![601Travis](https://upload.wikimedia.org/wikipedia/commons/a/a5/601Travis.JPG)
Dynegy Inc. is an
electric
Electricity is the set of physical phenomena associated with the presence and motion of matter that has a property of electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by ...
company based in
Houston, Texas
Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 in ...
, in the United States. It owns and operates a number of
power station
A power station, also referred to as a power plant and sometimes generating station or generating plant, is an industrial facility for the generation of electric power. Power stations are generally connected to an electrical grid.
Many p ...
s in the U.S., all of which are
natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
-fueled or
coal
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
-fueled. Dynegy was acquired by
Vistra Corp on April 9, 2018. The company is located at 601 Travis Street in
Downtown Houston
Downtown is the largest central business district in the city of Houston and the largest in the state of Texas, located near the geographic center of the metropolitan area at the confluence of Interstate 10 in Texas, Interstate 10, Interstate 45, ...
.
[Heschmeyer, Mark. "Dynegy Bails on 181,000-SF Houston Office Lease." CoStar Group News. July 11, 2012.](_blank)
Accessed 2012-07-12. The company was founded in 1984 as Natural Gas Clearinghouse. It was originally an energy brokerage, buying and selling natural gas supplies. It changed its name to NGC Corporation in 1995 after entering the electrical power generation business.
The company adopted the name Dynegy in 1998. Dynegy maintained a rivalry with the Houston-based
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
energy and trading firm, which it agreed to buy in 2001. Dynegy withdrew from the deal as the extent of
wrongdoing by Enron emerged.
Dynegy nearly went
bankrupt
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debt ...
in 2002, and several executives were eventually convicted of financial fraud and mismanagement. Dynegy exited the energy trading business in 2002 and the natural gas supply business in 2005, focusing its efforts on electrical generation. The company has one major subsidiary, Dynegy Holdings. It also has three operating subsidiaries: GasCo, CoalCo, and the "stub group" (for other miscellaneous business enterprises).
Dynegy Inc. was the subject of two unsuccessful
takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to t ...
efforts in 2010. Its Dynegy Holdings subsidiary went bankrupt in November 2011, and Dynegy Inc. itself filed for bankruptcy protection on July 6, 2012. Its GasCo and CoalCo subsidiaries were unaffected by the bankruptcy filing. Dynegy emerged from bankruptcy on October 2, 2012. On April 9, 2018
Vistra Corp closed its acquisition of Dynegy following a FERC determination that the $1.7 billion deal raised no competitive concerns.
Corporate predecessors
Natural Gas Clearinghouse
Natural Gas Clearinghouse (NGC) was created in 1985 by
Charles Watson;
a consortium of natural gas pipeline companies that included
Transco; investment bank
Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
; and the legal firm of
Akin Gump Strauss Hauer & Feld
Akin Gump Strauss Hauer & Feld LLP is an American multinational law firm headquartered in Washington, DC. It is the largest lobbying firm in the United States by revenue. Akin Gump has consistently been ranked as among the top law firms in the Un ...
. A major investor was
Kenneth Lay
Kenneth Lee Lay (April 15, 1942 – July 5, 2006) was an American businessman who was the founder, chief executive officer and chairman of Enron. He was heavily involved in the eponymous accounting scandal that unraveled in 2001 into the large ...
, later the chief executive officer of the energy firm
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
.
[Fox, Loren. ''Enron: The Rise and Fall.'' New York: Wiley, 2003, p. 12.] Its first headquarters was on the 40th floor of the Transco Tower in
Houston, Texas
Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 in ...
. NGC was so successful that in 1985 Morgan Stanley bought out some of the other investors and took a majority stake in the company.
NGC was purchased by Noble Affiliates, Inc. and Apache Corporation, independent oil and gas exploration and production companies, for a reported $50 million in 1989. In 1993,
LG&E Energy Corporation took a stake in NGC, which by then was the largest independent natural gas marketing firm in the United States and had revenues of more than US$2 billion. NGC purchased
Trident NGL
A trident is a three-tine (structural), pronged spear. It is used for spear fishing and historically as a polearm.
The trident is the weapon of Poseidon, or Neptune (mythology), Neptune, the God of the Sea in classical mythology. The trident ma ...
in 1994 in a deal worth more than $750 million. That same year, it also established a partnership with Nova (also known as Novagas Clearinghouse, a natural gas marketing company based in Canada) and
British Gas
British Gas (trading as Scottish Gas in Scotland) is an energy and home services provider in the United Kingdom. It is the trading name of British Gas Services Limited and British Gas New Heating Limited, both subsidiaries of Centrica. Serving ...
, which gave both companies a financial stake in NGC.
NGC Corporation
Natural Gas Clearinghouse shortened its name to NGC Corporation in 1995 after its merger with Trident NGL closed. It became a publicly traded company on the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
that same year. By 1996, it had grown to US$550 million in assets, and carried US$525 million in long-term debt.
[Standard & Poor's Stock Guide, April 1996.] NGC Corporation also established several subsidiaries to enable it to enter the electrical generation, marketing, and sales areas. Electric Clearinghouse sold electricity, and the Energy Store marketed it. In August 1996, it purchased the natural gas gathering, marketing, and processing operations of
Chevron Corporation
Chevron Corporation is an American multinational energy corporation. The second-largest direct descendant of Standard Oil, and originally known as the Standard Oil Company of California (shortened to Socal or CalSo), it is headquartered in S ...
.
[Salpukas, Agis. "Growing Natural-Gas Seller to Expand Electric Business." ''New York Times.'' February 19, 1997.] The latter deal gave Chevron a 29 percent stake in NGC.
NGC followed that deal by buying
Destec Energy for US$1.27 billion. The deal required NGC Corporation to sell Destec's power generation subsidiaries in Australia, Canada, the Dominican Republic, the Netherlands, and the United Kingdom for US$407 million, although NGC Corporation retained Destec's 20 domestic gas-fired power plants.
