HOUSTON – Reliant Energy, which supplies electricity to nearly 2 million customers in Texas and the Mid-Atlantic region, served notice that it may be shopping for a buyer Monday as a credit crises that has reshaped Wall Street continued to spread.

The company announced last week that it was forced to raise $1 billion in new capital under less favorable conditions after it failed to meet standards outlined in an arrangement with Merrill Lynch & Co.

The announcement caught investors off guard and its shares lost half their value. Shares fell another 6 percent in a broad market sell-off Monday on signs that the U.S. economic crises was spreading overseas.

As the U.S. economy soured, Reliant was slammed by Hurricane Ike last month and will likely have to spend millions to repair damages.

Some analysts believe Reliant may only want to rid itself of its retail business. The company cut its retail profit expectations by $300 million to $350 million for the year, partly due to damage from Ike.

“The retail business is far and away the root of all their problems and the reason they are in their current position,” said Andy DeVries, an analyst at CreditSights Inc. “To properly hedge this business requires massive amounts of capital for collateral postings. That capital just got a lot more expensive in the last few weeks owing to the credit crisis.”

But amid the current economic turmoil, a sale at favorable terms may be difficult.

Reliant said Monday it is exploring “strategic alternatives,” a term typically used by companies considering a sale, either whole or partial.

Mark Jacobs, president and chief executive, said in a statement the company would “explore the full range of options to enhance stockholder value while we continue to execute on our current business plan.”

Carl Blake, an analyst at Gimme Credit in New York, said Reliant's new credit arrangement is going to be about 3.5 times more expensive and far more restrictive than the deal it had with Merrill Lynch.

“But considering the state of the financial markets and the potential damage to the company's business if its liquidity were to dry up suddenly, it's actually not that bad,” Blake wrote in a research note to clients last week.

DeVries said he doesn't think there are any logical buyers for the retail business in the current market and he questions how or if the company could walk away from it.

Besides its retail business, Reliant has a portfolio of wholesale generation plants.

The company's board of directors formed a special committee comprised of Evan J. Silverstein, the chair, Steven L. Miller, Joel V. Staff and William L. Transier, to oversee the strategic alternatives process and make recommendations to the full board. In addition, Staff will serve as executive chairman.

Morgan Stanley and Goldman Sachs & Co. are serving as financial advisers, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Reliant.

Shares plunged last week and fell 65 cents Monday afternoon to $4.94, more than 60 percent below share prices last month. Last December, shares were selling for nearly $29.

Reliant Energy has approximately 1.8 million retail electricity customers primarily in Texas. It also serves commercial, industrial, governmental and institutional customers in Delaware, Illinois, Maryland, New Jersey, New York, Pennsylvania and Washington, D.C.