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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.
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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.
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"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.
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