SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
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ORION POWER HOLDINGS, INC.
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(Name of Registrant as Specified in Its Charter)
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[RELIANT RESOURCES, INC. LOGO] [ORION POWER HOLDINGS, INC. LOGO]
RELIANT RESOURCES TO ACQUIRE ORION POWER
IN $2.9 BILLION TRANSACTION
TRANSACTION ENHANCES RELIANT RESOURCES' POSITION AS LEADING PROVIDER OF
WHOLESALE POWER AND ENERGY SERVICES
HOUSTON AND BALTIMORE, SEPTEMBER 27, 2001 - Reliant Resources, Inc. (NYSE: RRI)
and Orion Power Holdings, Inc. (NYSE: ORN) announced that they have entered into
a definitive merger agreement, under which Reliant Resources will acquire all of
the outstanding shares of Orion Power for $26.80 per share in cash in a
transaction valued at approximately $2.9 billion. Reliant Resources will also
assume approximately $1.8 billion of Orion Power's net debt. The transaction
will be immediately accretive to Reliant Resources' earnings per share. The
companies anticipate that the transaction will be completed in early 2002, at
which time Orion Power's business will be combined with Reliant Resources'
domestic wholesale group.
The transaction will enhance Reliant Resources' position as a leading provider
of wholesale power, gas, and energy services, combining Reliant Resources'
14,100 megawatts (MW) of domestic capacity in operation or under construction
with Orion Power's 6,500 MW. The combined company will capitalize on strong
commercial skills, including trading, marketing, risk management and integrated
asset operations.
This transaction is consistent with Reliant Resources' strategy to:
o Focus on a diverse portfolio of assets across multiple regions within
North America;
o Target regions with attractive market fundamentals and growth
opportunities; and
o Utilize trading, marketing, risk management and operating skills to
enhance earnings.
Steve Letbetter, chairman, president and chief executive officer of Reliant
Resources, said, "This transaction positions the company for continued
attractive growth in earnings. Orion Power's generation fleet utilizes a diverse
fuel mix, provides a wide range of dispatch capabilities and expands our
geographic footprint into attractive power markets in New York and the ECAR
power pools, which complement our existing presence in the PJM market. With our
combined asset base, Orion Power's power sales contracts and Reliant Resources'
commercial skills and synergies, we can create greater value from our combined
business at lower risk. The transaction is also consistent with our focus on
North America, which we believe continues to offer the most attractive growth
opportunities in the gas and power markets."
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Jack Fusco, president and chief executive officer of Orion Power, said, "This
transaction is beneficial to both companies' shareholders as well as our
employees and the communities we serve. We are very pleased to be combining with
an organization with the skills and reputation of Reliant Resources. The
combined company will be even better positioned to capture the growth
opportunities created by deregulation. We are firmly committed to helping to
achieve a rapid and seamless integration of our two companies to ensure that
Reliant Resources continues to play a leading role in the energy industry."
The acquisition is structured as a cash merger and is conditioned upon approval
by Orion Power's shareholders and regulatory approvals. Shareholders owning a
majority of Orion Power's outstanding stock, including Goldman, Sachs & Co. and
its affiliates, Constellation Energy Group, Inc., Mitsubishi Corporation and
Tokyo Electric Power Company International, have agreed to vote their shares in
favor of the transaction. The transaction is not conditioned upon financing.
Funding for the transaction will be obtained through current cash balances,
existing Reliant Resources credit facilities and a new acquisition financing
facility, which will be in place prior to closing.
As previously announced, Reliant Resources' Board of Directors has authorized
the company to repurchase up to 10 million shares of its common stock over the
next 18 months.
Merrill Lynch & Co. acted as financial advisor, and Baker Botts, L.L.P. acted as
legal counsel to Reliant Resources. Goldman, Sachs & Co. acted as financial
advisor, and Wachtell, Lipton, Rosen & Katz and Stroock & Stroock & Lavan LLP
acted as legal counsel to Orion Power.
