Independent power producer Dynegy Inc. said Oct. 1 that it has successfully completed its Chapter 11 reorganization and emerged from bankruptcy that day.
The company will have about $800m in liquidity in the form of cash (restricted and unrestricted) and letter of credit capacity available to support its post-emergence operations and commercial activities and this, along with the elimination of over $4bn in debt through the Chapter 11 process, gives Dynegy one of the strongest balance sheets in the independent power sector.
The common stock and warrants to purchase common stock for the reorganized company are expected to be listed with and begin trading on the New York Stock Exchange on Oct. 3 under the symbols DYN and DYNw, respectively. The reorganized company will have about 100 million shares outstanding.
“We are very pleased to announce the successful completion of our financial restructuring and emergence in what can be considered a relatively quick timeframe due to the collaboration of our stakeholders during the Chapter 11 process,” said Robert Flexon, Dynegy President and CEO. “Dynegy is well positioned for success and we are committed to creating value for our investors. With the Chapter 11 process behind us, our focus is exclusively on executing our forward strategy. With our balanced asset portfolio, along with operational, commercial and financial discipline and our dedicated workforce, we are confident that we will deliver favorable results in the current as well as future market environments.”
As part of the reorganization, on Sept. 30, Dynegy Holdings LLC, which preceded the parent company into bankruptcy, merged with and into Dynegy Inc. Under the terms of the joint Chapter 11 plan of reorganization, in exchange for the elimination of over $4bn in debt and other obligations, unsecured creditors are receiving common equity representing a 99% stake in the reorganized company and $200m in cash. Legacy stockholders are receiving a 1% stake in the reorganized company and 5-year warrants to purchase up to 13.5% of the common stock of the reorganized company (on a fully-diluted basis) to be exercisable at $40 per share.
Dynegy said it expects that it will initiate distributions of stock and cash to creditors and stockholders, according to the terms of the reorganization plan, starting on Oct 2. The reorganized company will have around 15.6 million warrants outstanding (with shares of common stock authorized and reserved for issuance on a one-for-one basis), and about 6.1 million shares of common stock authorized and reserved for issuance for distributions to be made under Dynegy’s employee incentive plan.
Dynegy Northeast Generation Inc., Hudson Power LLC, Dynegy Danskammer LLC and Dynegy Roseton LLC did not emerge from bankruptcy and remain under Chapter 11 protection, Dynegy noted. Those companies went into bankruptcy in November 2011 along with Dynegy Holdings.
There is an ongoing effort to sell the gas-fired Roseton plant and coal-fired Danskammer power plant, both located in New York State. The court had some time ago approved the termination of the plant leases by the Dynegy companies, but the plants remain under the management of the Dynegy companies while a plant sale effort is underway. Those plants are owned by affiliates of Public Service Enterprise Group (NYSE: PEG), which had been leasing them to Dynegy.
Dynegy Inc.’s subsidiaries produce and sell electric energy, capacity and ancillary services in key U.S. markets. The Dynegy Power LLC power generation portfolio consists of approximately 6,771 MW of primarily natural gas-fired intermediate and peaking power generation facilities. The Dynegy Midwest Generation LLC portfolio consists of about 3,132 MW of primarily coal-fired baseload power plants in Illinois. The separate portfolio now up for sale consists of about 1,693 MW from two power plants which are primarily natural gas-fired peaking (Roseton) and baseload coal (Danskammer) facilities.