By Matt Daily and Michael Erman

Constellation shares fell as much as 45 percent after credit rating agency Standard & Poor's said it may change its ratings on the company and that it was increasingly urgent for Constellation to take actions to shore up its balance sheet. The stock has shed more than 65 percent in the past three days.

The company's statement that bank commitments behind a $2 billion credit facility remained strong initially boosted the stock.

But those gains evaporated on worries that a cut in its 'BBB' ratings from S&P could be in jeopardy, which would

require a cash infusion for collateral to support its trading operations.

S&P said Constellation's management had informed it that talks regarding an outright sale of the company were at "an advanced stage."

The company declined to comment on potential buyers or whether it would seek to sell the company in its entirety.

Constellation, whose earlier proposed buyout by larger peer FPL Group was foiled by regulatory hurdles, said it had hired Morgan Stanley and UBS to advise it on strategic alternatives.

The company's trading business has been a drag on its stock since August, when Constellation disclosed that a credit rating downgrade could force it to post billions of dollars of extra collateral. It later took steps to shore up its liquidity, including making an agreement for the additional $2 billion credit facility.

Constellation said on Wednesday the banks sponsoring that facility confirmed that their commitment remains in effect.

S&P said it verified the Royal Bank of Scotland and UBS' commitment to the $2 billion credit line, but warned the company still faced hurdles.

"Constellation is facing an acute crisis of confidence that has resulted in a decline in its stock price and a widening of its five-year (credit default swaps) spreads," S&P said, noting that some of its trading counterparties may have started backing away from new deals.

The cost to insure Constellation's debt with credit default swaps rose 8 percent to 678 basis points, according to Markit Intraday.

Another analyst said Constellation could also seek a partner with a strong balance sheet to back up its trading operation, much like Sempra Energy did with RBS.

"I don't think they need to be bought totally, they may just need a partner for the trading book," said Dot Matthews, analyst with CreditSights.

"The trading book has been providing all these great earnings but it requires so much collateral," she said.

The power and gas wholesaler and owner of Baltimore Gas & Electric also reiterated that its exposure to financial institutions was limited, and that its credit exposure to the banks was about $120 million. Its exposure was no higher than $28 million to any single financial institution.

The company also reaffirmed its third-quarter forecast of earnings of 83 cents to 99 cents per share and full-year earnings of $5.25 to $5.75.

French energy group EDF SA recently doubled its stake in Constellation to 9.51 percent, under an agreement that limited the French company's purchases to 9.9 percent of company.

Shares of Constellation were down 37 percent at $19.22 on the New York Stock Exchange, well below their 52-week high of $107.97 on January 8. The stock traded as low at $16.70 earlier in the day.

(Additional reporting by Karen Brettell; Editing by Steve Orlofsky, Leslie Gevirtz, Brad Dorfman)