Merrill sues Reliant over canceled $300M facility
Monday December 29, 2008, 3:50 pm EST
Merrill Lynch sues Reliant Energy over terminated $300M credit facility
NEW YORK (AP) -- Merrill Lynch is suing energy provider Reliant Energy for terminating a $300 million credit agreement, a move that could lead the investment bank to foreclose on some of the company's assets.
In a filing with the U.S. Securities and Exchange Commission, Reliant said it had the right to terminate the credit line, did not default on the loan and plans to "vigorously oppose" the lawsuit. The company also said that if Merrill did foreclose on its collateral, little material impact on the wholesale business would result.
Reliant terminated the credit facility on Dec. 5 as its board considered strategic alternatives, including selling some or all of the company. In a lawsuit filed Dec. 24, Merrill insisted that under the credit agreement Reliant's action without consent constitutes default.
Last month, Reliant backed away from financing agreements with GS Loan Partners and First Reserve, citing sufficient liquidity. Its shares had taken a beating after it announced earlier that it was shopping for a buyer as the credit crisis spread. In November the company also said it would sell its contracts for electricity supply and sales of its retail subsidiaries in the Northeast to Hess Corp.
Shares of Reliant fell 38 cents, or 6.8 percent, to $5.22 in late Monday afternoon trading. The 52-week share price range is between $2.77 and $28.06.
Source: Associated Press
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