Dynegy history
Growth
In June 1998, NGC Corporation changed its name to Dynegy, Inc. The company's original slogan was "We believe in people." Nova announced two months later that it was seeking to sell its stake in Dynegy. Dynegy bought Illinova Corporation in 1999 in a deal worth US$1.75 billion and the assumption of US$2.25 billion of Illinova Corp. debt. The deal also allowed Nova and British Gas to sell their stake in Dynegy.
["Two More Deals Further Consolidate the Nation's Utilities." ''New York Times.'' June 15, 1999.]
Dynegy also began branching into areas outside natural gas and electrical generation. In August 2000, the company announced that it had purchased Extant Inc., a
broadband
In telecommunications, broadband is wide bandwidth data transmission which transports multiple signals at a wide range of frequencies and Internet traffic types, that enables messages to be sent simultaneously, used in fast internet connections. ...
provider building a nationwide fiber optic network, for US$152.5 million.
Dynegy, along with Enron,
El Paso Corporation
El Paso Corporation was a provider of natural gas and related energy products and was one of North America's largest natural gas producers until its acquisition by Kinder Morgan in 2012. It was headquartered in Houston, Texas. United States.
Pr ...
,
Reliant Energy
Reliant Energy is an American energy company based in Houston, Texas.
History
Headquartered in Houston, Texas, Reliant Energy, a subsidiary of NRG Energy, is one of the largest Texas electricity providers serving over 1.5 million Texans. Relian ...
, and several other energy companies, was accused of
price manipulation
In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...
and other fraudulent practices during the
California electricity crisis
California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...
in 2000 and 2001. The case against Dynegy was dismissed in 2003.
In 2001, Dynegy made a
white knight US$8 billion takeover bid for Enron, which was saddled with $13 billion in debt and whose stock had plummeted. The deal began unraveling two weeks later as Enron revealed even larger financial losses and more debt than previously reported. Dynegy withdrew its merger offer on November 28. Enron sued Dynegy on December 2, the day after Enron declared bankruptcy. (The lawsuit was settled in August 2002 after Dynegy agreed to pay Enron US$25 million for backing out of the deal.) Enron attempted to sell off assets in an effort to stay afloat. On January 3, 2002, Dynegy successfully acquired Enron's
Northern Natural Gas Company pipeline. NNGC was Enron's most lucrative pipeline asset and had been put up as collateral in return for Dynegy providing financing to Enron during merger talks.
Near-bankruptcy of 2002
![Wells Fargo Bank Plaza, Houston, from base](https://upload.wikimedia.org/wikipedia/commons/b/bc/Wells_Fargo_Bank_Plaza%2C_Houston%2C_from_base.jpg)
Dynegy came close to bankruptcy in 2002. Investor pressure on energy stocks in the wake of the Enron collapse pushed Dynegy's stock price down 42 percent by late April. The company also admitted on April 26 that it made a large accounting error on a fuel contract, which further depressed the stock price 22 percent.
Moody's Investors Service
Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides international ...
announced it was reviewing all US$4 billion of Dynegy debt. In financial distress, Dynegy successfully applied for a US$900 million line of credit. On May 1, the
U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
opened a formal investigation into how Dynegy's "Project Alpha", an internal corporate initiative that allegedly inflated income from natural gas transactions and illegally structured business partnerships to avoid income. Two weeks later, the ''
New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
'' reported that Dynegy's Illinova subsidiary was part of the investigation. Illinova had formed a joint partnership named Catlin in January 2000 with a little-known investment company named Black Thunder. Catlin took over some of Illinova's electrical generating assets. Although Black Thunder put up almost 90 percent of the money to form Catlin, Dynegy was required to buy out Black Thunder's investment or sell off the assets if Catlin did not earn a specified high rate of return. On May 28, Dynegy founder, president, and chief executive officer
Charles Watson resigned. Dynegy Inc. chairman Dan Dienstbier was named interim CEO.
["Dynegy May Find a Partner to Stabilize Energy Trading." ''New York Times.'' July 24, 2002.] In mid-June, Dynegy reported that its first quarter income had fallen 80 percent. It also admitted that it had signed long-term power contracts that would not produce revenue for years to come; but it had charged the income to the current year's revenues in an attempt to bolster its bottom line. On June 19, Dynegy's chief financial office, Rob Doty, resigned. The following day, Dynegy shut down its online energy trading system.
Dynegy was quickly approaching bankruptcy by late June 2002. On June 25, the company announced it would sell off assets in an attempt to raise US$2 billion in cash. Moody's downgraded the rating of the company's bonds to "
junk" status on June 28. Dynegy announced it might need a financial partner to help it stabilize. After the July 23 announcement, the company's shares dropped 64 percent.
Desperate for cash, Dynegy sold the Northern Natural Gas Company to MidAmerican Energy Holdings for $928 million on July 29 ($572 less than it paid for it). The sale saved Dynegy from bankruptcy.
Although Dynegy avoided bankruptcy, the fallout from the company's accounting practices continued throughout 2002. In August, former Dynegy controller and chief accounting officer Bradley P. Farnsworth sued the company, saying he'd been fired after refusing to help manipulate the company's financial statements in the summer of 2000. The company suspended its dividend on August 12. On September 3, interim chairman Glenn F. Tilton resigned in order to become chief executive officer of
United Airlines
United Airlines, Inc. (commonly referred to as United), is a major American airline headquartered at the Willis Tower in Chicago, Illinois. . On September 24, Dynegy announced that it had agreed to pay a US$3 million fine for using the Catlin company and other business partnerships to hide losses and taxable income. It also admitted that it had engaged in "round-trip" trades, phony natural gas and electricity trades designed to mislead investors and other companies about the success of Dynegy's online trading operation. The company later fired five traders after the
Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.
The Commodity Exchange Ac ...
(CFTC) discovered that Dynegy energy traders had supplied false prices to industry trade publications. The company later paid a US$5 million fine to the CFTC. Still needing cash, Dynegy sold its Hornsea natural gas storage site in the United Kingdom to help pay the fine.
