Exhibit 99.2

THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN.  ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT.  THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT.

DISCLOSURE STATEMENT RELATED TO THE SECOND AMENDED CHAPTER 11 PLAN OF REORGANIZATION FOR DYNEGY HOLDINGS, LLC
PROPOSED BY DYNEGY HOLDINGS, LLC AND DYNEGY INC.

Dated:   March 5, 2012

1              The Debtors, together with the last four digits of each Debtor’s federal tax identification number, are Dynegy Holdings, LLC (8415); Dynegy Northeast Generation, Inc. (6760); Hudson Power, L.L.C. (NONE); Dynegy Danskammer, L.L.C. (9301); and Dynegy Roseton, L.L.C. (9299).  The location of the Debtors’ corporate headquarters and the service address for Dynegy Holdings, LLC, Dynegy Northeast Generation, Inc. and Hudson Power, L.L.C. is 1000 Louisiana Street, Suite 5800, Houston, Texas 77002.  The location of the service address for Dynegy Roseton, L.L.C. is 992 River Road, Newburgh, New York 12550.  The location of the service address for Dynegy Danskammer, L.L.C. is 994 River Road, Newburgh, New York 12550.

ON [MARCH 9, 2012], THE EXAMINER IN THESE CHAPTER 11 CASES ISSUED A REPORT DESCRIBING HIS FINDINGS.   A COPY OF THE EXAMINER’S EXECUTIVE SUMMARY IS ATTACHED HERETO AS EXHIBIT “G.”  THE EXAMINER’S FULL REPORT WILL BE MADE AVAILABLE ON THE DEBTORS’ CLAIMS AGENT’S WEBSITE AT THE URL:  [http://dm.epiq11.com/DHL/Project/default.aspx], WITH HARD COPIES AVAILABLE TO HOLDERS OF CLAIMS AGAINST OR EQUITY INTERESTS IN DH UPON REQUEST TO COUNSEL TO THE DEBTORS OR COUNSEL TO THE CREDITORS’ COMMITTEE.   THE PLAN PROPONENTS ENCOURAGE EACH HOLDER OF A CLASS 3 GENERAL UNSECURED CLAIM TO REVIEW SUCH REPORT, IN ADDITION TO THIS DISCLOSURE STATEMENT AND THE PLAN, PRIOR TO EXERCISING SUCH HOLDER’S RIGHT TO VOTE ON THE PLAN.

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TABLE OF CONTENTS

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(1)   Included as Exhibit 99.1 to Dynegy Inc.’s Current Report on Form 8-K filed March 7, 2012

(2)   Exhibits B and G are not included in Dynegy Inc.’s Current Report on Form 8-K filed on March 7, 2012, Exhibits B and G will be filed with the Bankruptcy Court at a later date not yet determined.

(3)   Please see the Quarterly Report on Form 10-Q for Dynegy Inc. for the quarter ended September 30, 2011 filed on November 14, 2011

(4)   Please see Projections, as Exhibit D to the Amended Disclosure Statement filed as Exhibit 99.2 on Dynegy’s Current Report on Form 8-K on January 23, 2012

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I.

INTRODUCTION

THIS DISCLOSURE STATEMENT RELATES TO A PLAN FOR DYNEGY HOLDINGS, LLC ONLY, AND NOT THE OTHER DEBTORS (DYNEGY NORTHEAST GENERATION, INC., HUDSON POWER, L.L.C., DYNEGY DANSKAMMER, L.L.C., AND DYNEGY ROSETON, L.L.C.) IN THESE CHAPTER 11 CASES.

All capitalized terms used in this Disclosure Statement but not defined in this Disclosure Statement shall have the meaning ascribed to them in the Plan (see Exhibit “A” to the Plan, Glossary of Defined Terms).  For ease of reference, all terms defined in this Disclosure Statement are listed on Schedule 1 hereto with reference to the page number where the term is defined.  Unless otherwise stated, all references herein to “Schedules” and “Exhibits” are references to schedules and exhibits to this Disclosure Statement, respectively.

BY ORDER DATED                             , 2012 (THE “DISCLOSURE STATEMENT ORDER”), THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (THE “BANKRUPTCY COURT”) APPROVED THE DISCLOSURE STATEMENT RELATING TO THE CHAPTER 11 PLAN OF REORGANIZATION FOR DYNEGY HOLDINGS, LLC (“DH”) PROPOSED BY DH AND DYNEGY INC. (“DYNEGY” AND TOGETHER WITH DH, THE “PLAN PROPONENTS”).  THIS DISCLOSURE STATEMENT INCLUDES AND DESCRIBES THE SECOND AMENDED CHAPTER 11 PLAN OF REORGANIZATION FOR DYNEGY HOLDINGS, LLC PROPOSED BY DYNEGY HOLDINGS, LLC AND DYNEGY INC., DATED MARCH 5, 2012 (THE “PLAN”), A COPY OF WHICH IS ATTACHED HERETO AS EXHIBIT “A.”  PURSUANT TO THE PLAN, CLASS 1 — PRIORITY CLAIMS, CLASS 2 — SECURED CLAIMS, CLASS 4 — SUBORDINATED NOTES CLAIMS, CLASS 5 — CONVENIENCE CLAIMS AND CLASS 6 — EQUITY INTERESTS ARE UNIMPAIRED AND ARE THEREFORE DEEMED TO HAVE ACCEPTED THE PLAN.  ACCORDINGLY, EXCEPT AS OTHERWISE DESCRIBED HEREIN, THE PLAN PROPONENTS ARE ONLY SOLICITING ACCEPTANCES OF THE PLAN FROM THE HOLDERS OF CLASS 3 — GENERAL UNSECURED CLAIMS.

THE PLAN IS THE PRODUCT OF EXTENSIVE NEGOTIATIONS BETWEEN AND AMONG, AND IS SUPPORTED BY, THE PLAN PROPONENTS AND AN AD HOC GROUP OF HOLDERS OF APPROXIMATELY $1.8 BILLION OF SENIOR NOTES CLAIMS AND SUBORDINATED NOTES CLAIMS (THE “CONSENTING NOTEHOLDERS”).1  THE PLAN PROPONENTS AND THE CONSENTING NOTEHOLDERS BELIEVE THAT THE PLAN IS IN THE BEST INTEREST OF AND

1              Pursuant to a settlement among Dynegy, the Debtors and the PSEG Entities (defined below), the PSEG Entities, who have an Allowed Claim against DH in the amount of $110 million, have also agreed to support the Plan.  See “The Reorganization Cases — PSEG Settlement.”

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PROVIDES THE HIGHEST AND MOST EXPEDITIOUS RECOVERIES AVAILABLE TO ALL HOLDERS OF CLAIMS, INCLUDING HOLDERS OF CLASS 3 — GENERAL UNSECURED CLAIMS.  ALL HOLDERS OF CLASS 3 — GENERAL UNSECURED CLAIMS ARE URGED TO VOTE IN FAVOR OF THE PLAN.

VOTING INSTRUCTIONS ARE CONTAINED IN THE DISCLOSURE STATEMENT ORDER, A TRUE AND CORRECT COPY OF WHICH IS ATTACHED HERETO AS EXHIBIT “B.”  IN ADDITION, THE SOLICITATION PACKAGE ACCOMPANYING EACH OF THE BALLOTS CONTAINS APPLICABLE VOTING INSTRUCTIONS.  TO BE COUNTED, YOUR BALLOT MUST BE DULY COMPLETED, EXECUTED AND ACTUALLY RECEIVED BY 5:00 P.M. (PREVAILING EASTERN TIME), ON                                           , 2012 (THE “VOTING DEADLINE”).

II.

NOTICE TO HOLDERS OF CLAIMS

The purpose of this Disclosure Statement is to enable each holder of a Claim that is impaired under the Plan to make an informed decision in exercising its right to vote on the Plan.  More information on voting on the Plan is contained in this Disclosure Statement in the article entitled “Confirmation and Consummation Procedures.”

THIS DISCLOSURE STATEMENT CONTAINS IMPORTANT INFORMATION THAT MAY BEAR UPON YOUR DECISION TO ACCEPT OR REJECT THE PLAN.  PLEASE READ THIS DOCUMENT WITH CARE.

