The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter of 2004, involves Texas Genco's purchase of the 19 percent of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants.

In the second step of the transaction, expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility.

Total cash proceeds to CenterPoint Energy from both steps of the transaction will be approximately $2.9 billion, or $45.25 per share for its 81 percent interest in Texas Genco.

The transaction has been approved by the board of directors of CenterPoint Energy and by the board of directors of Texas Genco acting upon the unanimous recommendation of a special committee composed of independent members of the Texas Genco Board.

"We believe that the sale of Texas Genco is beneficial for both companies," said David M. McClanahan, president and chief executive officer of CenterPoint Energy. "The sale enables CenterPoint Energy to reduce its debt and concentrate on its energy delivery businesses.

"I am also pleased that Texas Genco's new owner is backed by some of today's strongest private equity investment firms, which should allow it to build on the firm foundation that the management and employees of Texas Genco have established over the years."

"Of course it's hard for us at CenterPoint Energy to let go of a business that has been a part of our company for so many years. But under the plan we developed in response to the 1999 Texas electric restructuring law, it is time for CenterPoint Energy to take this step," said McClanahan.

The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group said in a statement: "We have focused extensively on the energy sector and we are excited to purchase Texas Genco, one of the nation's largest independent electric generating companies."

"Through Texas Genco, we are acquiring high quality coal, nuclear and gas power plants in the rapidly growing Houston market. We look forward to joining with the dedicated employees of a newly-independent Texas Genco to continue to provide outstanding service to Texas Genco's customers while developing the nation's premier independent power generation business."

CenterPoint Energy was advised on the transaction by Citigroup Global Markets and Baker Botts L.L.P., and the special committee of independent directors of Texas Genco was advised by RBC Capital Markets Corporation and Haynes and Boone, LLP. GC Power Acquisition LLC was advised by Goldman Sachs, Deutsche Bank and Morgan Stanley and the law firms Simpson Thacher & Bartlett LLP, Stroock & Stroock & Lavan LLP and Vinson & Elkins LLP.

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