Dynegy shuttered its online energy trading business for good on October 16, 2002. The closure led Dynegy to lay off 14 percent of its workforce, which left it with just 4,600 employees.
Several Dynegy executives were later convicted or indicted for their roles in Dynegy's near-collapse. In June 2003, Jamie Olis (former Senior Director of Tax Planning), Gene Foster (former Vice President for Taxation), and Helen Sharkey (a former employee in Dynegy's risk control and deal structure groups), were indicted on numerous counts of
mail and wire fraud. According to court documents, the three employees conceived of a plan in early 2001 to borrow money but make it look like operational revenue. A corporation known as ABG Gas Supply was created. ABG secured loans from
Citigroup
Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
,
Credit Suisse First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York.
The company was created by the merger of First Boston, First Boston Corporation and Credit Suisse, ...
, and
Deutsche Bank
Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...
to buy natural gas at market prices. ABG then sold this gas at a discount to Dynegy, which resold it at market prices and booked a $300 million profit. ABG then bought natural gas at market prices, and sold it at a premium to Dynegy. The profits ABG booked were then used to repay the loans. Prosecutors accused Olis, Foster, and Sharkey of deceiving auditors, regulators, and other company executives regarding the transactions. Foster and Sharkey plead guilty two months later. Olis was found guilty in March 2004, and sentenced to 24 years in prison. (A year later, after a
U.S. Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
ruling in a different case held that mandatory sentencing guidelines violated the Constitution, Olis' sentence was reduced to just six years in prison.) In December 2003, three former executives at Nicor Energy LLC (a joint venture of Dynegy and
Nicor
Nicor Gas is an energy company headquartered in Naperville, Illinois. Its largest subsidiary, Nicor Gas, is a natural gas distribution company. Founded in 1954, the company serves more than two million customers in a service territory that en ...
), were indicted for illegally manipulating that firm's income by US$11 million in 2001 to hide losses. Former chief financial officer Robert Doty agreed to pay a $376,650 fine in October 2007 for his role in helping to conceal the ABG Gas Supply scheme.
Shareholders, too, were unhappy with Dynegy's actions during the financial crisis. A
class action
A class action, also known as a class-action lawsuit, class suit, or representative action, is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member or members of that group. The class actio ...
lawsuit was filed against the company in 2002. In April 2005, Dynegy agreed to settle the lawsuit. Shareholders would be paid a total of US$468 million. To come up with the money, Dynegy paid out $250 million in cash and issued $68 million in stock to the plaintiffs. Its insurance companies paid another $150 million to the plaintiffs.
Recovery and restructuring
On October 23, 2002, Dynegy hired
Bruce Williamson, a former
Duke Energy
Duke Energy Corporation is an American electric power and natural gas holding company headquartered in Charlotte, North Carolina.
Overview
Based in Charlotte, North Carolina, Duke Energy owns 58,200 megawatts of base-load and peak generation in ...
executive, as its chief executive officer. Six weeks later, Dynegy hired Nick J. Caruso, a former chief financial officer at
Royal Dutch Shell
Shell plc is a British multinational oil and gas company headquartered in London, England. Shell is a public limited company with a primary listing on the London Stock Exchange (LSE) and secondary listings on Euronext Amsterdam and the New Yo ...
, as its new chief financial officer.
Williamson began a program of cost cutting, elimination of unprofitable businesses, and financial
restructuring
Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons ...
. As Williamson later told the ''New York Times'' in June 2005, "We had businesses in trading, in marketing, in broadband communications, in Europe, in communications as far as China. What we have done is very systematically sell those off, shut down offices and concentrate on the two businesses that looked like we had a competitive advantage."
[Mouawad, Jad. "Life in Energy, After Enron." ''New York Times.'' June 25, 2005.] Dynegy sold its
telecommunications
Telecommunication is the transmission of information by various types of technologies over wire, radio, optical, or other electromagnetic systems. It has its origin in the desire of humans for communication over a distance greater than that fe ...
business in Europe in January 2003, restated its income for 2001 and 2002, sold a natural gas terminal in Louisiana, sold its telecommunications business in North America in April 2003, engaged in a US$1.6 billion refinancing and other restructuring of its debt, sold its Illinois Power Company subsidiary to
Ameren
Ameren Corporation is an American power company created December 31, 1997, by the merger of St. Louis, Missouri's Union Electric Company (formerly NYSE: UEP) and the neighboring Central Illinois Public Service Company (CIPSCO Inc. holding, form ...
, and nullified a number of contracts in non-core or money-losing areas. In March 2004, Wiliamson was named chairman of the company, succeeding Dan Dienstbier (who retired).
Dynegy undertook a strategy to move into coal-fired and hydroelectric electrical generation in 2004, and out of natural gas distribution and trading. In November 2004, the company acquired four natural gas-fired and four hydroelectric power generation plants in the
Northeast United States
The Northeastern United States, also referred to as the Northeast, the East Coast, or the American Northeast, is a geographic list of regions of the United States, region of the United States. It is located on the Atlantic Ocean, Atlantic coast ...
. In March 2005, it agreed to settle a 1999 dispute with the
Environmental Protection Agency
A biophysical environment is a biotic and abiotic surrounding of an organism or population, and consequently includes the factors that have an influence in their survival, development, and evolution. A biophysical environment can vary in scale f ...
by spending US$321 million to repair and upgrade coal-fired generating plants in Illinois to reduce pollutants. In mid-2005, Dynegy hired Credit Suisse First Boston to assist it in finding a buyer for its natural gas transmission businesses.
The sale of this business came quickly: In August 2005, Dynegy sold this business to
Targa Resources
Targa Resources Corp. is a Fortune 500 company based in Houston, Texas. Targa, a midstream energy infrastructure corporation, is one of the largest infrastructure companies delivering natural gas and natural gas liquids in the United States. T ...
, a company owned by private equity firm
Warburg Pincus
Warburg Pincus LLC is a global private equity firm, headquartered in New York, with offices in the United States, Europe, Brazil, China, Southeast Asia and India. Warburg has been a private equity investor since 1966. The firm currently has over ...