PLAN SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN AND THE EXHIBITS ANNEXED TO THE PLAN AND TO THE EXHIBITS AND SCHEDULES ANNEXED TO THIS DISCLOSURE STATEMENT.  THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF.  IN THE EVENT OF ANY CONFLICT BETWEEN THE DESCRIPTIONS SET FORTH IN THIS DISCLOSURE STATEMENT AND THE TERMS OF THE PLAN, THE TERMS OF THE PLAN SHALL GOVERN.

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND RULE 3016(b) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE (THE “BANKRUPTCY RULES”) AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAW OR OTHER NON-BANKRUPTCY LAW.  THIS DISCLOSURE STATEMENT HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.  PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING SECURITIES OR CLAIMS OF PLAN

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PROPONENTS OR ANY OF THEIR SUBSIDIARIES OR AFFILIATES SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED.

AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION, OR WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS SUBJECT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND OTHER SIMILAR RULES.  ACCORDINGLY, THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING NOR SHALL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES, OR OTHER LEGAL EFFECTS OF THE PLAN AS TO HOLDERS OF CLAIMS AGAINST, OR EQUITY INTERESTS IN, DH OR ANY OF ITS SUBSIDIARIES OR AFFILIATES.

On                       , 2012 after notice and a hearing, the Bankruptcy Court entered the Disclosure Statement Order pursuant to section 1125 of the Bankruptcy Code, finding that this Disclosure Statement contains information of a kind, and in sufficient detail, adequate to enable a hypothetical, reasonable investor typical of the solicited holders of Claims against DH to make an informed judgment with respect to the acceptance or rejection of the Plan.  APPROVAL OF THIS DISCLOSURE STATEMENT BY THE BANKRUPTCY COURT DOES NOT CONSTITUTE A DETERMINATION BY THE BANKRUPTCY COURT OF THE FAIRNESS OR MERITS OF THE PLAN OR OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT.

Each holder of a Claim entitled to vote to accept or reject the Plan should read each of this Disclosure Statement and the Plan in its entirety before voting.  No solicitation of votes to accept or reject the Plan may be made except pursuant to this Disclosure Statement and section 1125 of the Bankruptcy Code.  Except for the Plan Proponents and certain of the professionals they have retained, no person has been authorized to use or promulgate any information concerning DH, its businesses, or the Plan other than the information contained in this Disclosure Statement, and if other information is given or made, such information may not be relied upon as having been authorized by the Plan Proponents.  YOU SHOULD NOT RELY ON ANY INFORMATION RELATING TO DH, ITS BUSINESSES OR THE PLAN OTHER THAN THAT CONTAINED IN THIS DISCLOSURE STATEMENT AND THE SCHEDULES AND EXHIBITS ANNEXED HERETO.

After carefully reviewing this Disclosure Statement, including the attached Schedules and Exhibits, please indicate your acceptance or rejection of the Plan by voting in favor of or against the Plan on the enclosed ballot, and return the completed ballot to the address set forth on the ballot in the enclosed postage prepaid return envelope so that it will be actually received by Epiq Bankruptcy Solutions, LLC (“Epiq” or the “Solicitation Agent” or the “Claims Agent,” as applicable), no later than the Voting Deadline.  All votes to accept or reject the Plan must be cast by using the appropriate ballot.  Votes which are cast in any other manner will not be counted.  All ballots must be actually received by the Solicitation Agent no later than the Voting

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Deadline:                                , 2012 at 5:00 p.m., Prevailing Eastern Time.  For detailed voting instructions and the name, address and phone number of the person you may contact if you have questions regarding the voting procedures, see the Disclosure Statement Order attached hereto as Exhibit “B.”

DO NOT RETURN ANY OTHER DOCUMENTS WITH YOUR BALLOT.

You will be bound by the Plan if it is accepted by the requisite holders of Claims and confirmed by the Bankruptcy Court, even if you do not vote to accept the Plan or if you are the holder of an unimpaired Claim or Equity Interest that is not entitled to vote on the Plan.  The Consenting Noteholders, which hold in the aggregate approximately $1.8 billion of the approximately $3.57 billion principal amount of Senior Notes Claims and Subordinated Notes Claims have agreed, subject to the terms and conditions contained in the Noteholder Restructuring Support Agreement, to vote to accept the Plan.  See “General Information — Restructuring Support Agreement.”  The PSEG Entities, which hold an Allowed Claim in the amount of $110 million, have also agreed to vote to accept the Plan.  See “The Reorganization Cases — PSEG Settlement.”  Class 3 — General Unsecured Claims will have accepted the Plan if the holders of at least two-thirds in amount and more than one-half in number of the Claims entitled to vote and actually voting in such class have accepted the Plan.  See “Confirmation and Consummation Procedures.”  Further information concerning the minimum thresholds required to constitute acceptance of the Plan for the purposes of confirmation is contained in Article XII herein entitled “Confirmation and Consummation Procedures.”

Pursuant to section 1128 of the Bankruptcy Code, the Bankruptcy Court has scheduled a hearing to consider confirmation of the Plan (the “Confirmation Hearing”) on                       , 2012, at                .m., Prevailing Eastern Time, before the Honorable Cecelia G. Morris, United States Bankruptcy Judge.  The Bankruptcy Court has directed that objections, if any, to confirmation of the Plan be filed and served on or before                       , 2012, in the manner described in the Disclosure Statement Order attached hereto as Exhibit “B.”

THE PLAN PROPONENTS AND THE CONSENTING NOTEHOLDERS URGE ALL HOLDERS OF CLASS 3 — GENERAL UNSECURED CLAIMS TO ACCEPT THE PLAN.

III.

ADDITIONAL INFORMATION AND INCORPORATION BY REFERENCE

Dynegy and DH have filed annual and quarterly reports and other information with the SEC.  Holders of Claims entitled to vote on the Plan may read and copy any reports, statements and other information that Dynegy and DH file at the SEC’s public reference room located at 100 F Street, NE, Washington, D.C. 20549 and request copies of the documents, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC.  Please call 1-800-SEC-0330 for further information on the public reference rooms. Dynegy’s and DH’s filings will also be available to the public from commercial document retrieval services and at the web site maintained by the SEC at http://www.sec.gov.  The reports that Dynegy and DH file

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are also available free of charge on Dynegy’s website at http://www.dynegy.com.  In addition, the Quarterly Report on Form 10-Q of Dynegy for the quarter ended September 30, 2011 is filed herewith on Exhibit “C” — “Selected Financial Information.”  Information on Dynegy’s website does not constitute part of this Disclosure Statement, is not incorporated by reference in this Disclosure Statement and should not be relied upon in connection with making any decision with respect to voting for the Plan.

The Plan Proponents “incorporate by reference” information into this Disclosure Statement. This means the Plan Proponents disclose important information to the holders of Claims entitled to vote on the Plan by referring such holders to another document filed separately with the SEC.  The information in the documents incorporated by reference is considered to be part of this Disclosure Statement. The Plan Proponents incorporate by reference the documents listed below filed by Dynegy and DH under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These documents contain important information about them and their financial condition.

·                  Annual Report on Form 10-K of Dynegy and DH for the fiscal year ended December 31, 2010;

·                  Quarterly Reports on Form 10-Q of Dynegy and DH for the periods ended March 31, 2011, and June 30, 2011;

·                  Quarterly Report on Form 10-Q of Dynegy for the period ended September 30, 2011;

·                  Current Reports on Form 8-K or 8-K/A of Dynegy and DH filed on January 25, 2011, January 26, 2011, February 8, 2011, February 11, 2011, February 14, 2011, February 23, 2011, March 1, 2011, April 11, 2011, June 10, 2011, June 21, 2011, June 28, 2011, July 11, 2011, August 1, 2011, August 26, 2011, September 12, 2011, September 26, 2011, October 14, 2011, November 2, 2011, November 8, 2011, December 2, 2011, December 9, 2011, December 14, 2011, December 20, 2011, and January 23, 2012 (to the extent such reports are filed);

·                  Current Reports on Form 8-K or 8-K/A of Dynegy filed on March 10, 2011, March 22, 2011, May 5, 2011, November 14, 2011, November 17, 2011, November 22, 2011, December 2, 2011, January 9, 2012, and February 3, 2012 (to the extent such reports are filed);

·                  Current Report on Form 8-K of DH filed on September 8, 2011, December 23, 2011 (as amended on February 15, 2012), and January 25, 2012, and

·                  Definitive Proxy Statement on Schedule 14A of Dynegy filed April 29, 2011.

