Power company Dynegy (a short version of "dynamic energy") has lost some of its dynamism in recent years. It provides wholesale power, capacity, and other services to a broad range of customers (utilities, cooperatives, municipalities and other energy operations) in 13 states, in the Midwest, the Northeast, and on the West Coast. Its generation portfolio consists of 18 power plants fueled by coal, fuel oil, and natural gas, with a capacity of more than 11,770 MW. In 2010 Dynegy's board recommended that the debt-heavy company be acquired by Icahn Enterprises for $665 million, but the deal was rejected in 2011, leading Dynegy to consider bankruptcy protection.
Dynegy initially had agreed in 2010 to merge with the Blackstone Group in a $4.7 billion transaction, but the deal was rejected by Carl Icahn and other shareholders.
However, the subsequent failure of shareholders to accept a recommendation for the company to be acquired by the Icahn-led group, led to the resignation of the company's top executives. Director E. Hunter Harrison stepped in as Interim President and CEO in early 2011. He resigned his position in July 2011 and became Chairman. Industry veteran Robert Flexon became Dynegy's President and CEO.
Dynegy has been endeavoring to find the right mix of assets to secure reliable and consistent financial returns. Hurt by the 2009 global recession that sapped customer demand and generated low commodity prices, the Blackstone deal offered an opportunity to pay down debt it has piled up after years of expansion. The purchase would have been the largest buyout of a power company by an investment firm since the acquisition of TXU (now Energy Future Holdings) in 2007. The 2010 proposed Blackstone deal, which included a $543 million purchase price and an agreement to sell some of Dynegy's premium assets to NRG Energy, reflects a growing consolidation trend in the US power industry. However, stakeholders Carl Icahn (13%) and Seneca Capital (9%) opposed the deal, and led a stockholder rejection of the offer, forcing all parties to reconsider their options.
In 2010 the company posted lower revenues due primarily to reduced contributions from its financial transactions. An improved net loss situation was not enough to rescue Dynegy from its deepening debt crisis. In April 2011 the company retained financial advisers Lazard Frères & Co. to assist the company with its debt restructuring activities.
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