.
In September 2006, Dynegy and
LS Power Group LS may refer to:
Businesses
* LS Group, a Korean company
* Jet2.com (IATA code: LS), a British airline
Latin
* Lewis and Short (abbr. "L&S"), authors of the 1879 work ''A Latin Dictionary''
* Lectori Salutem (L.S.), Latin for 'Greetings Re ...
agreed to a joint venture in a deal worth US$2.3 billion. Under the terms of the agreement, Dynegy gave LS Power a 40 percent stake in Dynegy itself while LS Power contributed 10 of its power plants. Dynegy also agreed to create a 245 million new Class B shares, which it turned over to LS Power.
["Dynegy in $1.5 Billion Deal to Sell 8 Electricity Plants." ''Retuers.'' August 10, 2009.] In May 2007, ChevronTexaco announced it was selling its 12 percent stake in Dynegy to the public. The sale netted ChevronTexaco US$680 million by July. The joint venture did not last, however. In August 2009, LS Power agreed to buy nine electrical generating plants from Dynegy for US$1.025 billion in cash in order to dissolve the joint venture. Part of the reason for the joint venture's demise was another collapse in Dynegy's share price. Dynegy's shares fell 80 percent in the two years after the deal closed, and the company posted a large $345 million loss in the second quarter of 2009. LS Power also agreed to return all its Class B shares, so that Dynegy would only have 95 million shares of common stock outstanding. The dissolution of the joint venture left LS Power with a 15 percent stake in Dynegy.
Dynegy's move into coal-powered electrical generation was not without controversy. In September 2007,
New York Attorney General
The attorney general of New York is the chief legal officer of the U.S. state of New York and head of the Department of Law of the state government. The office has been in existence in some form since 1626, under the Dutch colonial government of ...
Andrew Cuomo
Andrew Mark Cuomo ( ; ; born December 6, 1957) is an American lawyer and politician who served as the 56th governor of New York from 2011 to 2021. A member of the Democratic Party, he was elected to the same position that his father, Mario Cuo ...
sued Dynegy and other utilities, arguing that the companies were not properly accounting for the financial risks that pollutants from coal-fired generating plants created. After a year of negotiations and legal maneuvering, Dynegy agreed to issue statements to its current and future investors warning that government regulation of carbon emissions and lawsuits over pollution could pose financial risks to the company. Its move into
coal-fired
Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen.
Coal is formed when dea ...
electrical generation led the
National Environmental Trust, an environmental group, to derisively call Dynegy the "king of coal" in 2008.
Takeover battles
On August 13, 2010, the
Blackstone Group
Blackstone Inc. is an American alternative investment management company based in New York City. Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate b ...
announced plans to purchase Dynegy for US$4.7 billion. As part of the deal,
NRG Energy
NRG Energy, Inc. is an American energy company, headquartered in Houston, Texas. It was formerly the wholesale arm of Northern States Power Company (NSP), which became Xcel Energy, but became independent in 2000. NRG Energy is involved in ener ...
would acquire four natural gas plants in California and Maine for US$1.36 Billion.
Seneca Capital, Dynegy's largest shareholder, fought the purchase in a proxy fight. Dynegy investor
Carl Icahn
Carl Celian Icahn (; born February 16, 1936) is an American financier. He is the founder and controlling shareholder of Icahn Enterprises, a public company and diversified conglomerate holding company based in Sunny Isles Beach. Icahn takes l ...
also promised a proxy battle, arguing that Blackstone Group's offer was too low. Icahn raised his stake in Dynegy to 12.9 percent in preparation for the shareholder fight. Seneca Capital nominated former railroad executive
E. Hunter Harrison and former energy company executive Jeff D. Hunter for the Dynegy board of directors, challenging Bruce Williamson and David Biegler (a Williamson ally).
A series of maneuvers followed. Dynegy executives said the offer was a good one, as the deal would give Dynegy access to lines of credit which would enable it to refinance and restructure its debt. With energy prices at cyclical lows, the company said it lacked the resources to do so and that its debt burden was destabilizing. Blackstone Group initially said it would not offer more than US$4.50 per share, but then revised its offer later that day to US$5.00 a share. Worried that it did not have enough shareholder support to accept the Blackstone Group offer, Dynegy proposed postponing its shareholder meeting a few days to November 23, but postponement did not occur. Legal counsel advised that
Delaware
Delaware ( ) is a state in the Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes its name from the adjacent Del ...
law (under which Dynegy was incorporated) considered a postponement a new meeting, and that would require notifying shareholders (again) and giving at least 20 days' notice. Furthermore, Dynegy's proxy rules did not make it clear that a proxy remained in effect in the event of a postponement (which could lead to lawsuits). Legal counsel also believed that Dynegy management would be forced refile resolution with shareholders and resolicit votes, which would delay a meeting until early 2011.
[Davidoff, Steven M. "Unusual Tactic." ''New York Times.'' November 19, 2010.](_blank)
Accessed 2012-07-6. During the shareholder meeting, management's fears proved accurate. On November 19, Dynegy was forced to recess its shareholder meeting in an attempt to garner more support for the Blackstone bid. (Dynegy was unable to adjourn the meeting because its bylaws did not clearly provide for adjournment to another date, and because it was unclear that adjournment could occur without a shareholder vote—a vote the board felt it would lose.)
During the four-day recess, Dynegy executives said the company would continue to solicit a takeover even if the Blackstone Group bid failed. On November 23, 2010, Dynegy management and Blackstone agreed to call off the takeover after it became clear there was not enough support for the US$5.00 a share bid.
On December 15, 2010, Icahn offered a US$5.50 a share cash bid for Dynegy. Dynegy's board asked for other bids, but none emerged. But Icahn, too, found little support among shareholders. He extended his offer by two weeks on January 25, 2011. That same day, Seneca Capital said it would not even entertain a US$6.00 a share bid. Dynegy's board urged shareholders to accept the Icahn bid, or risk bankruptcy. But by mid-February, even those investors willing to accept the Icahn bid had rescinded these offers. Icahn extended his offer by few days. The Icahn bid, too, collapsed.