Holders of Claims entitled to vote on the Plan can also obtain from the Plan Proponents, as applicable, without charge, copies of any document incorporated by reference in this Disclosure Statement, excluding exhibits (unless the exhibit is specifically incorporated by reference into the information that this Disclosure Statement incorporates, in which case the Plan Proponents may charge a nominal fee to cover its expenses) by requesting such materials in writing or by telephone from Dynegy at:

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Dynegy Inc.

Attention: Investor Relations

1000 Louisiana Street, Suite 5800

Houston, Texas 77002

(713) 507-6400

IV.

SUMMARY EXPLANATION OF CHAPTER 11

A.                                    Overview of Chapter 11

Chapter 11 is the principal reorganization chapter of the Bankruptcy Code pursuant to which a debtor may reorganize its business for the benefit of its creditors, equity interest holders, and other parties in interest.  DH and certain of its direct and indirect subsidiaries (the “Debtors”)2 commenced the Chapter 11 Cases with the filing of petitions for voluntary protection under chapter 11 of the Bankruptcy Code on November 7, 2011.  By order of the Bankruptcy Court, the Chapter 11 Cases have been consolidated for procedural purposes only and are being jointly administered under Case No. 11-38111 (CGM).

The commencement of a chapter 11 case creates an estate comprising all of the legal and equitable interests of a debtor as of the date the petition is filed.  Sections 1101, 1107, and 1108 of the Bankruptcy Code provide that a debtor may continue to operate its business and remain in possession of its property as a “debtor in possession” unless the bankruptcy court orders the appointment of a trustee.  In the Chapter 11 Cases, DH and each of the other Debtors remain in possession of their property and continue to operate their businesses as debtors in possession.

The filing of a chapter 11 petition triggers the automatic stay provisions of the Bankruptcy Code.  Section 362 of the Bankruptcy Code provides, among other things, for an automatic stay of all actions against a debtor on account of prepetition claims against it and various other forms of interference with a debtor’s property or business.  Exempted from the automatic stay are, among other things, actions by governmental authorities seeking to exercise police or regulatory powers.  Except as otherwise ordered by the bankruptcy court administering a chapter 11 case, the automatic stay remains in full force and effect until the effective date of a confirmed plan of reorganization.

The formulation and ultimate consummation of a plan of reorganization is the principal purpose of a chapter 11 case.  The plan sets forth the means for satisfying claims against and interests in a debtor’s estate.  Unless a trustee is appointed, only a debtor may file a plan during the first 120 days of a chapter 11 case (the “Exclusive Filing Period”), and the debtor will have 180 days to solicit acceptance of such plan (the “Exclusive Solicitation Period”).  However, section 1121(d) of the Bankruptcy Code permits the bankruptcy court to extend or reduce the Exclusive Filing Period and Exclusive Solicitation Period upon a showing of “cause.”  The Exclusive Filing Period and Exclusive Solicitation Period may not be extended beyond 18

2              The Debtors are Dynegy Holdings, LLC; Dynegy Northeast Generation, Inc.; Hudson Power, L.L.C. Dynegy Danskammer, L.L.C.; and Dynegy Roseton, L.L.C.

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months and 20 months, respectively, from the Petition Date.  The Plan was filed within the Exclusive Filing Period.  To the extent that DH believes it may be unable to secure acceptance of the Plan within the Exclusive Solicitation Period, DH may seek to extend that period.  So long as the Exclusive Solicitation Period continues, and so long as no trustee is appointed in the Chapter 11 Case of DH, only DH (or Persons authorized by DH) shall be entitled to file and solicit a plan of reorganization.

B.                                    Plan of Reorganization

Although referred to simply as a plan of reorganization, a plan may provide for anything from a comprehensive restructuring of a debtor’s business and its related obligations to a simple liquidation of a debtor’s assets.  In either event, upon confirmation of a plan, the plan becomes binding on the debtor and all of its creditors and equity holders, and the prior obligations owed by the debtor to such parties are compromised and exchanged for the obligations specified in the plan.  For a description of key components of the Plan, refer to the article of this Disclosure Statement entitled “Overview of the Plan.”

After a plan of reorganization has been filed, the holders of impaired claims against and equity interests in a debtor are permitted to vote to accept or reject the plan.  Before soliciting acceptances of the proposed plan, section 1125 of the Bankruptcy Code requires the debtor to prepare and file a disclosure statement containing adequate information of a kind, and in sufficient detail, to enable a hypothetical reasonable investor to make an informed judgment about the plan.  This Disclosure Statement is presented to holders of Claims against DH to satisfy the requirements of section 1125 of the Bankruptcy Code in connection with the Plan Proponents’ solicitation of votes on the Plan.

C.                                    Confirmation of a Plan of Reorganization

If all classes of claims and equity interests accept a plan of reorganization, the bankruptcy court may confirm the plan if the bankruptcy court independently determines that the requirements of section 1129(a) of the Bankruptcy Code have been satisfied.  These requirements are discussed in this Disclosure Statement in the article entitled “Confirmation and Consummation Procedures.”  The Plan Proponents believe that the Plan satisfies all the applicable requirements of section 1129(a) of the Bankruptcy Code.

Chapter 11 of the Bankruptcy Code does not require that each holder of a claim or interest in a particular class vote in favor of a plan for the bankruptcy court to determine that the class has accepted the plan.  Further information concerning minimum thresholds required to constitute acceptance of the Plan for the purposes of confirmation is contained in this Disclosure Statement in the article entitled “Confirmation and Consummation Procedures.”

Classes of claims or equity interests that are not “impaired” under a plan of reorganization are conclusively presumed to have accepted the plan and thus are not entitled to vote.  Thus, acceptances of a plan will generally be solicited only from those persons who hold claims or equity interests in an impaired class.  Under the Plan, Class 1 — Priority Claims, Class 2 — Secured Claims, Class 4 — Subordinated Notes Claims, Class 5 — Convenience Claims, and Class 6 — Equity Interests are unimpaired classes and Class 3 — General Unsecured Claims is the

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only impaired class.  Accordingly, except as otherwise described herein (and specifically, in the next paragraph), only holders of Class 3 — General Unsecured Claims are entitled to vote on the Plan.

Although Class 4 — Subordinated Notes Claims is unimpaired under the Plan and presumed to have accepted the Plan, holders of Class 4 — Subordinated Notes Claims shall be provided a provisional ballot pursuant to Section 3.3 of the Plan to vote to accept or reject the Plan, which provisional ballot will be included as part of the election form (“Election Form”) for making the Subordination Alternative Election pursuant to Section 4.1(d)(ii) of the Plan.  See “The Chapter 11 Plan.”  If there is a controversy with respect to whether or not Class 4 — Subordinated Notes Claims is unimpaired under the Plan and the Bankruptcy Court determines that such class is impaired, votes to accept or reject the Plan properly cast by holders of Class 4 — Subordinated Notes Claims pursuant to the Election Form shall be tabulated to determine whether Class 4 — Subordinated Notes Claims has accepted the Plan.  Any holder of a Subordinated Notes Claim that makes the Subordination Alternative Election shall be deemed to have voted to accept the Plan in Class 4 — Subordinated Notes Claims in the full amount of its Subordinated Notes Claim.

V.

OVERVIEW OF THE PLAN

The following is an overview of the Plan.  It is qualified in its entirety by reference to the full text of the Plan, which is attached to this Disclosure Statement as Exhibit “A.”  In addition, for a more detailed description of the terms and provisions of the Plan, refer to the article of this Disclosure Statement entitled “The Chapter 11 Plan.”

As noted above, this is a plan of reorganization for DH only, and not the other Debtors in these Chapter 11 Cases.  The Plan provides for the treatment of Claims against and Equity Interests in DH.  It further provides for the settlement of all Claims and Causes of Action arising from or related to the Prepetition Restructurings, including the Prepetition Lawsuits.  As part of this settlement, Dynegy will provide substantial consideration under the Plan, consisting of Cash, the Plan Secured Notes, and the Plan Preferred Stock, all as described more fully below.  Such consideration shall provide significant recoveries to holders of Claims against DH, including certain of those Persons who are plaintiffs in the Prepetition Lawsuits.  As such, if the Plan is confirmed and the Effective Date occurs, for and in consideration of the undertakings and other agreements of Dynegy under and in connection with the Plan, all Claims and Causes of Action arising from or related to the Prepetition Restructurings, including the Prepetition Lawsuits, will be released and permanently and forever stayed, restrained and enjoined.

