Attached files
file | filename |
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8-K - DYNEGY INC 8-K 11-25-2009 - DYNEGY HOLDINGS, LLC | form8k.htm |
EX-4.2 - EXHIBIT 4.2 - DYNEGY HOLDINGS, LLC | ex4_2.htm |
EX-99.1 - EXHIBIT 99.1 - DYNEGY HOLDINGS, LLC | ex99_1.htm |
EX-10.1 - EXHIBIT 10.1 - DYNEGY HOLDINGS, LLC | ex10_1.htm |
EX-4.1 - EXHIBIT 4.1 - DYNEGY HOLDINGS, LLC | ex4_1.htm |
EX-2.1 - EXHIBIT 2.1 - DYNEGY HOLDINGS, LLC | ex2_1.htm |
Exhibit
99.2
FOR
IMMEDIATE RELEASE
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NR09-20
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DYNEGY ANNOUNCES COMPLETION
OF TRANSACTION WITH LS POWER
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Approximately $1 billion in
cash now available to address near-term debt maturities and other
obligations
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Redeems 245 million of its
Class B shares, eliminating dual-class stock structure and associated
Class B rights and
restrictions
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Closes sale of select natural
gas-fired assets while maintaining a diversified 13,000-megawatt power
generation portfolio with significant upside potential to economic and
power market recovery
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HOUSTON (December 1, 2009) –
Dynegy Inc. (NYSE: DYN) today announced that it has completed its previously
announced transaction with LS Power. As a result of the closing, the
transaction has increased Dynegy’s strategic and financial flexibility and
provided a means for addressing near-term debt maturities. The
transaction also transforms Dynegy’s stockholder structure into a 100 percent
publicly held company with a diversified base of 13,000 megawatts of core
operating assets.
“This
transaction provides benefits to the company and our investors on several
fronts, beginning with an increase in liquidity to approximately $3 billion,
enabling Dynegy to now deleverage by addressing near-term debt maturities,” said
Bruce A. Williamson, Chairman, President and Chief Executive Officer of Dynegy
Inc. “We also redeemed approximately 30 percent of our outstanding shares,
eliminating the dual-class stock structure and associated rights and
restrictions. This resulted in a streamlined 100 percent publicly
held share ownership structure with enhanced flexibility for pursuing
value-creating options for investors.
“By
selling certain assets, we have effectively reshaped our power generation
portfolio with a strategic emphasis on baseload and intermediate assets and less
weighted toward peaking plants that run infrequently,” Williamson added.
“Going forward, we believe we have a strong, diversified power generation
portfolio with upside potential to economic and power market recovery. Our
focus is on operating these plants in a safe, reliable and low-cost manner to
capture market opportunities as they occur.”
Details of
Transaction
As
provided by the terms of the agreements with LS Power, Dynegy has received
approximately $970 million in cash (consisting, in part, of the release of $175
million of restricted cash used to support its funding commitment to Sandy
Creek and approximately $200 million for the unsecured senior notes), subject to
further working capital adjustments, and 245 million of its Class B shares from
LS Power. In exchange, Dynegy sold to LS Power five peaking and three
combined-cycle generation assets, as well as Dynegy’s remaining interest in the
Sandy Creek project under construction in Texas. LS Power also
received $235 million in principal amount of 7.5 percent senior unsecured notes
due 2015.
The
remaining 95 million Class B shares held by LS Power have been converted into
the same number of Class A shares, representing approximately 15 percent of
Dynegy’s Class A common stock outstanding. With the conversion, the
special approval, board representation, and other rights associated with the
former Class B shares were eliminated. In connection with the
conversion, LS Power and Dynegy terminated the existing shareholder agreement,
and a new shareholder agreement became effective. Among other things,
the new agreement generally restricts LS Power from increasing its ownership for
a specified period.
Key Benefits of the
Transaction
The
transaction is immediately accretive to Dynegy’s Adjusted EBITDA on a per share
basis, as well as to earnings (loss) per share attributable to Dynegy Inc.
common stockholders.
Other key
benefits of the transaction include:
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Increased Liquidity and
Financial Flexibility: Dynegy currently has
approximately $3 billion in liquidity, including approximately $1.6
billion in cash available. The cash proceeds received will
enable the company to significantly reduce both near-term debt maturities
and total debt outstanding.