On February 20, 2011, Bruce Williamson resigned as Dynegy's chairman, and announced he would step down as chief executive officer on March 11. Chief financial officer Holli C. Nichols also said she would resign as chief financial officer on March 11 as well. Board member Thomas W. Elward was named interim chairman, and Robert C. Flexon was appointed interim president and chief executive officer.
[Roose, Kevin. "Dynegy Settles With Creditors." ''New York Times.'' April 4, 2012.](_blank)
Accessed 2012-07-06. Harrison was elected to the board of directors. Also elected to the board were Vincent J. Intrieri, Senior Managing Director of Icahn Capital, and Samuel J. Merksamer, an investment analyst for Icahn Capital.
[de la Merced, Michael. "Hurt by Debt, Dynegy Says Bankruptcy Is a Possibility." ''New York Times.'' March 9, 2011.](_blank)
Accessed 2012-07-06.
2012 bankruptcy
The takeover bids all came after one of Dynegy's largest subsidiaries filed for bankruptcy. On November 7, 2011 Dynegy Holdings, the largest of Dynegy Inc.'s four subsidiaries, filed for
Chapter 11 bankruptcy protection
Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, wheth ...
.
The bankruptcy was a novel one. Dynegy had structured itself so that Dynegy Inc. (the holding company) had little debt. Nearly all the debt was held by its subsidiary, Dynegy Holdings, which also guaranteed debt for the operating divisions. Dynegy Inc. created three operating divisions: the natural gas group (GasCo), the coal group (CoalCo), and a group for all other businesses (known as "the stub group"). GasCo and CoalCo were structured so that they would be little affected by any bankruptcy filing by either Dynegy Inc. or Dynegy Holdings. Part of the structure meant that few of the natural GasCo's and CoalCo's dividends were given to Dynegy Holdings. To separate Dynegy Holdings from Dynegy Inc., Dynegy Holdings was transformed from a
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
into a
limited liability company
A limited liability company (LLC for short) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...
(LLC). This legal maneuver took advantage of a
Delaware Supreme Court
The Delaware Supreme Court is the sole appellate court in the United States state of Delaware. Because Delaware is a popular haven for corporations, the Court has developed a worldwide reputation as a respected source of corporate law decisions, ...
ruling which made it difficult for creditors to sue an LLC's board of directors for failing to uphold their
fiduciary duty
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for exampl ...
. Finally, GasCo and CoalCo sold themselves to Dynegy Inc., which left Dynegy Holdings holding US$1.25 billion in debt but without the ability to seize the assets of GasCo and CoalCo in the event of a default. Under the structure adopted by Dynegy Inc., the company could meet its debt obligations to Dynegy Holdings by paying cash or by forgiving debt. This provided an incentive for Dynegy Inc. to withhold payment and force Dynegy Holdings to declare bankruptcy (thereby reducing the value of the debt and making it easier to pay off).
The restructuring plan put Dynegy's assets which had the worst financial performance into the hands of Dynegy Holdings. The goal was to protect Dynegy's secured creditors at the expense of its unsecured creditors. The plan had already generated one lawsuit. In 2011,
U.S. Bancorp, representing bondholders whose investment was secured by leases of two Dynegy power plants new
Newburgh, New York
Newburgh is a city in the U.S. state of New York, within Orange County. With a population of 28,856 as of the 2020 census, it is a principal city of the Poughkeepsie–Newburgh–Middletown metropolitan area. Located north of New York City, a ...
(the
Danskammer Generating Station
Danskammer Generating Station is located on the shore of the Hudson River in the Newburgh (town), New York, Town of Newburgh, New York, United States, upstream of the larger oil-fired Roseton Generating Station. Danskammer 'units 1 and 2 burn na ...
and the
Roseton Generating Station).
[Checkler, Joseph and Stilwell, Victoria. "Dynegy Joins Subsidiary in Chapter 11, Sets Merger." ''Wall Street Journal.'' July 6, 2012.](_blank)
Accessed 2012-07-12.
On March 8, 2011, Dynegy submitted financial filings with government regulators warning investors that it faced bankruptcy if it could not restructure its debt.
The company announced a month later that it had hired the restructuring firm
Lazard
Lazard Ltd (formerly known as Lazard Frères & Co.) is a financial advisory and asset management firm that engages in investment banking, asset management and other financial services, primarily with institutional clients. It is the world's lar ...
and the law firm
White & Case
White & Case LLP is a global law firm based in New York City. Founded in 1901, the firm has 46 offices in 31 countries worldwide and has been ranked among the top ten firms worldwide by revenue.
History
The firm was launched on May 1, 1901 wh ...
to advise it on debt restructuring. Vincent Intrieri was named chair of the boards finance and restructuring committee.
On March 9, 2012, the November 2011 bankruptcy of Dynegy Holdings ran into difficulty. An examiner appointed by the
United States bankruptcy court
United States bankruptcy courts are courts created under Article I of the United States Constitution. The current system of bankruptcy courts was created by the United States Congress in 1978, effective April 1, 1984. United States bankruptcy c ...
found that the Dynegy Inc.'s purchase of CoalCo was fraudulent. The examiner found that Dynegy Holdings was already bankrupt at the time the sale took place, and therefore constituted a breach of fiduciary duty by the Dynegy Holdings board of directors. This allowed the Dynegy Holdings board of directors to sue the Dynegy Inc. board of directors for damages (which could run into the billions of dollars). This threw the Dynegy Holdings bankruptcy filing into doubt, and put Dynegy Inc. on the hook for billions in debt. The bankruptcy court trustee said she would sue on behalf of Dynegy Holdings to recover these debts.