The Plan Proponents believe that the settlement and compromise proposed in the Plan and the resulting treatment provided under the Plan to holders of Claims against DH offer the best alternative to DH and its stakeholders.

Accordingly, the Plan Proponents urge holders of Claims entitled to vote on the Plan to vote to accept the Plan.  The Consenting Noteholders, which hold in the aggregate approximately $1.8 billion of the approximately $3.57 billion principal amount of Senior Notes Claims and

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Subordinated Notes Claims, have agreed, subject to the terms and conditions contained in the Noteholder Restructuring Support Agreement, to vote to accept the Plan.  See “General Information — Restructuring Support Agreement.”  Class 3 — General Unsecured Claims will have accepted the Plan if the holders of at least two-thirds in amount and more than one-half in number of the Claims entitled to vote and actually voting in such class have accepted the Plan.  See “Confirmation and Consummation Procedures.”

A.                                    Summary of the Terms of the Plan

The Plan is built around the following key elements, which are qualified in their entirety by reference to the full text of the Plan.

·                                          The Plan Settlement:3

·                                          Dynegy shall issue to DH for the benefit of holders of Allowed General Unsecured Claims against DH, in accordance with and pursuant to the Plan, (i) the Plan Cash Payment, (ii) the Plan Preferred Stock, and (iii) either (A) the Plan Secured Notes or (B), in lieu of the Plan Secured Notes, the Plan Secured Notes Alternative Payment; and DH shall thereafter cause such property to be distributed to the holders of Allowed General Unsecured Claims in accordance with and pursuant to the Plan.

·                                          Dynegy and DH shall cause Dynegy Gas Investments, LLC (“DGIN”) to cancel the DH Note and deem such DH Note fully satisfied and extinguished;

·                                          Legacy DH (as successor to DH) and Dynegy shall cancel the Undertaking Agreement and Dynegy’s obligations under such Undertaking Agreement shall be deemed to be fully satisfied and extinguished;

·                                          Legacy DH (as successor to DH) shall transfer to New DH (a newly formed, wholly-owned subsidiary of Dynegy) 100% of the equity interests in DGIN;

·                                          DH, its non-Debtor Affiliates, its Estate, and the Plan Proponents shall release, and be deemed to have released, all Claims and Causes of Action of the types described in Section 8.13 of the Plan against all persons and entities referenced in such Section 8.13 of the Plan; and

3              As discussed herein and in the Plan, to implement the settlement and compromise in the most efficient manner, Dynegy will form a wholly-owned direct subsidiary, New DH, as a Delaware corporation, which will then form a wholly-owned direct subsidiary, Legacy DH, as a Delaware limited liability company.  Dynegy will contribute to New DH its 100% equity interest in DH, and DH will then merge with Legacy DH, with Legacy DH as the surviving entity.  Substantially all of the assets of Legacy DH will then be transferred to New DH.  The equity interests in Legacy DH will then be transferred to the Plan Trust, which will be administered by the Plan Trust Administrator.

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·                                          Holders of Claims or Causes of Action arising from or related to the Prepetition Restructurings, including the Prepetition Lawsuits, shall be enjoined from taking any action in respect of or on account of such Claims or Causes of Action against DH and all successors thereto, Dynegy or its non-Debtor Affiliates, or any of their current or former respective members, equity holders, directors, managers, officers, employees, agents, and professionals, successors and assigns or their respective assets and property.

·                                          Treatment afforded Class 3 — General Unsecured Claims under the Plan:

·                                          Class 3 — General Unsecured Claims shall consist of all General Unsecured Claims against DH, which specifically includes all Senior Notes Claims, Lease Guaranty Claims, and, solely for purposes of receiving Plan Distributions, Subordination Alternative Election Claims (which are Allowed Subordinated Notes Claims for which the holder thereof has properly exercised the Subordination Alternative Election, described below).

·                                          Except to the extent that a holder of an Allowed General Unsecured Claim against DH and the Plan Proponents agree on less favorable treatment for such holder, each holder of an Allowed General Unsecured Claim against DH shall receive, on the Effective Date, a Pro Rata Share of (i) the Plan Cash Payment, (ii) the Plan Preferred Stock, and (iii) at the sole option of Dynegy, in its capacity as a Plan Proponent, either (a) the Plan Secured Notes or (b) the Plan Secured Notes Alternative Payment.

·                                          The Plan Cash Payment is a Cash payment to be provided to DH by Dynegy and distributed to holders of Allowed Class 3 — General Unsecured Claims pursuant to and in accordance with Section 4.1(c) of the Plan, which payment shall be in the amount of $400 million, subject to adjustment as set forth in Section 8.5 of the Plan and described below, plus an amount equal to the interest that would have accrued on $1.015 billion aggregate principal amount of Plan Secured Notes as of the Effective Date had such Plan Secured Notes been issued on the Petition Date, less the amount of Cash distributable in respect of any Allowed Class 4 — Subordinated Notes Claims for which the Subordination Alternative Election is not made.  The Plan Proponents estimate that the total aggregate amount of Allowed Subordinated Notes Claims will be approximately $216 million (plus interest and other fees).  As such, the Plan Cash Payment would not be reduced by more than $216 million (plus interest and other fees) with respect to Allowed Class 4 — Subordinated Notes Claims for which the Subordination Alternative Election is not made.

·                                          The Plan Secured Notes will be 11% Senior Secured Notes issued by Dynegy in the aggregate principal amount of $1.015 billion, subject to

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adjustment as set forth in Sections 8.5 and 12.3 of the Plan, which Plan Secured Notes shall, subject to certain exceptions and permitted liens, be secured by (i) a first-priority security interest on the Plan Secured Notes Debt Service Account and all of the presently-owned and after-acquired assets of Dynegy and the direct and indirect wholly-owned subsidiaries of Dynegy (excluding (a) Dynegy Gas Investments Holdings, LLC and Dynegy Coal Investments Holdings, LLC and their respective subsidiaries, (b) DH and its successor in interest Legacy DH (except for the equity interests in DGIN covered in clause (ii) below), (c) Dynegy Northeast Generation, Inc. (“DNE”) and its direct and indirect subsidiaries and (d) the Marketing Entities (as defined below)); and (ii) a first-priority pledge of the outstanding equity interests in each of the direct and indirect subsidiaries of Dynegy, including Dynegy Gas Holdco, LLC, Dynegy Coal Holdco, LLC, Dynegy Gas Investments Holdings, LLC and Dynegy Coal Investments Holdings, LLC (but excluding (a) each of the Ring-Fenced Entities (as defined in the “Description of the New Secured Notes” attached to the Plan as Exhibit “C” (the “Notes Description”) that are direct and indirect subsidiaries of Dynegy Gas Investments Holdings, LLC and Dynegy Coal Investments Holdings, LLC, (b) Legacy DH and DNE and their respective direct and indirect subsidiaries, and (c) the Marketing Entities).

·                                          Pursuant to Sections 12.2 and 12.3 of the Plan, the effectiveness of the Plan is conditioned on the satisfaction or waiver of certain conditions precedent to the Effective Date, including, among other things, that the Lease Guaranty Claims are Allowed or estimated in an aggregate amount that does not exceed $300 million (or $190 million, net of the TIA Claim, which has been Allowed in the amount of $110 million).  If the Lease Guaranty Claims are Allowed or estimated as set forth in the Plan in an aggregate amount that is less than $300 million (or $190 million, net of the TIA Claim, which has been Allowed in the amount of $110 million), the aggregate principal amount of Plan Secured Notes to be issued pursuant to the Plan shall be reduced by an amount to be determined for every dollar such Lease Guaranty Claims are less than $300 million (or $190 million, net of the TIA Claim, which has been Allowed in the amount of $110 million).  If the Lease Guaranty Claims are Allowed or estimated as set forth in the Plan in an aggregate amount that exceeds $300 million and the condition precedent to the occurrence of the Effective Date described in this paragraph is waived in accordance with the terms of the Plan, the aggregate principal amount of Plan Secured Notes to be issued pursuant to the Plan shall be increased by an amount to be determined for every dollar such Lease Guaranty Claims exceed $300 million.  The adjustment amounts left to be determined shall be (i) an amount that is the same for an increase or decrease in the aggregate principal amount of Plan Secured Notes, (ii) agreed to among the Plan Proponents and Requisite Consenting Noteholders, and (iii) identified in a Plan Document to be filed with the

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Bankruptcy Court not less than ten (10) days prior to the Plan Objection Deadline.

