NRG Energy, Inc. Confirms Proposal to Calpine

Business Wire,  May 22, 2008  

Tags: NRG Energy Inc.

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--Transaction would create the definitive competitive power generation company--

* The combined company would create the archetypical U.S. wholesale power generation company-- multi-regional, multi-fuel, across-the-merit-order and appropriately-scaled;

* The combined company would consist of four fully capable regional generation businesses, each consisting of at least 8GW of existing generation, spanning all of the major competitive power generation markets in the United States; and

* The newly combined company would benefit from, and be in an enhanced position to execute a strategy based on both intrinsic growth through, the investment in new generation from wind to nuclear and the regular return of capital to its combined shareholders.

PRINCETON, N.J. -- In light of the disclosure of the terms of its offer by Calpine Corporation (NYSE: CPN), NRG Energy, Inc. (NYSE: NRG) confirmed today the Company's proposal to enter into a combination with Calpine Corporation. In a letter dated May 14, 2008, NRG proposed to purchase all of Calpine's outstanding capital stock in an all stock transaction. The proposed fixed exchange ratio would be 0.534 NRG shares which represents approximately $23 per Calpine share as of May 14, 2008. This offer represents a 16% premium to the May 13, 2008 closing price and approximately 20% to the 30-day trading average for Calpine stock price at that time.

"The combined company would be the culmination of what we in this industry have aspired to become," said David Crane, President and Chief Executive Officer, NRG Energy. "We look forward to working with Calpine to demonstrate the full potential of the benefits enumerated in our letter for our respective shareholders. This is, quite simply, the right deal, at the right point in time, between the right partners."

The text of the letter sent on May 14 to William Patterson, Chairman, Calpine Corporation is included below.

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About NRG

A Fortune 500 company, NRG Energy, Inc. owns and operates a diverse portfolio of power generating facilities, primarily in Texas and the Northeast, South Central and West regions of the United States. Its operations include baseload, intermediate, peaking, and cogeneration and thermal energy production facilities. NRG also has ownership interests in generating facilities in Australia and Germany. NRG is a member of USCAP, a diverse group of business and environmental organizations calling for mandatory legislation to achieve significant reductions of greenhouse gas emissions. NRG is also a founding member of "3C--Combat Climate Change," a global initiative with companies calling on the global business community to take a leadership role in designing the road map to a low carbon society.

More information on NRG is available at www.nrgenergy.com

Safe Harbor Disclosure

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks, uncertainties and assumptions that include, but are not limited to, expected earnings and cash flows, future growth and financial performance and the expected synergies and other benefits of the transaction described herein; and typically can be identified by the use of words such as "will," "expect," "estimate," "anticipate," "forecast," "plan," "believe" and similar terms. Although the Company believes that its expectations are reasonable, it can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulation of markets and of environmental emissions, the condition of capital markets generally, our ability to access capital markets, unanticipated outages at our generation facilities, adverse results in current and future litigation, the inability to implement value enhancing improvements to plant operations and companywide processes, our ability to realize expected tax benefits, our ability to achieve the expected timing and benefits of our RepoweringNRG project and our ability to realize expected synergies and other benefits as a result of the combination described herein.

The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause the Company's actual results to differ materially from those contemplated in the forward-looking statements included in this press release should be considered in connection with information regarding risks and uncertainties that may affect the Company's future results included in the Company 's filings with the Securities and Exchange Commission ("SEC") at www.sec.gov.

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