Xcel Energy 2004 Annual Report Download - page 58

NOTES to CONSOLIDATED FINANCIAL STATEMENTS
Xcel Energy Annual Report 2004
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4. NRG BANKRUPTCY
In June 2002, in response to NRG’s severe financial difficulties, Xcel Energy completed an exchange transaction, whereby Xcel Energy acquired a 100-percent
interest in NRG through a tender offer and merger involving a tax-free exchange of 0.50 shares of Xcel Energy common stock for each outstanding share
of NRG common stock. Xcel Energy reacquired all of the 26 percent of NRG shares not then owned by Xcel Energy, which was accounted for as a purchase.
The 25,764,852 shares of Xcel Energy stock issued were valued at $25.14 per share, based on the average market price of Xcel Energy shares for three days
before and after April 4, 2002, when the revised terms of the exchange were announced and recommended by the independent members of the NRG
board of directors. Including other costs of acquisition, this resulted in a total purchase price to acquire NRG’s shares of approximately $656 million.
The process to allocate the purchase price to underlying interests in NRG assets, and to determine fair values for the interests in assets acquired, resulted
in approximately $62 million of amounts being allocated to fixed assets related to projects where the fair values were in excess of carrying values, to
prepaid pension assets and to other assets.
The continued financial difficulties at NRG, resulting primarily from lower prices for power and declining credit ratings, culminated in NRG and certain
of its affiliates filing, on May 14, 2003, voluntary petitions in the U.S. Bankruptcy Court for the Southern District of New York for reorganization under
Chapter 11 of the U.S. Bankruptcy Code to restructure their debt. In December 2003, NRG emerged from bankruptcy. As part of the reorganization,
Xcel Energy completely relinquished its ownership interest in NRG. As part of the overall settlement, Xcel Energy agreed to pay $752 million to NRG to
settle all claims of NRG against Xcel Energy, and claims of NRG creditors against Xcel Energy. In return for such payments, Xcel Energy received, or was
granted, voluntary and involuntary releases from NRG and its creditors.
In 2004, Xcel Energy paid $752 million to NRG. Xcel Energy met these cash requirements with cash on hand, including tax refund proceeds associated
with the NRG bankruptcy and/or borrowings under its revolving credit facility.
5. SHORT-TERM BORROWINGS
Credit Facilities As of Dec. 31, 2004, Xcel Energy had the following credit facilities available:
Maturity Term Credit Line Available
NSP-Minnesota May 2005 364 days $300 million $171 million
PSCo May 2005 364 days $350 million $153 million
SPS February 2005 364 days $125 million $ 88 million
Other subsidiaries Various Various $ 89 million $ 77 million
The lines of credit provide short-term financing in the form of notes payable to banks, letters of credit and, depending on credit ratings, support
for commercial paper borrowings. The borrowing rates under these lines of credit are based on either the bank’s prime rate or the applicable London
Interbank Offered Rate (LIBOR) plus a borrowing margin.
At Dec. 31, 2004 and 2003, Xcel Energy and its continuing subsidiaries had approximately $312 million and $59 million, respectively, in notes payable
to banks, drawn on these credit lines. The weighted average interest rate at Dec. 31, 2004, was 4.15 percent. Also, $82.2 million of letters of credit were
outstanding at Dec. 31, 2004, as discussed in Note 15 to the Consolidated Financial Statements, of which approximately $62.2 million were outstanding
under the above credit facilities, which further reduced amounts available under the lines. Subsequent to Dec. 31, 2004, SPS arranged for the extension
of the maturity date of its credit facility to May 2005.