·                                          Pursuant to Section 8.5 of the Plan, the aggregate amount of the Plan Cash Payment to be issued is subject to increase, with a corresponding dollar-for-dollar reduction in the aggregate principal amount of the Plan Secured Notes to be issued on the Effective Date, by the amount of Cash or cash equivalents held by DH and certain of its Affiliates in excess of the sum of (i) $200 million (including, for this purpose, any funds in or required to be funded to the Plan Secured Notes Debt Service Account, but excluding, for this purpose, the Plan Cash Payment and the amount of Cash distributable in respect of any Allowed Subordinated Notes Claims for which the Subordination Alternative Election is not made) and (ii) any Cash reserved in an amount agreed to by the Plan Proponents and the Requisite Consenting Noteholders to pay (on the Effective Date, or thereafter as contemplated by the Plan) Allowed Administrative Claims and other Allowed Claims pursuant to and in accordance with the Plan and to fund the Plan Trust.

·                                          The Plan Secured Notes Alternative Payment may be issued by Dynegy, at its sole option, in lieu of issuing the Plan Secured Notes, and shall be a Cash payment in an amount equal to the aggregate principal amount of the Plan Secured Notes that would have been issued, after applicable adjustments pursuant to Section 8.5 and Section 12.3 of the Plan.

·                                          The Plan Preferred Stock will be Redeemable Convertible Preferred Shares, par value $0.01 per share, issued by Dynegy and will accrue dividends, commencing on November 7, 2011, at an annual rate of 4% through December 31, 2013, 8% on or after January 1, 2014 through December 31, 2014, and 12% thereafter, compounding as set forth in the “Designation of the Preferred Stock” attached to the Plan as Exhibit “D” (the “Stock Designation”).  Dividends will not be paid in cash, but will accrue.  The Plan Preferred Stock will not be convertible at the option of the holder; but, based upon the capital structure of Dynegy anticipated to be in effect as of the Effective Date, the Plan Preferred Stock shall be convertible into 97% of Dynegy’s fully-diluted common stock on the terms set forth in the Stock Designation.  The Plan Preferred Stock may be redeemed by Dynegy, subject to certain limitations, as set forth in the Stock Designation, at an aggregate price (assuming redemption of all Plan Preferred Stock outstanding as of the Effective Date) equal to: (i) $1.95 billion if redeemed prior to May 8, 2013; (ii) $2.0 billion if redeemed on or after May 8, 2013 through December 31, 2013; and (iii) $2.1 billion if redeemed on or after January 1, 2014 through the mandatory conversion date (December 31, 2015), in each case, plus accrued and unpaid dividends; provided, that if Dynegy redeems less than all of the shares of Plan Preferred Stock, the amounts set forth in clauses (i) and (ii) will be replaced with $2.1 billion. Dynegy may only redeem less than all of the

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shares of Plan Preferred Stock with the proceeds of a firm commitment, underwritten issuance of Permitted Stock (as described and defined in the Stock Designation) that is entered into prior to December 31, 2014.  In addition, Dynegy may not purchase, and may not permit any of its Subsidiaries to purchase, any shares of Plan Preferred Stock in the open market except as permitted pursuant to the provisions of the indenture governing the Plan Secured Notes (as in effect on the Effective Date, whether or not such indenture remains in effect), subject to certain restrictions set forth in the Stock Designation. The Plan Preferred Stock will have no voting or governance rights except that, following the occurrence of a Trigger Event, the Plan Preferred Stock will vote, on an “as converted” basis together with the holders of the Common Stock (as defined below), and subject to the receipt of any required regulatory approvals, on all matters submitted to stockholders. In addition, after the Effective Date, the approval of holders of Plan Preferred Stock will be required for certain actions by Dynegy, as described in more detail in the Stock Designation. Dynegy and its Subsidiaries are restricted from entering into certain Affiliate Transactions (as such term is defined in the Stock Designation), as described in more detail in the Stock Designation.  Dynegy may, without the consent of the holders of shares of Plan Preferred Stock, issue and sell shares of Permitted Stock, subject to certain restrictions set forth in the Stock Designation and to the right of first offer of the holders of shares of Plan Preferred Stock to purchase such shares of Permitted Stock (as described in more detail in the Stock Designation), if immediately following such issuance and sale, all of the outstanding shares of Permitted Stock issued from and after the Effective Date shall comprise or be convertible into Common Stock comprising less than thirty percent (30%) of the issued and outstanding Common Stock of Dynegy, calculated on a fully diluted basis at the time of such issuance and sale.

·                                          Treatment afforded Class  4 — Subordinated Notes Claims under the Plan:

·                                          Class 4 — Subordinated Notes Claims shall consist of all Subordinated Notes Claims against DH.

·                                          Each holder of an Allowed Subordinated Notes Claim against DH shall be paid in full in Cash on the Plan Distribution Date the amount owed to such holder on account of such holder’s Allowed Subordinated Notes Claim as of the Effective Date; provided that the rights of holders of Allowed Subordinated Notes Claims to receive Plan Distributions under Section 4.1(d)(i) of the Plan shall be subject to the subordination provisions set forth in the Subordinated Notes Indenture and Section 10.8(b) of the Plan, pursuant to which all Plan Distributions to holders of Allowed Subordinated Notes Claims shall be automatically distributed to the Indenture Trustee under the Senior Notes Indenture without any further action or demand and shall be shared pro rata only among holders of

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Allowed Senior Notes Claims.4  A holder of an Allowed Subordinated Notes Claim, however, may agree to alternative treatment pursuant to the Subordination Alternative Election, as set forth in Section 4.1(d)(ii) of the Plan and discussed below.

·                                          Pursuant to the Subordination Alternative Election, a holder of an Allowed Subordinated Notes Claim may elect to reduce the amount of its Allowed Subordinated Notes Claim to 35% of the Allowed principal amount of such Claim, and receive a Pro Rata Share of the Plan Distributions under Class 3 — General Unsecured Claims, without subordination, based on the reduced amount of its Allowed Subordinated Notes Claim.  In the event of an impairment controversy in which the Bankruptcy Court determines that Class 4 — Subordinated Notes Claims is impaired under the Plan, each holder of a Subordinated Notes Claim that makes the Subordination Alternative Election shall be deemed to have voted to accept the Plan in Class 4 — Subordinated Notes Claims in the full amount of its Allowed Subordinated Notes Claim. The Subordination Alternative Election may be made pursuant to the procedures approved by the Bankruptcy Court in the Disclosure Statement Order.5

B.                                    Summary of Treatment Under the Plan

The following chart summarizes the treatment of each class of Claims against and Equity Interests in DH under the Plan.  The chart also provides an estimated range of Allowed Claims in Class 3 — General Unsecured Claims, which is the sole impaired class under the Plan.  Although every reasonable effort was made to be accurate, this projected Allowed range of Class 3 — General Unsecured Claims is only an estimate as of the date of this Disclosure Statement, and may vary from the final amounts in Class 3 Allowed by the Bankruptcy Court.  Reference should be made to the entire Disclosure Statement and the Plan for a complete description of the classification and treatment of Allowed Claims against and Equity Interests in DH under the Plan.

4              The Lease Indenture Trustee (as defined below) has asserted that it also has a right to enforce the subordination provisions under the Subordinated Notes Indenture, and if it is determined that the Lease Indenture Trustee (and/or any other party) has such a right, recoveries to the holders of Senior Notes Claims on account of such subordination provisions, if any, would be diluted.

5              Pursuant to Section 5.02 of the Subordinated Notes Indenture and Section 3.16 of the NGC Trust Declaration, the beneficial holders of the NGC Trust Capital Income Securities shall be deemed to be the beneficial holders of the Subordinated Notes for purposes of solicitation and voting on the Plan and making the Subordination Alternative Election.

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CLAIMS NOT CLASSIFIED UNDER THE PLAN

CLAIMS AND EQUITY INTERESTS CLASSIFIED UNDER THE PLAN

6              Administrative Claims and Priority Tax Claims are treated in accordance with sections 1129(a)(9)(A) and 1129(a)(9)(C) of the Bankruptcy Code, respectively.  Such Claims are not designated as classes of Claims for the purposes of the Plan or for the purposes of sections 1123, 1124, 1125, 1126 or 1129 of the Bankruptcy Code.

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7              The Allowed amounts of the various issuances of Senior Notes Claims are set forth on Exhibit “B” to the Plan.