The bankruptcy court examiner's finding quickly led to the bankruptcy of Dynegy Inc. itself. On April 3, 2012, Dynegy Inc. announced that it had reached an agreement with the U.S. bankruptcy trustee, the board of directors of Dynegy Holdings, and its other creditors. The agreement, which affected US$2.25 billion in debt, gave all creditors 99 percent of the stock of Dynegy Inc. once it emerged from bankruptcy. Existing shareholders would get just 1 percent of the stock in the new company, with
warrants
Warrant may refer to:
* Warrant (law), a form of specific authorization
** Arrest warrant, authorizing the arrest and detention of an individual
** Search warrant, a court order issued that authorizes law enforcement to conduct a search for eviden ...
enabling them to buy up to 13.5 of common stock at a set price over the next five years.
Accordingly, Dynegy Inc. filed for Chapter 11 bankruptcy protection on July 5, 2012. The bankruptcy plan filed by Dynegy Inc. also called for a merger with Dynegy Holdings. The bankruptcy filing did not, however, affect GasCo, CoalCo, or the "stub group", and allowed the Dynegy Holdings bankruptcy to proceed. Dynegy's stock was delisted from the New York Stock Exchange following the bankruptcy filing. U.S. Bancorp agreed to drop its lawsuit against the company in exchange for a $540 million claim against the company in bankruptcy court. The bondholders represented by U.S. Bancorp would also get a further US$31 million if the Danskammer and Roseton plants are sold.
As part of its bankruptcy filing, Dynegy moved its corporate headquarters. In November 2011, the company signed a lease for new principal offices in an office building at 601 Travis Street in Houston. (It occupied these quarters early July 2012.) Dynegy continued to hold leases on several floors of the Wells Fargo Plaza, however. As part of its bankruptcy filing, the bankruptcy court approved a new lease in which Dynegy would abandon of space at Wells Fargo Plaza. The company asked the court to cancel its lease on the remaining as well.
Dynegy said it hoped to hold a vote on August 24, at which time its creditors would approve the bankruptcy plan. A court hearing on the creditor-approved bankruptcy plan would then be held September 5, after which the company said it would emerge from bankruptcy protection.
Dynegy Inc. posted a second-quarter 2012 loss of $1.06 billion, an increase to $8.65 per share from 95 cents per share a year ago. The company blamed, among other things, markedly lower demand for its electricity, much lower prices for its coal, and a $941 million noncash loss caused by the transfer of its coal unit to Dynegy Holdings. The company also said it now hoped to emerge from bankruptcy in September 2012.
Dynegy agreed to auction off its Roseton and Danskammer energy plants in New York state in order to emerge from bankruptcy. Dynegy had signed a
sale-leaseback agreement in 2001 with Public Services Enterprise Group for the Roseton and Danskammer facilities. Fifty percent of the proceeds from the auction would be used to pay bondholders (up to $571 million), while the remaining 50 percent would be used to pay unsecured creditors.
[Butler, Kelsey "Dynegy Holdings Plan Confirmed." ''Deal Pipeline.'' September 5, 2012.] The unsecured creditors would get $200 million in cash. Unsecured creditors also would receive 99 percent of Dynegy's new stock, with the company retaining the rest (with
warrants
Warrant may refer to:
* Warrant (law), a form of specific authorization
** Arrest warrant, authorizing the arrest and detention of an individual
** Search warrant, a court order issued that authorizes law enforcement to conduct a search for eviden ...
to purchase 13.5 percent of the stock after five years). Dynegy also agreed to pay holders of $206 million in
subordinated capital income securities just $55 million in principal and $16 million in interest to settle their claims. The bankruptcy agreement also settled claims between Dynegy Holdings and Dynegy, Inc.
Dynegy emerged from bankruptcy on October 2, 2012, and its shares began trading on October 3 under the "DYN" symbol.
Post-bankruptcy
On November 5, 2012, the
Federal Energy Regulatory Commission
The Federal Energy Regulatory Commission (FERC) is the United States federal agency that regulates the transmission and wholesale sale of electricity and natural gas in interstate commerce and regulates the transportation of oil by pipeline in ...
settled a decade-old lawsuit which alleged that Dynegy had manipulated the California energy market. While the lawsuit continued, Dynegy sold its California subsidiary to NRG Energy, Inc. NRG Energy subsequently agreed to pay $20 million in refunds to consumers as well as spend more than $100 million to install 200
public fast-charging electric vehicle stations and 10,000
plug-in stations throughout California. Twenty percent of the stations were required to be in low-income neighborhoods.
On January 4, 2013, Dynegy's Chief Operating Officer, Kevin Howell, resigned. Howell continued as a consultant to the company, and agreed to stay on until a successor was named in order to provide an orderly transition.
On February 2, 2013, Dynegy's South Bay Power Plant in
San Diego, California
San Diego ( , ; ) is a city on the Pacific Ocean coast of Southern California located immediately adjacent to the Mexico–United States border. With a 2020 population of 1,386,932, it is the eighth most populous city in the United States ...
, was imploded. The demolition of the smokestacks of the outmoded plant was watched by more than 1,000 people.
Roseton and Danskammer sales
The sale of the Roseton and Danskammer plants—a condition of Dynegy's emergence from bankruptcy—proceeded slowly. On November 8, 2012, members of
International Brotherhood of Electrical Workers
The International Brotherhood of Electrical Workers (IBEW) is a labor union that represents approximately 775,000 workers and retirees in the electrical industry in the United States, Canada, Guam, Panama, Puerto Rico, and the US Virgin Islands; ...
(IBEW) Local 320 struck the Roseton and Danskammer plants after a contract extension expired and Dynegy continued to seek cuts in retirement benefits. Dynegy's bankruptcy also left $17 million in unpaid property taxes in
Orange County, New York
Orange County is a county located in the U.S. state of New York. As of the 2020 census, the population was 401,310. The county seat is Goshen. This county was first created in 1683 and reorganized with its present boundaries in 1798.
Orange ...
. This created a budget crisis in the county which threatened to close local schools in Ulster County and create severe cutbacks in Orange County services. On December 10, 2012, Dynegy announced it would sell the Roseton plant to Louis Dreyfus Highbridge Energy for $19.5 million in cash.
