Long-Term Debt

12 Months Ended

Dec. 31, 2011

4. Long-Term Debt

(a) Overview.

Outstanding debt was as follows:

	December 31, 2011							December 31, 2010
	Weighted Average Stated Interest Rate (1)		Long-term			Current		Weighted Average Stated Interest Rate (1)		Long-term			Current
	(in millions, except interest rates)
Facilities, Bonds and Notes:
GenOn Americas Generation:
Senior unsecured notes, due 2011(2)	—		$	—		$	—	8.30	%	$	—		$	535
Senior unsecured notes, due 2021	8.50	%	450			—		8.50		450			—
Senior unsecured notes, due 2031	9.125		400			—		9.125		400			—
Unamortized debt discounts	—		(2		)	—		—		(2		)	—
GenOn North America:
Senior notes, due 2013(3)	—		—			—		7.375		—			850
GenOn Mid-Atlantic:
GenOn Chalk Point, LLC capital lease, due 2012 to 2015	8.19		14			4		8.19		18			4
Total			$	862		$	4			$	866		$	1,389

(1)		The weighted average stated interest rates are at December 31, 2011 and 2010, respectively.
(2)		These notes were repaid on May 2, 2011.
(3)		These notes were discharged at the closing of the Merger on December 3, 2010 and were redeemed on January 3, 2011 at a call price of 101.844% of the principal amount.

GenOn Americas Generation

Debt maturities for the principal amounts at December 31, 2011 are (in millions):

2012	$	4
2013	4
2014	5
2015	5
2016	—
2017 and thereafter	850
Total	$	868

GenOn Americas Generation

Senior Unsecured Notes. The senior notes due 2021 and 2031 are senior unsecured obligations of GenOn Americas Generation having no recourse to any subsidiary or affiliate of GenOn Americas Generation. In May 2011, GenOn Americas Generation repaid at maturity $535 million of its senior notes due 2011.

GenOn North America

Senior Notes Due 2013. Upon closing of the Merger, the senior notes due 2013 of GenOn North America were discharged following the deposit with the trustee of funds sufficient to pay the redemption price thereof, plus accrued interest to the date of redemption. The amount of funds on deposit with the trustee was $866 million at December 31, 2010 and was recorded as restricted cash, included in funds on deposit on the consolidated balance sheet.

In January 2011, the senior notes were redeemed at the call price of 101.844% of the principal amount plus accrued and unpaid interest through the date of redemption. The total payment on the date of redemption was $866 million and a $23 million loss on early extinguishment of debt (in other, net on the consolidated statement of operations) was recognized in 2011, which includes a $16 million premium and $7 million of unamortized debt issuance costs.

Senior Secured Credit Facilities. Upon closing of the Merger, GenOn North America repaid the outstanding senior secured credit facility of $305 million plus accrued and unpaid interest through the date of repayment. The total payment was $305 million and a $9 million loss on extinguishment of debt was recognized in other, net in the consolidated statement of operations during 2010.

Other

Capital Lease. This is a capital lease at our Chalk Point generating facility for an 84 MW peaking unit. The amount outstanding under the capital lease at December 31, 2011, which matures in 2015, is $18 million with an 8.19% annual interest rate. Depreciation expense related to this lease was $2 million during 2011, 2010 and 2009. The annual principal payments under this lease are $4 million during 2012 and 2013 and $5 million in 2014 and 2015. The gross amount of assets under the capital lease, recorded in property, plant and equipment, net, was $24 million at December 31, 2011 and 2010. The related accumulated depreciation was $18 million and $16 million at December 31, 2011 and 2010, respectively.

(b) GenOn Credit Facilities.

The GenOn credit facilities, and the subsidiary guarantees thereof, are the senior secured obligations of GenOn and certain of its existing and future direct and indirect subsidiaries, excluding GenOn Americas Generation; provided, however, that certain of GenOn Americas Generation’s subsidiaries (other than GenOn Mid-Atlantic and GenOn Energy Management and their subsidiaries) guarantee the GenOn credit facilities to the extent permitted under the indenture for the senior notes of GenOn Americas Generation.

(c) Sources of Funds.

The principal sources of liquidity for us are expected to be: (a) existing cash on hand and expected cash flows from operations and the operations of our subsidiaries, (b) at its discretion, letters of credit issued under the GenOn revolving credit facility on our behalf and (c) at its discretion, capital contributions from GenOn.

GenOn Americas Generation and certain of its subsidiaries are holding companies and, as a result, GenOn Americas Generation and such subsidiaries are dependent upon dividends, distributions and other payments from their respective subsidiaries to generate the funds necessary to meet their obligations. In particular, a substantial portion of the cash from GenOn Americas Generation’s operations is generated by GenOn Mid-Atlantic. GenOn Mid-Atlantic’s ability to pay dividends and make distributions is restricted under the terms of its operating leases. Under the operating leases, GenOn Mid-Atlantic is not permitted to make any distributions and other restricted payments unless: (a) it satisfies the fixed charge coverage ratio for the most recently ended period of four fiscal quarters; (b) it is projected to satisfy the fixed charge coverage ratio for each of the two following periods of four fiscal quarters, commencing with the fiscal quarter in which such payment is proposed to be made; and (c) no significant lease default or event of default has occurred and is continuing. In the event of a default under the operating leases or if the restricted payment tests are not satisfied, GenOn Mid-Atlantic would not be able to distribute cash. At December 31, 2011, GenOn Mid-Atlantic satisfied the restricted payments tests. GenOn Mid-Atlantic has reserved $165.6 million of cash (which is included in funds on deposit on the consolidated balance sheet) in respect of such liens. See note 9.

Pursuant to the terms of its leases, GenOn Mid-Atlantic is restricted from, among other actions, (a) encumbering assets, (b) entering into business combinations or divesting assets, (c) incurring additional debt, (d) entering into transactions with affiliates on other than an arm’s length basis or (e) materially changing their business. Therefore, at December 31, 2011 and 2010, all of GenOn Mid-Atlantic’s net assets (excluding cash) were deemed restricted for purposes of Rule 4-08(e)(3)(iii) of Regulation S-X.

The amounts of restricted net assets were as follows:

	December 31,
	2011		2010
	(in millions)

GenOn Mid-Atlantic	$	3,859	$	3,690

The ability of GenOn Americas Generation to pay its obligations is dependent on the receipt of dividends from GenOn North America and, in turn, GenOn Mid-Atlantic; capital contributions or intercompany loans from GenOn; and its ability to refinance all or a portion of those obligations as they become due.

GENON MID-ATLANTIC, LLC 10-K