12             For the purpose of estimating recoveries, the Plan Proponents have included in Exhibit “F” hereto an estimated range of the aggregate value of all Plan Preferred Stock based on Lazard’s valuation of the Company.  See Exhibit “F” — “Valuation.”

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8              Pursuant to the Amended Stipulated Rejection Order (defined below), the TIA Claim was Allowed as a General Unsecured Claim in the amount of $110,000,000.

9              Although the Pass-Through Certificate Holders (as defined below), through the Lease Indenture Trustee (as defined below), are seeking allowance of their alleged Lease Guaranty Claims in the amount of approximately $1 billion, DH believes that they cannot in good faith assert allowance of such Claims in excess of $550 million in the aggregate and believes that the Lease Guaranty Claims (exclusive of the TIA Claim) are in fact equal to $0 as a result of the application of section 502(b)(6) of the Bankruptcy Code, the availability of other sources of recovery on such Claims, and the existence of claims by the Debtors against the Lease Indenture Trustee.  However, the Allowed amounts of the Roseton Lease Guaranty Claims and Danskammer Lease Guaranty Claims are the subject of litigation, the outcome of which is inherently uncertain, and therefore such amounts may be significantly higher than $0.  Thus, strictly for the purposes of this estimated range of Allowed Other General Unsecured Claims and the estimated recovery percentage range for Class 3 — General Unsecured Claims, to be as conservative as possible, the Plan Proponents have included an estimated range of $0 to $190 million for the Roseton Lease Guaranty Claims and Danskammer Lease Guaranty Claims to reflect the Debtors’ belief that the aggregate amount of the Allowed Lease Guaranty Claims (which includes the TIA Claim) will not exceed $300 million, which is the maximum amount in which such Claims may be Allowed, subject to certain exceptions, for the Plan to become effective.  See “Risk Factors — Certain Bankruptcy Considerations” for an explanation of the risks associated with the Lease Guaranty Claims being Allowed in an amount greater than $300 million (or $190 million net of the TIA Claim, which has been Allowed in the amount of $110 million).  The estimated range of Allowed Other General Unsecured Claims also includes a range of $0 to $26 million on account of certain other estimated General Unsecured Claims.

10             The Bar Date for claims to be filed in these cases was February 24, 2012.  As of the Bar Date, the Claims Agent received approximately 65 timely filed Proofs of Claim for General Unsecured Claims against DH that totaled, along with the scheduled General Unsecured Claims against DH, approximately $6.5 billion.  This figure includes the $1.25 billion DH Note (discussed below).  DH is in the process of evaluating the Proofs of Claim; however, DH believes that many of the Claims filed are invalid, untimely, duplicative and/or overstated and anticipates that they will file objections to many of the Proofs of Claims.   The Creditors’ Committee has advised that it believes it is important for creditors to understand that the final amount of Allowed Claims against DH may differ greatly from the estimates provided by the Plan Proponents in the Disclosure Statement, and that the pro rata recovery for holders of Allowed Class 3 — General Unsecured Claims will necessarily depend on the aggregate amount of such Allowed Claims.  DH believes that, following reconciliation of filed and scheduled Claims, the estimated Allowed amount of General Unsecured Claims will be the amounts set forth in the summary chart included in this section of the Disclosure Statement entitled “Overview of the Plan — Summary of Treatment Under the Plan.”

11             For the purpose of this total estimated range of Allowed Class 3 — General Unsecured Claims, the Debtors have assumed that all of the holders of Class 4 — Subordinated Notes Claims will make the Subordination Alternative Election to reduce the amount of their Allowed Class 4 —Subordinated Notes Claims to 35% of the

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Allowed principal amount for such Claims pursuant to Section  4.1(d)(ii) of the Plan, and to have their Allowed Class 4 — Subordinated Notes Claims be deemed Allowed Class 3 — General Unsecured Claims for Plan Distribution purposes and receive Pro Rata Shares of the Plan Distributions under Class 3 — General Unsecured Claims, without subordination, based on the reduced amount of their Allowed Class 4 —Subordinated Notes Claims.  See Exhibit “F” — “Valuation” for the assumed total distribution to Class 3 — General Unsecured Claims and the estimated recovery percentage range for Class 3 — General Unsecured Claims.

13             If all of the holders of Class 4 — Subordinated Notes Claims elect to reduce their Claims pursuant to section 4.1(d)(ii) of the Plan, such Claims would be deemed to be Allowed Class 3 — General Unsecured Claims for Plan Distribution purposes in the amount of approximately $70million.

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14             In the event of an impairment controversy in which the Bankruptcy Court determines that Class 4 — Subordinated Notes Claims is impaired under the Plan, each holder of a Subordinated Notes Claim that makes the Subordination Alternative Election shall be deemed to have voted to accept the Plan in Class 4 — Subordinated Notes Claims in the full amount of its Allowed Subordinated Notes Claim.

15             If the holders of Class 3 General Unsecured Claims as a class vote to accept the Plan, DH will not have to satisfy the requirements of section 1129(b) of the Bankruptcy Code for holders of Equity Interests to retain such interests under the Plan.  If the holders of Class 3 — General Unsecured Claims as a class vote to reject the Plan, then the Plan as formulated will likely not satisfy the requirements of section 1129(b) of the Bankruptcy Code in which case it could not be confirmed.  The Plan is the product of extensive negotiations with the Consenting Noteholders, an ad hoc group of holders of approximately $1.8 billion of Senior Notes Claims and Subordinated Notes Claims.  As of the date hereof, parties holding an aggregate amount of approximately $1.9 billion of Claims (consisting of the Consenting Noteholders and the PSEG Entities) have agreed to vote to accept the Plan.

16             The Equity Interests in DH are proposed to be reinstated under the Plan.  The Creditors’ Committee believes that creditors should understand the value that Equity Interest holders are retaining under the Plan, which, in effect, equates to the value that creditors are giving up under the Plan. See Exhibit “F” — “Valuation” for a range of equity’s implied value.

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VI.

GENERAL INFORMATION

The discussion below briefly describes DH, as well as the other Debtors, and certain of their non-Debtor subsidiaries and affiliates (together with Dynegy, collectively, the “Company”) and their businesses as they exist as of the date of this Disclosure Statement.  Please note that while all of the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code and their cases are being jointly administered under Case No. 11-38111 (CGM), the Plan only addresses the Claims against and Equity Interests in DH.

A.                                    Overview of the Company

Dynegy and DH are holding companies and conduct substantially all of their business operations through their subsidiaries.  Their primary business is the production and sale of electric energy, capacity and ancillary services from their fleet of sixteen operating power plants in six states totaling approximately 11,600 megawatts of generating capacity.  The organizational chart below illustrates the structure of the Company as of the date of this Disclosure Statement.  Please note that this organizational chart does not show all legal entities in the corporate structure.

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B.                                    Overview of the Company’s Business

The operating subsidiaries of Dynegy and DH sell electric energy, capacity and ancillary services on a wholesale basis from their power generation facilities.  The capacity of a power generation facility is its electricity production capability, measured in megawatts (“MW”).  The capacity is used to produce electric energy, which is measured in megawatt hours.  Wholesale electricity customers will, for reliability reasons and to meet regulatory requirements, contract for rights to capacity from generating units.  Ancillary services are the products of a power generation facility that support the transmission grid operation, follow real-time changes in load, and provide emergency reserves for major changes to the balance of generation and load.

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The operating subsidiaries of Dynegy and DH sell these products individually or in combination to customers under short-, medium- and long-term contractual agreements or tariffs.  These customers include regional transmission organizations and independent system operators, integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, industrial customers, power marketers, financial participants such as banks and hedge funds, other power generators, and commercial end-users.  All products are sold on a wholesale basis for various lengths of time from hourly to multi-year transactions.  Some customers, such as municipalities or integrated utilities, purchase products for resale in order to serve their retail, commercial and industrial customers.  Other customers, such as some power marketers, may buy products and related services to serve their own wholesale or retail customers or as a hedge against power sales they have made.

C.                                    Overview of the Debtors’ Businesses

DH is a holding company that conducts its business operations through its direct and indirect subsidiaries, including the other Debtors.  The primary business of DH and its operating subsidiaries is the production and sale of electric energy, capacity and ancillary services from a fleet of 10 operating power plants in six states totaling approximately 8,464 MW of generating capacity.  The other Debtors’ direct operations consist of only two of these plants — at Dynegy Danskammer and Dynegy Roseton — which have a combined generating capacity of 1,693 MW.