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Diversified Asset
Portfolio: The generation assets sold to LS Power
include five peaking facilities (Riverside and Bluegrass in Kentucky,
Rocky Road and Tilton in Illinois, and Renaissance in Michigan) as well as
three combined-cycle facilities (Arlington Valley and Griffith in Arizona
and Bridgeport in Connecticut). Dynegy is retaining a strategic
portfolio of low-cost, well-operated assets that is diverse in terms of
geography, fuel and dispatch. This 13,000 megawatts of
generating capacity is located across seven U.S. states with 43 percent of
the company’s portfolio located in the Midwest, 32 percent in the West and
25 percent in the Northeast. Thirty-four percent of Dynegy’s
generating capacity is natural gas-fired combined-cycle capacity, 25
percent is natural gas-fired peaking capacity, 31 percent is baseload
coal/fuel oil capacity and 10 percent is dual fuel
capacity.
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Leveraged to Power Market
Recovery: Dynegy is preserving strategic core operating
assets leveraged to both prices and demand. The assets that
were sold include peaking assets that are typically marginal, and two of
the combined-cycle units have long-term contracts that expire in 2017 or
later, limiting their upside potential should market conditions
improve. Dynegy is maintaining a prudently hedged position
with more than 95 percent of its expected generation volumes
contracted through 2010. In the future, the company’s baseload
coal and natural gas combined-cycle assets are expected to provide the
most value through anticipated increases in pricing and heat rate
expansion.
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Eliminated Dual-Class Stock
Structure and Enhanced Strategic Flexibility: By
eliminating its dual-class stock structure, Dynegy significantly enhances
its strategic flexibility and achieves a more simplified and traditional
corporate governance structure. Dynegy will continue its focus
on the long-term fundamentals of power generation and the pursuit of
strategic value capture
opportunities.
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Accounting
Treatment
Dynegy
expects to record a fourth quarter net loss on the sale of assets of
approximately $85 million related to the sale of the company’s Sandy Creek
investment. However, this estimate could change materially based on
changes in the value of the investment in Sandy Creek from September 30, 2009,
through the transaction closing. Further, Dynegy expects to record
additional gains or losses on the sale of these assets in the fourth quarter
2009, based on changes subsequent to September 30, 2009, in the fair value of
the shares received as part of the consideration for this transaction, changes
in the fair value of debt issued, and changes in working capital items not
reimbursed by the purchaser.
Financial
and Legal Advisors
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Greenhill
& Co. acted as financial advisor on the transaction to the Independent
Director Committee of Dynegy’s Board of Directors and provided a fairness
opinion related to the transaction.
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Goldman
Sachs acted as financial advisor to Dynegy and provided a fairness opinion
related to the transaction.
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Sullivan
& Cromwell LLP acted as legal counsel to the Independent Director
Committee of Dynegy’s Board of
Directors.
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Akin
Gump Strauss Hauer & Feld LLP acted as legal counsel to
Dynegy.
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Non-GAAP Financial
Measures
The
non-GAAP financial measure of Adjusted EBITDA is used by management to evaluate
Dynegy’s business on an ongoing basis. The definition, purposes and
uses of Adjusted EBITDA are included in the Form 8-K filed with the SEC on
November 5, 2009, which is available in the “Investor Relations” section of
Dynegy’s website at www.dynegy.com.
About Dynegy
Inc.
Through
its subsidiaries, Dynegy Inc. produces and sells electric energy, capacity and
ancillary services in key U.S. markets. The power generation
portfolio consists of approximately 13,000 megawatts of baseload, intermediate
and peaking power plants fueled by a mix of natural gas, coal and fuel
oil.
Certain
statements included in this news release are intended as “forward-looking
statements.” These statements include assumptions, expectations,
predictions, intentions or beliefs about future events. Dynegy
cautions that actual future results may vary materially from those expressed or
implied in any forward-looking statements, which include statements contained in
this news release regarding: how the proceeds of the transaction will be
deployed; the make-up and advantages of our portfolio going forward; our
business strategy, including any statements regarding hedging or contracted
rates and what types of units will provide the most value; and gains or losses
to be recorded as a result of the sale and their timing. More
information about the risks and uncertainties relating to these and other
forward-looking statements are found in Dynegy’s SEC filings, including its
Annual Report on Form 10-K for the year ended December 31, 2008; and its
Quarterly Reports on Form 10-Q for the periods ended: March 31, 2009; June 30,
2009; and September 30, 2009, all of which are available free of charge on the
SEC’s website at www.sec.gov or Dynegy’s website in the Investor Relations
section at www.dynegy.com. Dynegy expressly disclaims any obligation
to update any forward-looking statements contained in this news release to
reflect events or circumstances that may arise after the date of this release,
except as otherwise required by applicable
law. (DYNC)