SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 23, 2002
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RELIANT RESOURCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-16455 76-0655566
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-3000
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ITEM 5. OTHER EVENTS.
On May 23, 2002, NEA B.V. ("NEA"), the former Dutch electric generation
pooling company, and its four shareholders (including Reliant Energy Power
Generation Benelux B.V. ("REPGB"), an indirect wholly-owned subsidiary of
Reliant Resources, Inc. ("RRI")) entered into an agreement (the "EDF Settlement
Agreement") amending the terms of a long-term power supply agreement between NEA
and Electricite de France, Service National ("EDF"). This power supply agreement
(the "EDF Power Contract"), which was entered into in 1989, provided for the
sale by EDF to NEA of 600 MW through March 2002, and 750 MW from April 2002
through March 2009.
In addition, on May 30, 2002, NEA and its four shareholders entered
into an agreement (the "E.ON Settlement Agreement," and together with the EDF
Settlement Agreement, the "Settlement Agreements") amending the terms of a
long-term power supply agreement between NEA and E.ON Sales and Trading GmbH,
formerly known as PreussenElektra Aktiengesellschaft ("E.ON"). This power supply
agreement (the "E.ON Power Contract"), which was entered into in 1989, provided
for the sale by E.ON to NEA of 300 MW through 2005.
The Dutch Electricity Production Sector Transition Act (the "Transition
Act") allocates to REPGB and the other shareholders of NEA specified percentage
interests in the contractual obligations and rights under, among other things,
the EDF Power Contract and the E.ON Power Contract, including the right to
purchase electricity. REPGB's allocated share of the assets and liabilities of
NEA is 22.5%. For additional information regarding the Transition Act, please
read Note 13(f) to the consolidated financial statements of RRI included in
RRI's Annual Report on Form 10-K for the year ended December 31, 2001.
Under the terms of the Settlement Agreement, NEA paid EDF and E.ON a
net aggregate payment of Euro 485 million, approximately $446 million, (the
"Settlement Payment") (of which REPGB's proportionate share as a NEA shareholder
was Euro 109 million, approximately $100 million). NEA has invoiced REPGB for
its proportionate share of the Settlement Payment. REPGB will pay its share of
the Settlement Payment with funds withdrawn from the stranded cost indemnity
escrow account established in connection with the settlement of the indemnity of
the former shareholders of REPGB. However, on May 31 2002, following the
execution of the Settlement Agreements, the Supervisory Board of NEA declared a
Euro 625 million, approximately $575 million, cash dividend payable to its
shareholders. REPGB's share of the dividend is Euros 141 million, approximately
$130 million. The payment date for the dividend is July 1, 2002.
In exchange for its portion of the Settlement Payment, EDF agreed to
replace the EDF Power Contract's existing terms with a market-based electricity
price index for comparable electricity products quoted on the LPX Leipzig Power
Exchange. In addition, EDF agreed to pay 50% of transportation costs for
electricity supplied under the EDF Power Contract from France into the
Netherlands. Under an additional term of the EDF Settlement Agreement, NEA
agreed to assign 20% (150 MW out of the 750 MW) of the rights and obligations
under the EDF Power Contract (including associated import and transit rights
into the Netherlands) to Electricite de France Service National Trading Ltd., a
subsidiary of EDF. The remaining 600 MW of the
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contract was assigned to each of the 4 Dutch generation companies (or designated
affiliates), with 22.5% (135 MW) being assigned to REPGB. REPGB has an
obligation to purchase or take at least 65% of the 135MW under the EDF Power
Contract per year through March 2009.
In exchange for its portion of the Settlement Payment, E.ON agreed to
replace the E.ON Power Contract's existing terms with a market-based electricity
price index for comparable electricity products quoted on the LPX Leipzig Power
Exchange. The 300 MW contract was assigned to each of the 4 Dutch generation
companies (or designated affiliates), with 22.5% (67.5 MW) being assigned to
REPGB. REPGB has no obligation to purchase or take any volume under the E.ON
Power Contract.
The Company marked to market its stranded cost liability to reflect the
effect of the market-conforming amendments to the two power supply agreements.
Based on current market prices and terms, the Company estimates that it will
record in the second quarter of 2002 a one-time net gain of approximately Euro
118 million, approximately $109 million, in total for the amendments of the two
contracts.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
None.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RELIANT RESOURCES, INC.
Date: June 10, 2002 By: /s/ Mary P. Ricciardello
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Mary P. Ricciardello
Senior Vice President and
Chief Accounting Officer