DH and the other Debtors rely on certain non-Debtor subsidiaries of DH for essential functions.  For example, Dynegy Administrative Services Company, a Delaware corporation, generally manages the segregated cash management systems for DH and its subsidiaries.  Dynegy Power Marketing, LLC, a Texas limited liability company (“DPM”), performs various functions, including marketing power and capacity, coordinating the power output of the various generation facilities, and providing fuel management services.  The Debtors also have service agreements with other non-Debtor affiliates, under which the Debtors provide compensation to such affiliates for their services.

As noted above, while all of the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code and their cases are being jointly administered under Case No. 11-38111(CGM) solely for procedural purposes, the Plan only addresses the claims against and equity interests in DH.  The following is a description of each of DH and the other Debtors.

1.                                      Dynegy Holdings, LLC

DH began operations as Natural Gas Clearinghouse (“Clearinghouse”) in 1985.  From the inception of its operations until 1990, Clearinghouse’s activities related primarily to natural gas marketing.  Starting in 1990, Clearinghouse began expanding its core business operations through acquisitions and strategic alliances resulting in the formation of a midstream energy asset business, and it established energy marketing operations in both Canada and the United Kingdom.  In 1994, Clearinghouse initiated electric power marketing operations in order to take advantage of opportunities created by the deregulation of the domestic electric power industry, and in March 1995, Clearinghouse merged with Trident NGL Holding, Inc., a fully integrated natural gas liquids company, with the surviving entity named NGC Corporation (“NGC”).  Approximately one year later, NGC completed a strategic combination with Chevron U.S.A. Inc.

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and certain of its affiliates (collectively, “Chevron”) whereby substantially all of Chevron’s midstream assets merged with NGC.  In 1998, NGC changed its name to Dynegy Inc. to reflect its evolution from a natural gas marketing company to an energy services company capable of meeting the growing demands and diverse challenges of the dynamic energy market of the 21st century.  In early 2000, Dynegy Inc. acquired Illinova Corporation, and as part of this acquisition, Dynegy Inc. changed its name to Dynegy Holdings Inc. and became a wholly-owned subsidiary of a new holding company, now referred to as Dynegy Inc.  On September 1, 2011, DH changed its corporate form from a Delaware corporation to a Delaware limited liability company pursuant to the General Corporation Law of the State of Delaware (the “DGCL”).

As further described above, DH is a holding company that conducts its business operations through its direct and indirect subsidiaries, including the other Debtors.  The primary business of DH and its operating subsidiaries is the production and sale of electric energy, capacity and ancillary services from a fleet of 10 operating power plants in six states totaling approximately 8,464 MW of generating capacity.

2.                                      Dynegy Northeast Generation, Inc.

DNE is a Delaware corporation and wholly-owned subsidiary of DH that holds 100% of the equity interests in Hudson Power, L.L.C. and provides administrative support and employs personnel for the operation of the Danskammer and Roseton power generation facilities.

3.                                      Hudson Power, L.L.C.

Hudson Power, L.L.C. (“Hudson Power”) is a Delaware limited liability company that has no operations and holds 100% of the equity interests in Dynegy Danskammer and Dynegy Roseton.

4.                                      Dynegy Danskammer, L.L.C.

Dynegy Danskammer, L.L.C. (“Dynegy Danskammer”), a Delaware limited liability company, owns the 185-acre site in Newburgh, New York on which the Danskammer power generation facility is located, adjacent to the Roseton site.  There are six (6) units at Dynegy Danskammer’s power generation facility — four of which are owned by Dynegy Danskammer, and two of which are leased by Dynegy Danskammer from Danskammer OL LLC (the “Danskammer Owner Lessor”), an indirect subsidiary of Public Service Enterprise Group, Inc. (“PSEG”), an unaffiliated entity.  A further description of Dynegy Danskammer’s operations is set forth below.

5.                                      Dynegy Roseton, L.L.C.

Dynegy Roseton, L.L.C. (“Dynegy Roseton”), a Delaware limited liability company, owns the 195-acre site in Newburgh, New York, on which the Roseton power generation facility is located, adjacent to the Danskammer site.  Dynegy Roseton operates the two (2) units at the power generation facility.  It leases these units from Roseton OL LLC (the “Roseton Owner Lessor” and together with the Danskammer Owner Lessor, the “Owner Lessors”), an indirect subsidiary of PSEG.  A further description of Dynegy Roseton’s operations is set forth below.

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D.                                    Operations of Dynegy Danskammer and Dynegy Roseton

Dynegy Danskammer owns units 1, 2, 5, and 6 at the Danskammer power generation facility.  Units 1 and 2 are “peakers” (power plants that generally run only during periods of peak demand for electricity) with a net capacity of 129.7 MW.  They use natural gas and fuel oil as their primary fuels.  Units 5 and 6 are emergency diesel generators with net capacities of 2.5 MW each and currently are not in operation and are not connected to the power grid.  Dynegy Danskammer leases units 3 and 4 (collectively, the “Danskammer Facility”) from the Danskammer Owner Lessor; these units are “baseload” power plants (power plants that generally run at all times, providing the amount of electricity generally needed to meet customer demand) with a net capacity of 373.4 MW.  They use coal and natural gas as their primary fuels.

Dynegy Roseton leases both units at the Roseton power generation facility (collectively, the “Roseton Facility” and together with the Danskammer Facility, the “Leased Facilities”) from the Roseton Owner Lessor; these units are “peakers” with a net capacity of 1,200 MW.  They use natural gas and fuel oil as their primary fuels.

The Leased Facilities are connected to the Northeast Power Coordinating Council, one of the 10 regional reliability councils that form the North American Electric Reliability Council.  They compete primarily in the New York wholesale market, operated and maintained by the New York Independent System Operator (the “NYISO”), although the power generated at the Danskammer and Roseton facilities may be sold into the Pennsylvania/New Jersey/Maryland Power Pool, as well as to New England, Quebec, and Ontario.

The operations of Dynegy Danskammer and Dynegy Roseton are subject to extensive federal, state, and local statutes, rules and regulations, including the Federal Power Act (the “FPA”), the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Resource Conservation and Recovery Act, and the Occupational Safety and Health Act.  Their regulators include the Federal Energy Regulatory Commission (“FERC”), the New York Public Service Commission (the “NYPSC”), and the Environmental Protection Agency (the “EPA”).

Dynegy Danskammer and Dynegy Roseton have no employees; the workers at the facility are employed by DNE.17  Their major liabilities consist of semiannual rent payments to the Owner Lessors under the Lease Documents (defined below).  In addition to the land on which the Roseton and Danskammer power plants are located and the power plant units or leasehold interests therein, as applicable, their assets consist of various capital spare parts, emissions credits, emissions control and monitoring equipment, fuel inventory, fuel supply equipment, communications equipment and licenses, vehicles, a locomotive, administrative buildings, and similar items.  Substantially all of Dynegy Danskammer’s and Dynegy Roseton’s revenues are derived from sales to the NYISO through DPM, a non-Debtor affiliate.  Due to NYISO regulations, DPM, rather than one of the Debtors, is a party to energy supply contracts with the NYISO.  Because none of the Debtors are currently authorized NYISO market

17             One employee, the Managing Director of Plant operations at the Danskammer and Roseton facilities is employed by Dynegy Operating Company, a non-Debtor Affiliate.

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participants/customers,18 DPM, an energy marketer that is a registered NYISO customer and market participant and is authorized to sell energy, capacity and certain ancillary services at market-based rates, provides energy management services to Dynegy Roseton and Dynegy Danskammer.  Among other things, DPM sells the energy generated by the Leased Facilities into the NYISO markets.

The Debtors’ obligations under the Danskammer Lease Documents and the Roseton Lease Documents (together, the “Lease Documents”) are significantly burdensome, do not provide economic value to the Debtors’ estates, and will impair the Debtors’ ability to reorganize absent rejection.  Accordingly, the Debtors have determined that the rejection of the Lease Documents is an appropriate exercise of their business judgment.  On the Petition Date, the Debtors filed a Motion Pursuant to Section 365 of the Bankruptcy Code and Bankruptcy Rule 6006 for Entry of an Order Authorizing the Debtors to Reject the Lease Documents [Docket No. 5] (the “Motion to Reject”).  On December 20, 2011, the Bankruptcy Court entered a stipulated order approving the rejection of the Lease Documents [Docket No. 227] (the “Stipulated Rejection Order”), which was thereafter amended, and such amended stipulated order was entered by the Bankruptcy Court on December 28, 2011 [Docket No. 273] (the “Amended Stipulated Rejection Order”).  Further information concerning the Motion to Reject is contained in this Disclosure Statement in the article entitled “The Reorganization Cases.”

