Dynegy Emerges From Chapter 11 Bankruptcy Protection

HOUSTON (AP) — The electric power producer Dynegy (OTC: DYNIQ) has emerged from Chapter 11 bankruptcy protection.

The Houston company, which generates and sells electricity in wholesale power markets, said late Monday that its reorganization allowed it to eliminate more than $4 billion in debt. Its new shares are expected to begin trading Wednesday on the New York Stock Exchange under the symbol "DYN."

Dynegy filed for Chapter 11 in July after years of falling electricity prices and debt that surpassed $5 billion last year. One of its subsidiaries, Dynegy Holdings, filed for bankruptcy protection last November. As part of the restructuring, Dynegy Holdings and Dynegy were combined on Sept. 30.

Under the restructuring plan, the company's unsecured lenders get a 99% stake in Dynegy and $200 million in cash in exchange for eliminating the debt. Shareholders receive a 1% stake in the new company and 5-year warrants to buy up to 13.5 percent of its common stock.

Dynegy's trip through Chapter 11 was contentious. Shareholders, led by billionaire investor Carl Icahn, appeared to win control of the company from its bondholders at the outset of bankruptcy proceedings. In most bankruptcies, shareholders are wiped out but bondholders are left with assets that generally have some value.

Bondholders had sued the company, alleging that Dynegy illegally shifted the rights to certain assets to shareholders. A court-appointed examiner agreed with the bondholders, though shareholders did get to retain 1% of the company.

The reorganization does not include some subsidiaries, such as Dynegy Northeast Generation and Hudson Power, which remain in Chapter 11.

Dynegy, which is based in Houston, owns and operates coal and gas-fired power plants in California, Illinois, Maine, New York, and Pennsylvania. It sells the power generated to local electric utilities that then deliver the power to customers. Dynegy doesn't serve retail customers. Its emergence from bankruptcy protection is not expected to affect wholesale or retail electric rates.

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