in August for approval of
the Public Utility Commission of Texas.
2
"As businesses that will remain regulated, Reliant Energy's electricity and
natural gas distribution companies will continue to focus on providing reliable
service at a reasonable cost, as we have been doing for more than 100 years,"
Letbetter said.
Reliant Energy (NYSE: REI), based in Houston, Texas, is an international
energy delivery and energy services company with more than $15 billion in annual
revenue and assets totaling $30 billion. The company has a wholesale energy
trading and marketing business that ranks among the top five in the U.S. in
combined electricity and natural gas volumes and has a presence in most of the
major power regions of the U.S. It also has power generation and wholesale
trading and marketing operations in Western Europe. The company has nearly
27,000 megawatts of power generation in operation in the U.S. and Western Europe
and has announced development projects that will add another 5,000 megawatts.
Reliant Energy also has marketing and distribution operations serving nearly
four million electricity and natural gas customers in the U.S., has significant
interests in power distribution operations serving more than 10 million
customers in Latin America and has a telecommunications business serving the
Houston area.
The IPO of the company's unregulated businesses will be registered under
the Securities Act of 1933 and such shares of common stock will only be offered
and sold by means of a prospectus. This news release does not constitute an
offer to sell or the solicitation of any offer to buy any securities of the
Company's unregulated businesses, nor will there be any sale of any such
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
such state.
This news release includes forward-looking statements. Actual events and
results may differ materially from those projected. Factors that could affect
actual results include the timing and impact of future regulatory and
legislative decisions, changes in Reliant Energy's business plans, financial
market conditions and other factors discussed in Reliant Energy's filings with
the Securities and Exchange Commission.
3
EXHIBIT 99.2
EXISTING STRUCTURE
(simplified)
_______________________________
| REI |
| |
| HL&P Division: |
| Generation ("ERCOT Genco") |
| Distribution ("WiresCo") |
| Retail |
|_____________________________|
|
____________________________________________________________________________________________________
| | | | |
| | | | |
___________________________ _______________ ______________ ______________ ____________
| | | Telecom | | FinanceCos | | Resources | | Latin |
| (REPG) | | & | | | | (Formerly | | America |
| Unregulated Generation | | E-Business | | | | NorAm) | | |
|_________________________| |_____________| |____________| |____________| |__________|
| |
_______________________________________ |
| | | |
_____________ ______________ ______________ ______________
| Other | | Wholesale | | RE Mid | | (RES) |
| Merchant | | Europe | | Atlantic | | Trading |
| Plants | | | | (Sithe) | | & |
| | | | | | | Marketing |
|___________| |____________| |____________| |____________|
___________________________________________________________________________________________________________________________________
PROPOSED BUSINESS SEPARATION PLAN
(simplified)
________________________________________
| Regulated Holding Company |
| |
___________________________________ | (Will assume all former non-FMB |
| Unregulated Holding Company | | debt of REI and HL&P) |
|_________________________________| |______________________________________|
| |
____________________________________________________ ______________________________________
| | | | | | | |
________________ ______________ ______________ ____________ __________ | ______________ ____________
| (REPG) | | Telecom | | (RES) | | Retail | | ERCOT | | | Resources | | Latin |
| Unregulated | | & | | Trading | | Electric | | Genco | | | (formerly | | America |
| Generation | | E-Business | | & | | Provider | --------| | | | NorAm) | | |
| | | | | Marketing | | | | | | | | | | |
|______________| |____________| |____________| |__________| |________| | |____________| |__________|
| | |
____________________________________________________ |
| | | | | |
_____________ ______________ _____________ ----------------------- ____________________________ ___________________________
| Other | | Wholesale | | RE Mid | | ERCOT Genco | | REI (WiresCo) | | FinanceCos |
| Merchant | | Europe | | Atlantic | (option exercisable | | | |
| Plants | | | | (Sithe) | | in 2004) | | Remaining debt: FMBs | | (Debt is expected to |
|___________| |____________| |___________| ----------------------- | (including obligations |__| be refinanced at the |
| under FMBs securing | | Regulated Holding |
| PCBs and MTNs) | | Company by |
| | | December 2002) |
|__________________________| |_________________________|
Definitions: FMBs: First Mortgage Bonds
PCBs: Pollution Control Bonds
MTNs: Medium Term Notes
