Photographer: Daniel Acker/Bloomberg

NRG Surges to 2015 High on Plan to Sell All of Yieldco Stake

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  • Sold 38-megawatt portfolio of solar farms to NRG Yield
  • Company selling assets after activist investors took a stake

NRG Energy Inc., the largest U.S. independent power producer, jumped to the highest in almost three years after saying it’ll sell its entire stake in NRG Yield Inc., a yieldco it founded that holds renewable and conventional power plants.

NRG expects the sale of its yieldco and renewable development business to be completed by year-end, Chief Executive Officer Mauricio Gutierrez said Thursday during a third-quarter earnings call. NRG had said earlier it was looking to sell at least half of its stake in NRG Yield.

NRG surged 7.1 percent to $27.81 as of 1:26 p.m. in New York after earlier rising to $27.86, the highest since January 2015. The shares jumped 4.6 percent on Thursday.

NRG is in the midst of a plan to shed assets, cut costs and reduce its debt load after activist investors led by billionaire Paul Singer’s Elliott Management Corp. and C. John Wilder’s Bluescape Energy Partners took a stake in the company. NRG said it sees getting as much as $4 billion from asset sales and has reduced debt by $600 million this year. Its cost cutting plan is ahead of schedule with $92 million in reduced expenses, Gutierrez said.

“Planned full sell down of NYLD and better than expected year-to-date cost cuts further cements NRG as our favorite independent power producer,” analysts at Tudor, Pickering, Holt & Co. wrote in a note.

Separately, NRG sold a 38-megawatt solar portfolio to NRG Yield, which paid $71 million in cash and assumed about $26 million in non-recourse project-finance debt, the Princeton, New Jersey-based company said in a filing Thursday. It funded the acquisition with cash-on-hand. The yieldco expects the acquisition to add about $8.8 million in annual cash available for distribution starting next year.

NRG offered to sell a 154-megawatt solar farm near Fort Stockton, Texas, to the yieldco. The offer price wasn’t disclosed. The Buckthorn project has a 25-year power-purchase agreement with the city of Georgetown.

In September, NRG and NRG Yield formed a new distributed-solar partnership. NRG Yield agreed to invest as much as $50 million in a portfolio primarily comprised of community-solar projects developed by its parent.

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