E.                                      Events Leading to the Need for Restructuring; the Prepetition Restructurings

A combination of dwindling liquidity due to declining revenues (resulting from lower prices over the past two years) and unprofitable leases at the Roseton Facility and Danskammer Facility have adversely impacted the Company’s financial performance.  Overall, sustained low power prices over the past two years have had a significant adverse impact on the Debtors’ business and continue to negatively impact their projected future liquidity.  Specifically, DH’s annual consolidated revenue peaked in the year ending December 31, 2008 at $3.324 billion, and has since declined to $2.468 billion in the year ending December 31, 2009 and $2.323 billion in the year ending December 31, 2010.  As further illustration of the steep decline in revenue, for the nine month period ending September 30, 2010, DH reported consolidated revenues of $1.872 billion, and for the nine month period ending September 30, 2011, DH reported consolidated revenues of $1.347 billion.

In an attempt to address these issues, Dynegy and its subsidiaries implemented a number of cost-cutting initiatives, including, among other things, in February 2011, eliminating approximately 135 positions across all functional and geographic areas, resulting in an expected annual savings of approximately $50 million.  While helpful, the cost-cutting initiatives were not enough, and as DH’s ratio of secured debt to EBITDA increased, its ability to draw on the revolving credit facility under the Credit Agreement (as defined below) became more problematic.  Further strain on DH’s liquidity came in March as S&P downgraded DH to “CC” and placed it on CreditWatch with negative implications.  Similarly, on March 28, 2011,

18             Each of Dynegy Roseton and Dynegy Danskammer filed new customer applications that are currently pending with NYISO. No action is expected with respect to these applications until after December 1, 2011, although it is unclear what impact the bankruptcy proceedings and rejection of the Danskammer Lease Documents and the Roseton Lease Documents will have on such applications.

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Moody’s downgraded DH from “Caa1” to “Caa3”, representing Moody’s fourth downgrade of DH since the beginning of 2009 (when it was rated “B1”).  These downgrades caused various counterparties to demand additional collateral in support of certain of the Debtors’ operational agreements.  The Company uses a significant portion of its capital resources in the form of cash, short-term investments and letters of credit to satisfy counterparty collateral demands.  These counterparty collateral demands reflect the Company’s non-investment grade credit ratings and counterparties’ views of DH’s and its subsidiaries’ financial condition and ability to satisfy their performance obligations, as well as commodity prices and other factors.

Overall, the Company faced a number of difficult circumstances in the spring of 2011.  Dynegy’s entire senior management team had departed.  See “General Information — Dynegy’s Board of Directors.”  In addition, DH faced a potential near-term covenant default under its then-existing senior secured credit facility, which jeopardized the Company’s ability to continue as a going concern, and projected cash losses over the next four years exceeded $1.5 billion, which losses were attributable largely to the unprofitable leases at the Roseton Facility and Danskammer Facility. Further, the Company’s organizational structure impaired value by constraining operational, financial and transactional flexibility and exposed all of the Company’s assets, operations and employees to the risk and costs of bankruptcy if a default occurred under any of DH’s debt instruments.

A great deal of effort was exerted to identify and assess potential alternative courses of action that could be pursued to maximize the Company’s flexibility to address leverage and liquidity issues and to preserve the value of their assets.  No alternative was free from risk and many of the alternatives posed an unacceptable risk of value destruction.  Faced with these difficult circumstances, and without any certain solution to be able to rely on, the Company moved cautiously down a path that involved (i) an operational reorganization of the Company to eliminate the regional organizational structure and instead create separate coal-fired power generation and gas-fueled power generation units, to enhance operational, financial and transactional flexibility; (ii) a refinancing of DH’s senior secured credit facility into a separate facility at each of the coal-fired power generation and gas-fueled power generation units, which removed the risk of an imminent liquidity crisis that could have been caused by a debt default, further promoted flexibility and made it possible to shield substantially all of the Company’s operations from bankruptcy; and (iii) positioned the Company to engage in one or more exchange offers that would provide bondholders with greater security and better terms in exchange for a discount.  Along the way, this plan underwent numerous modifications, however, it was largely implemented in a way that the Plan Proponents believe maximized value and was fair to all entities within the Dynegy enterprise.

One of the primary goals of the Prepetition Restructurings was to facilitate obtaining new financing for Dynegy GasCo and Dynegy CoalCo at a lower cost than otherwise would have been available but for the Prepetition Restructurings.  In connection therewith, the Company’s regional organizational structure was eliminated and separate coal-fired power generation and gas-fueled power generation units were created whereby (i) substantially all of Dynegy’s indirect wholly-owned coal-fired power generation facilities remained with Dynegy Midwest Generation, LLC (“Dynegy CoalCo”), (ii) substantially all of Dynegy’s indirect wholly-owned natural gas-fueled power generation facilities were transferred to Dynegy Power, LLC (“Dynegy GasCo”), and (iii) all of Dynegy’s indirect ownership interests in DNE, the entity that indirectly holds the

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equity interests in Dynegy Roseton and Dynegy Danskammer, were transferred to DH.  Following such reorganization, Dynegy’s operations were reorganized into three segments:  a gas segment, a coal segment and an “other” segment consisting of the remaining assets, including primarily DNE and the leasehold interests in the facilities owned by Dynegy Roseton and Dynegy Danskammer.

Dynegy GasCo and Dynegy CoalCo were designed to be separately financeable and bankruptcy remote.  This resulted in the credit rating agencies assigning a better credit rating to Dynegy GasCo and, consequently, a lower cost of raising capital to fund the entities’ operations.  On August 5, 2011, Dynegy GasCo and its parent Dynegy Gas Investments Holdings, LLC, each a non-Debtor subsidiary of DH, entered into a $1.1 billion, five-year senior secured term loan facility (as further described below, the “GasCo Credit Facility”).  The same day, Dynegy CoalCo and its parent Dynegy Coal Investments Holdings, LLC, each a non-Debtor subsidiary of DH, entered into a $600 million, five-year senior secured term loan facility (as further described below, the “CoalCo Credit Facility” and together with the GasCo Credit Facility, the “New Credit Facilities”).  Proceeds from these New Credit Facilities were used, among other things, to (a) repay an intercompany obligation of a Dynegy GasCo subsidiary to DH, which ultimately enabled DH to repay its outstanding indebtedness under DH’s existing senior secured credit agreement (the “Credit Agreement”), and (b) fund additional cash to the balance sheets of Dynegy GasCo and Dynegy CoalCo to be used for general working capital and general corporate purposes.  Refinancing Dynegy’s Credit Agreement into the separate CoalCo Credit Facility and GasCo Credit Facility removed the risk of an imminent liquidity crisis that could have resulted from a debt default under the Credit Agreement, promoted flexibility and made it possible to shield substantially all of Dynegy’s operations from bankruptcy.

On September 1, 2011, Dynegy and DGIN entered into a Membership Interest Purchase Agreement whereby DGIN sold 100% of the outstanding membership interests of Dynegy Coal Holdco, LLC, a Delaware limited liability company and wholly owned subsidiary of DGIN, to Dynegy. In exchange for Dynegy Coal Holdco, LLC, Dynegy issued an undertaking to make certain specified payments over time which coincide in timing and amount to the payments of principal and interest that DH is obligated to make under a portion of certain of its Senior Notes (the “Undertaking Agreement”). The Undertaking Agreement does not provide any rights or obligations with respect to any outstanding DH notes or debentures, including the notes and debentures due in 2019 and 2026. To ensure that fair value was provided for the transfer of Dynegy Coal Holdco, the Undertaking Agreement contains a purchase price adjustment mechanism, pursuant to which, in the event of a dispute within two years of the date of the Undertaking Agreement as to the equity value of Dynegy Coal Holdco, upon written notice of such valuation dispute by either DGIN or Dynegy, such equity value is to be determined by final arbitration.  In connection with any such arbitration, in the event the final equity value of Dynegy Coal Holdco, LLC is determined by the arbitrator to be greater than $1.25 billion, Dynegy would be required to provide DGIN with consideration equal to the difference in value, and if determined by the arbitrator to be less than $1.25 billion, DGIN would be required to provide Dynegy with the difference in value.