[Gruen, Abby. "Dynegy Sells Roseton, Danskammer Plants in New York." ''SNL Energy M&A Review.'' January 1, 2013.] The sale closed on April 30, 2013.
The Danskammer plant sale was far more troubled. The plant was heavily damaged by
Hurricane Sandy
Hurricane Sandy (unofficially referred to as ''Superstorm Sandy'') was an extremely destructive and strong Atlantic hurricane, as well as the largest Atlantic hurricane on record as measured by diameter, with tropical-storm-force winds spann ...
in October 2012, rendering it inoperable. On December 10, Dynegy said that ICS NY Holdings would buy the plant for $3.5 million and demolish it.
But the ICS sale stalled. Under the terms of the auction, ICS NY had to replace or find a substitute for its credit support agreement, and pay its portion of the plant's outstanding property taxes. But, Dynegy said, the company never did either. ICS defended itself, saying it was making every economically feasible effort to replace the credit agreement. On May 25, 2013, Dynegy filed suit with the bankruptcy court to force ICA to fulfill its obligations. The court imposed a July 31 deadline for ICS to close the sale, but it did not meet the deadline. Dynegy subsequently sought another buyer. Helios Power Capital, a
private equity firm
A private equity firm is an investment management company that provides financial backing and makes investments in the private equity of startup or operating companies through a variety of loosely affiliated investment strategies including leve ...
, agreed to purchase the plant for $3.5 million in cash on August 20. The court approved the sale on September 2.
Ameren purchase
In mid-March 2013, Dynegy purchased three electric generating subsidiaries of
Ameren
Ameren Corporation is an American power company created December 31, 1997, by the merger of St. Louis, Missouri's Union Electric Company (formerly NYSE: UEP) and the neighboring Central Illinois Public Service Company (CIPSCO Inc. holding, form ...
, an
Illinois
Illinois ( ) is a U.S. state, state in the Midwestern United States, Midwestern United States. Its largest metropolitan areas include the Chicago metropolitan area, and the Metro East section, of Greater St. Louis. Other smaller metropolita ...
power company. The deal, worth $900 million, involved Ameren's Ameren Energy Generating Co. (Genco); Genco's controlling interest in Electric Energy Inc.; AmerenEnergy Resources Generating Co.; and Ameren Energy Marketing Co. Dynegy formed a subsidiary, Illinois Power Holdings (IPH), to purchase the Ameren subsidiaries. No cash changed hands; rather, IPH agreed to assume $825 million in debt owed by Genco and the other subsidiaries. Ameren also transferred about $180 million in tax benefits the three subsidiaries would have received in 2015. Ameren retained Genco's inactive
Hutsonville and Meredosia plants, and agreed to buy back from IPH for $133 million three natural gas electrical generating plants. Dynegy agreed to honor the
union
Union commonly refers to:
* Trade union, an organization of workers
* Union (set theory), in mathematics, a fundamental operation on sets
Union may also refer to:
Arts and entertainment
Music
* Union (band), an American rock group
** ''Un ...
collective bargaining
Collective bargaining is a process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects of workers' compensation and rights for workers. The i ...
agreements in force at all plants. Under the deal, Dynegy acquired five coal-fired generating plants:
Coffeen in
Coffeen, Illinois
Coffeen is a small city in Montgomery County, Illinois, Montgomery County, Illinois, United States. The population was 647 at the 2020 census.
History
Coffeen was named after one of its founders, Gustavus Coffeen.
Geography
Coffeen is in southe ...
; Duck Creek in
Canton, Illinois
Canton is the largest city in Fulton County, Illinois, United States. The population was 14,704 at the 2010 census, down from 15,288 as of the 2000 census. The Canton Micropolitan Statistical Area covers all of Fulton County; it is in turn, part ...
; E.D. Edwards in
Bartonville, Illinois
Bartonville is a village in Peoria County, Illinois, United States. The population was 6,471 at the 2010 census. Bartonville is a suburb of Peoria and is part of the Peoria, Illinois Metropolitan Statistical Area.
Geography
Bartonville is located ...
; Joppa in
Joppa, Illinois
Joppa is a village in Massac County, Illinois, United States, along the Ohio River. The population was 350 as of the 2020 census. It is part of the Paducah, KY-IL Micropolitan Statistical Area.
History
During the first part of the 19th centu ...
; and Newton in
Newton, Illinois
Newton is a city in and the county seat of Jasper County, Illinois, United States. The population was 2,849 at the 2010 census, down from 3,069 at the 2000 census. Newton is home to a large coal-fired power plant operated by Illinois Power Gen ...
.
[Boshart, Glen. "Dynegy Bid to Buy Ameren's Merchant Plants Makes Its Way to FERC." ''SNL Power Daily with Market Report.'' April 18, 2013.][Yeagle, Patrick. "Shell Game." ''Illinois Times.'' September 19, 2013.]
As the deal worked its way through state and federal regulatory approval, Dynegy took advantage of low interest rates and refinanced its debt. The company obtained $1.3 billion in
term loan B facilities and $500 million in
revolving credit
Revolving credit is a type of credit that does not have a fixed number of payments, in contrast to installment credit. Credit cards are an example of revolving credit used by consumers. Corporate revolving credit facilities are typically used to ...
. The company used this income to retire an $800 million, seven-year
line of credit
A line of credit is a credit facility extended by a bank or other financial institution to a government, business or individual customer that enables the customer to draw on the facility when the customer needs funds. A line of credit takes se ...
and a $500 million, two-year line of credit. Dynegy agreed that the revolving credit line would be paid off and terminate within five years. Two
syndicated loans made up the $1.3 billion loan package. The $800 million loan and the $500 million loan were both due in 2020. This left Dynegy with $1.28 billion in lines of credit and $500 million in outstanding bonds.
The Ameren plants-for-debt swap also ran into trouble. The
Federal Energy Regulatory Commission
The Federal Energy Regulatory Commission (FERC) is the United States federal agency that regulates the transmission and wholesale sale of electricity and natural gas in interstate commerce and regulates the transportation of oil by pipeline in ...