Orion Power (NYSE: ORN), headquartered in Baltimore, MD, is a fast-growing
independent electric power generating company formed in March 1998 to acquire,
develop, own and operate power-generating facilities in the newly deregulated
wholesale markets throughout North America. Since its inception, Orion Power has
invested over $4 billion in 81 power plants currently in operation with a total
capacity of 5,926 megawatts and an additional 5,000 megawatts in construction
and various stages of development. For more information about Orion Power, visit
its website at www.orionpower.com.
Reliant Resources, based in Houston, Texas, provides electricity and energy
services to wholesale and retail customers in the U.S. and Europe. The company
has nearly 20,000 megawatts of power generation capacity in operation, under
construction or under contract in the U.S. and is one of only five companies to
rank among both the ten largest power marketers and the ten largest natural gas
marketers in North America. Reliant Resources also has wholesale trading and
marketing operations and nearly 3,500 megawatts of power generation in operation
in Western Europe. At the retail level, Reliant Resources provides energy
services and will serve approximately 1.7 million customers in Texas when the
electricity market opens to full retail competition in January 2002. Reliant
Resources currently is a majority owned subsidiary of Reliant Energy,
Incorporated (NYSE: REI).
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This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
contemplated transaction and strategic plans, expectations and objectives for
future operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or developments
that the companies expect, believe or anticipate will or may occur in the future
are forward-looking statements. This includes completion of the proposed
transaction, realization of expected synergies from the transaction, financing
for the transaction, future commodity prices, future financial performance, and
other matters. These statements are based on certain assumptions made by the
companies based on their experience and perception of historical trends, current
conditions, expected future developments and other factors they believe are
appropriate in the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the companies. These risks include, but are not limited to, market conditions,
economic conditions, environmental risks and regulatory changes. Investors are
cautioned that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those projected
in the forward-looking statements.
In connection with the proposed merger, Orion Power Holdings, Inc. will file a
proxy statement with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO
CAREFULLY READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION WHEN IT
BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders may obtain a free copy of the proxy statement (when it is
available) and other documents containing information about Reliant Resources,
Inc. and Orion Power Holdings, Inc., without charge, at the SEC's web site at
www.sec.gov. Copies of the proxy statement and the SEC filings that will be
incorporated by reference in the proxy statement may also be obtained for free
by directing a request to: Investor Relations, Orion Power Holdings, Inc., 7
East Redwood Street, Baltimore, MD 21202; Phone: (410) 230-3528; Fax: (410)
234-0994.
Orion Power and its directors, executive officers and certain of its employees
may be considered "participants" in the solicitation of proxies from Orion Power
stockholders in connection with the transaction. Information regarding such
persons and a description of their interests in the transaction are contained in
Orion Power's Proxy Statements and Annual Reports on Form 10-K filed with the
SEC. Additional information regarding the interests of those persons may be
obtained by reading the proxy statement for the transaction when it becomes
available.
FINANCIAL ANALYST TELECONFERENCE
The senior management of Reliant Resources will host a financial analyst
teleconference call today at 10:00 am EDT to discuss this transaction. A live
broadcast of the teleconference is available at www.reliantresources.com by
clicking on an available link in the Investing Section. Real Network's Real
Player or Window's Media Player is required to access the web cast. Please go to
the web site at least 15 minutes early to register, download, and install any
necessary software. For those who cannot listen to the live broadcast, a replay
will be available on www.reliantresources.com shortly after the call.
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FINANCIAL ANALYST MEETING
The senior management of Reliant Resources will also host a financial analyst
meeting in New York City tomorrow at 9:00 am EDT to discuss this transaction. A
live broadcast of the meeting is available at www.reliantresources.com by
clicking on an available link. Real Network's Real Player or Window's Media
Player is required to access the web cast. Please go to the web site at least 15
minutes early to register, download, and install any necessary software. For
those who cannot listen to the live broadcast, a replay will be available on
www.reliantresources.com shortly after the meeting.
CONTACTS FOR RELIANT RESOURCES CONTACTS FOR ORION POWER HOLDINGS
INVESTORS: INVESTORS AND MEDIA:
Dennis Barber Rahul Advani
(713) 207-3042 (410) 230-3528
MEDIA:
Sandy Fruhman
(713) 207-3123
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