The Return of Dynegy After Bankruptcy

Dynegy Inc. (NYSE: DYN) has now successfully completed its Chapter 11 reorganization and emerged from bankruptcy. The newly traded independent power producing company has approximately $800 million in liquidity in the form of restricted cash, unrestricted cash, and a letter of credit capacity. The company has eliminated more than $4 billion in debt through the Chapter 11 process. The reorganized company will have approximately 100 million shares outstanding.

The company now claims to have one of the strongest balance sheets in the independent power producers sector. The common stock and warrants are expected to be listed with and begin trading on the New York Stock Exchange today under the symbols DYN for the stock and DYNw for the warrants.

With Dynegy’s Chapter 11 process behind it, the company’s stated focus is “exclusively on executing our forward strategy.” In other words, the company message seems to be one that it wants to grow and retake position independently rather than being acquired by an outside player.

The unsecured creditors are receiving common equity representing a 99% stake in the reorganized company and $200 million in cash. Legacy stockholders under Dynegy Inc. (DYNIQ) are receiving a 1% stake in the reorganized company along with five-year warrants to purchase up to 13.5% of the reorganized common stock at an exercise price of $40 per share.

Dynegy previously said that it will initiate distributions of stock and cash to creditors and stockholders per the reorganization on October 2, 2012.

The reorganized Dynegy will have approximately 15.6 million warrants outstanding and approximately 6.1 million shares of common stock authorized and reserved for issuance under its employee incentive plan.

JON C. OGG