(FERC) had to approve the deal and ensure that there was no negative impact on consumers from Dynegy's expanding market share in the Midwest. But on April 16, FERC said that the studies submitted by Dynegy and Ameren were inadequate, and it ordered the two firms to rerun the studies and report back to FERC by July 14.
On July 16, FERC again declined to approve or disapprove the Dynegy-Ameren deal. The agency said that it Dynegy's study showed it charging market rates for energy in the Midwest. But FERC said it worried that transmission bottlenecks in the area would permit Dynegy to charge much more. Furthermore, federal regulators were considering an expansion in the market area IPH could serve. FERC asked Dynegy to provide additional information on transmission limitations and market area expansion. In August, the
Sierra Club
The Sierra Club is an environmental organization with chapters in all 50 United States, Washington D.C., and Puerto Rico. The club was founded on May 28, 1892, in San Francisco, California, by Scottish-American preservationist John Muir, who be ...
formally filed opposition to the Dynegy-Ameren deal. The environmental group said the transmission bottleneck issue gave Dynegy too much market power. It also argued that Dynegy and Ameren had submitted only regional
market power
In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. In other words, market powe ...
data, and had not accounted for local impacts (which could be very severe).
Another obstacle emerged on June 6. Ameren was required to install pollution-reducing equipment on its five coal-fired generating plants in 2015. But because Ameren was in financial difficulty, it sought and received a waiver from the state of Illinois granting it a five-year delay. Ameren sought to transfer this delay to Dynegy, so that Dynegy would not have to immediately install the devices until 2020, either. But the Illinois Pollution Control Board denied Ameren's request. Dynegy filed its own request for a five-year waiver in July, and warned that the Ameren deal would fall apart if it did not receive the waiver. But the Sierra Club, the
Environmental Law and Policy Center
The Environmental Law and Policy Center (ELPC) is a Midwest-based non-profit environmental advocacy group, with offices in Chicago, Columbus (OH), Des Moines (IA), Duluth (MN), Jamestown (ND), Madison (WI), Sioux Falls (SD), and Washington, D.C. E ...
, and other environmental groups said Dynegy had the resources to install the equipment, and opposed a waiver.
[Tomich, Jeffrey. "Pollution Waiver May Decide Fate of Illinois Coal Plants." ''St. Louis Post-Dispatch.'' September 13, 2013.][Finke, Doug. "Pollution Board Weighs Delay For Ameren Plants." ''Kewanee Star-Courier.'' September 18, 2013.] ACM Partners, a financial firm hired by the Sierra Club, also argued that Dynegy purposefully left IPH significantly underfunded and unable to tap into the parent company's resources.
Dynegy disagreed, but the firm warned that if IPH went bankrupt, workers would lose pensions and local communities would have to pay for any environmental remediation.
The Illinois AFL-CIO, however, supported Dynegy's request on September 16, saying that local jobs depended on the waiver.
["AFL-CIO Pushes For Waiver For Illinois Plants." ''Associated Press.'' September 17, 2013.] The pollution board said it would make a decision by November 2013.
Foresight Energy, a major Illinois coal mining company, said it would install the $500 million anti-pollution devices for free if Dynegy agreed to sign a long-term contract to accept coal only from Foresight Energy. Dynegy declined the offer (in part because it already has long-term coal contracts),
[Wernau, Julie. "Power Play for Ill. Coal." ''Chicago Tribune.'' September 22, 2013.] and environmental groups opposed it.
There was some speculation by financial analysts that the Dynegy-Ameren deal was a poor one. Julien Dumoulin-Smith, executive director of
UBS Investment Research, said Dynegy is far more likely to shutter all five coal-powered plants rather than add pollution control devices. Dumoulin-Smith pointed out that the
United States Environmental Protection Agency
The Environmental Protection Agency (EPA) is an independent executive agency of the United States federal government tasked with environmental protection matters. President Richard Nixon proposed the establishment of EPA on July 9, 1970; it be ...
(EPA) issued final rules on
sulfur dioxide
Sulfur dioxide (IUPAC-recommended spelling) or sulphur dioxide (traditional Commonwealth English) is the chemical compound with the formula . It is a toxic gas responsible for the odor of burnt matches. It is released naturally by volcanic activ ...
emissions that go into effect in July 2018. Because the Edwards plant is in an area of low air quality, EPA is likely to force Dynegy to close the plant anyway. The remaining four plants are borderline cases with the exception of Duck Creek Station which spent nearly US$800m on sulfur dioxide removal, and may also be forced to close if EPA regulations tighten in the future (a highly likely possibility, he said).
2014 acquisitions
On August 22, 2014, Dynegy announced a deal involving two interdependent transactions to be executed simultaneously. Dynegy acquired
Duke
Duke is a male title either of a monarch ruling over a duchy, or of a member of royalty, or nobility. As rulers, dukes are ranked below emperors, kings, grand princes, grand dukes, and sovereign princes. As royalty or nobility, they are ran ...
’s Midwest Generation assets and retail business for $2.8 billion in cash, and the power generating assets of
EquiPower Resources for $3.45 billion, with $3.35 billion in cash and $100 million in stock. This increased the company's generating capacity from 13000 MW to nearly 26000 MW.
Acquisition by Vistra
On April 9, 2018,
Vistra Corp closed its acquisition of Dynegy following a FERC determination that the $1.7 billion deal raised no competitive concerns.
Controversy
In June 2021, the Attorney General of Illinois filed a lawsuit against Dynegy claiming that the company polluted groundwater with contaminants from coal ash.
External links
Official site
References
{{Authority control
Vistra Corp
Natural gas companies of the United States
Companies based in Houston
Companies formerly listed on the New York Stock Exchange
Companies that filed for Chapter 11 bankruptcy in 2011
Companies that filed for Chapter 11 bankruptcy in 2012
Energy companies established in 1984
2018 mergers and acquisitions