Exelon/NRG: the war continues (Updatedx2)

The war of words and filings between power companies Exelon and NRG Energy was turned up a notch today when Exelon proposed a slate of candidates for shareholders to consider voting onto NRG’s board of directors at its next annual meeting.
Since the fall Exelon has been waging a $6.5 billion hostile takeover bid for NRG — which owns many power plants in Texas, particularly around Houston. NRG has not given an inch, saying the stock-swap offer is too low. Exelon was able to get a 46 percent of NRG shareholders to say they would be willing to go along with the deal earlier this month, but that doesn’t mean Exelon can expect a cakewalk at the NRG shareholder meeting, not yet scheduled.
Among the board candidates Exelon is proposing:

• Betsy Atkins, 55, chief executive of venture capital company B.S.A. Baja Corp.
• Ralph Faison, 50, who recently served as CEO of Andrew Corp., a wireless communications equipment maker.
• Coleman Peterson, 60, CEO of human resources firm Hollis Enterprises and former Wal-Mart exec.
• Thomas C. Wajnert, 65, former AT&T exec and vineyard owner.
• Jack Albertine, 64, CEO of consulting, merchant banking and lobbying firm, former Fruit of the Loom director.
• Marjorie L. Bowen, 43, retired managing director at investment bank Houlihan Lokey Howard & Zukin.
• Donald DeFosset, Jr., 60, former CEO of homebuilder Walter Industries.
• Richard H. Koppes, 62, attorney with Jones Day, Fellow at Stanford Law School former executive of the California Public Employees’ Retirement System (CalPERS).
• Ralph G. Wellington, 62, Chairman of law firm Schnader Harrison Segal & Lewis LLP, a Philadelphia-based law firm.

Simmons & Co. notes the reason Exelon wants to expand NRG’s board from 12 to 19:

“If Exelon can nominate all members, it would have 9 members on NRG’s board. Exelon would then try to sway at least one member on NRG’s board (a reason they added one extra position on NRG’s side) to consent to the transaction. Exelon cannot claim a majority on NRG’s board outright because it would trigger a change of control and cause all of NRG’s $8 billion debt to be refinanced. If Exelon can get its slate of directors elected, sway one or more NRG members to consent to the deal, then Exelon would try to create a reverse merger structure by merging themselves under NRG to avoid the change of control covenants.”

NRG put out this statement this afternoon:

“The Company believes Exelon’s actions to initiate a proxy fight are a clear attempt to compromise the independence of NRG’s Board in order to force a sale of NRG to Exelon at a price that is highly dilutive to NRG stockholders on a free cash flow basis. Through this latest aggressive tactic, Exelon is attempting to dilute NRG’s Board of Directors and NRG stockholder value, while attempting to take all the value for Exelon’s stockholders.”

Exelon has also filed with regulators in Texas and Maryland to get preliminary approval for the merger. In both cases regulators turned down the requests, including yesterday when Texas Public Utility Commission staff said in a filing the motions were “insufficient.” But that’s hardly a surprise to anyone, Exelon included.