HOUSTON, Fri Jul 6, 2012 – Power producer Dynegy Inc., the parent company of Dynegy Holdings, filed for bankruptcy protection on Friday morning as part of its settlement agreement with creditors and said it will merge with its unit.
Last month, a bankruptcy court approved the company’s settlement with creditors under which Dynegy and Dynegy Holdings would be combined, with creditors holding a 99 percent equity stake in the combined company.
The settlement resolved a dispute among creditors over whether Dynegy had acted properly last September in taking $1.25 billion of coal-powered plant assets from Dynegy Holdings.
Creditors of that unit said the transfer unfairly benefited shareholders, including billionaire financier Carl Icahn and the Seneca Capital Investments LP hedge fund and Franklin Resources Inc.’s Franklin Advisers unit at their expense.
Susheel Kirpalani, a court-appointed examiner, in March called the move a “fraudulent transfer” that harmed Dynegy Holdings.
On Thursday, the court approved the reorganization plan of Dynegy Holdings which clears the way for it to seek approval from creditors.
Dynegy units that operate its coal and gas-fired businesses were not included in Friday’s Chapter 11 filing.
The company in 2001 set and then canceled plans to buy Enron Corp as the business and finances of its larger rival deteriorated quickly.
Dynegy had total assets of $11.3 billion and liabilities of $5.1 billion as of May 31.
HOUSTON – Mon Mar 12, 2012: United States Trustee Tracy David filed a motion with a bankruptcy court late Sunday night seeking the appointment of a Chapter 11 trustee in the ongoing Dynegy Holdings bankruptcy proceeding.
In her motion, David said, “The mismanagement of the debtors by their current management to the financial detriment of the debtors’ creditors provides cause for the appointment of an independent fiduciary to manage the affairs of these debtors.”
A bankruptcy trustee is often appointed when it may serve the bankruptcy estate’s best interest, or when company executives are suspected of wrongdoing.
On Friday, Susheel Kirpalani, the court-appointed examiner in the case said Dynegy Inc. harmed creditors by fraudulently transferring some coal-powered plant assets to itself before putting Dynegy Holdings into bankruptcy, and urged that the transfer be reversed.
Examiners work for the benefit of creditors, shareholders and the bankruptcy estate, and may investigate such allegations as dishonesty, fraud, incompetence and mismanagement.
“Current management is not in a position to assess the findings and conclusion of the examiner, and to pursue any and all of the appropriate remedies. Only a Chapter 11 trustee will have the statutory authority to do so,” David said in her motion.
Dynegy Holdings, a unit of independent power producer Dynegy Inc., filed for bankruptcy in November to restructure expensive leases on power plants and lighten its debt load.
HOUSTON ― Dynegy Inc. said it has joined its unit Dynegy Holdings in filing a proposed plan of reorganization with a U.S. bankruptcy court that lays out a path for the bankrupt unit’s emergence from Chapter 11 in 2012.
Dynegy Holdings, a unit of energy producer Dynegy Inc., filed for Chapter 11 bankruptcy in November to restructure expensive leases on power plants and lighten its debt load.
Dynegy Inc., whose shareholders include billionaire investor Carl Icahn and investment firm Seneca Capital, and its other subsidiaries have not filed for bankruptcy.
The reorganization plan would replace $3.4 billion in senior notes, $200 million in subordinated notes, $130 million in accrued interest and lease payments on the two power plants.
In exchange, the company would offer $400 million in cash, $1 billion in new 11-percent notes due 2018 secured by equity in the company’s coal and gas-fueled generating businesses and $2.1 billion in new convertible preferred stock that would convert at the end of 2015.
Dynegy will have the right to redeem the convertible preferred stock at varying discounts through the end of 2013.
The plan and the accompanying disclosure statement have not been approved by the bankruptcy court and are subject to further negotiations with stakeholders, Dynegy said.
Once the plan is approved by the court, Dynegy Holdings will begin soliciting its creditors for the approval, the company said.
The bankruptcy of Dynegy Holdings has turned the usual order of payment for creditors upside down, as the power company tries to protect shareholders like billionaire financier Icahn at the expense of bondholders.
HOUSTON ― Dynegy Inc. said Monday it completed its $1.7 billion debt restructuring deal and separated its coal-fueled and gas-fueled power generation units, as the third largest U.S. independent power producer works to pay off about $1.3 billion in maturing debt.
The refinancing would help strengthen Dynegy, which warned earlier this year that it might have to file for bankruptcy in the wake of two failed takeover offers and under the weight of almost $4.5 billion in debt.
The refinancing consists of a $1.1 billion, five-year senior secured term loan facility to its gas unit and a $600 million, five-year senior secured term loan to its coal unit, the company said in a statement.
The company said it will use the proceeds to repay debt and provide cash collateral for existing and future collateral requirements, among other purposes.
As of Aug. 5, Dynegy’s consolidated net debt and other obligations were about $4.4 billion, including the new facilities. It had cash and equivalents of about $1.0 billion and restricted cash of about $660 million, Dynegy said.
The refinancing efforts drew legal challenges in Delaware and New York, but a Delaware Chancery Judge ruled late last month that the deal could proceed.
Dynegy also said its net loss for the second quarter narrowed to $116 million, or 95 cents per share, from $191 million, or $1.59 per share, a year ago.
Dynegy shares closed at $4.9 on Friday on the New York Stock Exchange.