DYNEGY BANKRUPTCY NEWS Issue Number 1
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Copyright 2011 (ISSN XXXX-XXXX) November 8, 2011
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Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001
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DYNEGY BANKRUPTCY NEWS is published by Bankruptcy Creditors'
Service, Inc., 572 Fernwood Lane, Fairless Hills, Pennsylvania
19030, on an ad hoc basis (generally every 10 to 20 days) as
significant activity occurs in the Debtors' cases. New issues
are prepared by Neil U. Lim, Psyche A. Castillon and
Peter A. Chapman, Editors. Subscription rate is US$45 per
issue. Any re-mailing of DYNEGY BANKRUPTCY NEWS is prohibited.
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IN THIS ISSUE
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[00000] HOW TO SUBSCRIBE TO DYNEGY BANKRUPTCY NEWS
[00001] BACKGROUND & DESCRIPTION OF DYNEGY HOLDINGS
[00002] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING
[00003] COMPANY'S BALANCE SHEET AS OF JUNE 30, 2011
[00004] DYNEGY HOLDINGS' CHAPTER 11 DATABASE
[00005] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES
[00006] DEBTORS' MOTION TO EXTEND TIME TO FILE SCHEDULES
KEY DATE CALENDAR
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11/07/11 Voluntary Chapter 11 Petition Date
11/21/11 Deadline to File Schedules of Assets and Liabilities
11/21/11 Deadline to File Statement of Financial Affairs
11/21/11 Deadline to File Lists of Contracts and Leases
12/07/11 Deadline to Provide Utilities with Adequate Assurance
02/05/12 Deadline to Remove Actions Pursuant to F.R.B.P. 9027
03/06/12 Expiration of Debtors' Exclusive Plan Proposal Period
03/06/12 Deadline to Make Decisions About Lease Dispositions
05/05/12 Expiration of Debtors' Exclusive Solicitation Period
11/06/13 Deadline for Debtors' Commencement of Avoidance Actions
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[00000] HOW TO SUBSCRIBE TO DYNEGY BANKRUPTCY NEWS
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DYNEGY BANKRUPTCY NEWS is distributed to paying subscribers by
electronic mail. New issues are published on an ad hoc basis as
significant activity occurs (generally every 10 to 20 days) in the
Debtors' cases. The subscription rate is US$45 per issue.
Newsletters are delivered via e-mail; invoices, transmitted
following publication of each newsletter issue, arrive by fax.
Re-mailing of DYNEGY BANKRUPTCY NEWS is prohibited. Distribution
to multiple individuals at the same firm is provided at no
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E-mail: peter@bankrupt.com
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(Distribution to multiple professionals at the
same firm is provided at no additional cost.)
DYNEGY BANKRUPTCY NEWS is distributed to paying subscribers by
electronic mail. New issues are published on an ad hoc basis as
significant activity occurs (generally every 10 to 20 days) in the
Debtors' cases. The subscription rate is US$45 per issue.
Newsletters are delivered via e-mail; invoices, transmitted
following publication of each newsletter issue, arrive by fax.
Re-mailing of DYNEGY BANKRUPTCY NEWS is prohibited.
Distribution to multiple individuals at the same firm is provided
at no additional charge; folks outside of your firm should set-up
and pay for their own subscriptions. Subscriptions may be
canceled at any time without further obligation.
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[00001] BACKGROUND & DESCRIPTION OF DYNEGY HOLDINGS
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Dynegy Holdings, LLC
1000 Louisiana, Suite 5800
Houston, Texas 77002
Tel: 713-507-6400
http://www.dynegy.com/
Dynegy Holdings, LLC and its subsidiaries' primary business is the
production and sale of electric energy, capacity and ancillary
services from a fleet of 10 operating power plants in six states
totaling roughly 9,903 MW of generating capacity. Dynegy Holdings
is a holding company and conducts substantially all of its
business operations through its subsidiaries.
Dynegy Holdings' direct operations consist of only two plants
-- at Dynegy Danskammer and Dynegy Roseton -- which have a
combined generating capacity of 1,693 MW, despite the size of
Dynegy Holdings' footprint and generating capacity across its
subsidiaries' enterprise.
Dynegy Holdings is a direct subsidiary of Dynegy Inc., and is the
direct or indirect parent of Dynegy Roseton, L.L.C., Dynegy
Danskammer, L.L.C., Hudson Power, L.L.C., and Dynegy Northeast
Generation, Inc.
The business operations of Dynegy Northeast Generation and Hudson
Power are wholly conducted through Dynegy Roseton and Dynegy
Danskammer at their power generation facilities in New York.
The DH Companies employ 152 full-time employees, of whom 126 are
represented by Local Union 320 of the International Brotherhood of
Electrical Workers, AFL-CIO. The remaining employees are not
represented by a union and are predominantly administrative and
managerial employees. All of these employees are employed in
connection with the operation of the Danskammer and Roseton power
generation facilities, and all but one are employees of Dynegy
Northeast.
Prepetition Indebtedness
As of Nov. 7, Dynegy Holdings is a wholly-owned subsidiary of
Dynegy Inc., with Dynegy Inc. holding 100% of the membership
interests in Dynegy Holdings. The remaining Debtors are wholly-
owned direct or indirect subsidiaries of Dynegy Holdings.
Dynegy Holdings, as of Nov. 7, has roughly $3.570 billion in
outstanding unsecured indebtedness arising under seven different
series of notes, debentures, and subordinated capital income
securities, with varying maturities.
A. Senior Unsecured Notes/Debentures
Dynegy Holdings has, from time to time, issued various series of
senior unsecured notes under the Indenture dated September 26,
1996, as amended and restated as of March 23, 1998, as amended and
restated as of March 14, 2001, and under the First through Sixth
Supplemental Indentures, between Dynegy Holdings and Wilmington
Trust Company (as successor to JP Morgan Chase Bank, N.A.,
successor to Bank One Trust Company, National Association).
These series of notes issued under the Indenture are outstanding:
-- 8.75% senior unsecured notes in the outstanding aggregate
principal amount of $88.5 million, due February 15, 2012;
-- 7.5% senior unsecured notes in the outstanding aggregate
principal amount of $785 million, due June 1, 2015;
-- 8.375% senior unsecured notes in the outstanding aggregate
principal amount of $1.046 billion, due May 1, 2016;
-- 7.75% senior unsecured notes in the outstanding aggregate
principal amount of $1.1 billion, due June 1, 2019;
-- 7.125% senior debentures in the outstanding aggregate
principal amount of $175 million due May 15, 2018; and
-- 7.625% senior debentures in the outstanding aggregate
principal amount of $175 million due October 15, 2026.
B. Subordinated Debentures
In May 1997, NGC Corporation Capital Trust I issued Series A
8.316% Subordinated Capital Income Securities through a Rule 144A
offering to qualified institutional buyers. In September 1997,
Series B 8.316% SKIS were exchanged for the outstanding Series A
8.316% SKIS. The Series B 8.316% SKIS in the aggregate principal
amount of $200 million due June 1, 2027 remain outstanding, and
are an unsecured obligation of Dynegy Holdings. The SKIS rank
subordinate and junior in right of payment to all senior
indebtedness of Dynegy Holdings.
C. Bilateral Contingent LC Facility
On May 21, 2010, Dynegy Holdings executed a $150 million unsecured
bilateral contingent letter of credit facility with Morgan Stanley
Capital Group Inc. Availability under the facility is tied to
increases in spark spreads and power prices for 2012 positions.
The facility matures on December 31, 2012. A facility fee accrues
on the unutilized portion of the facility at an annual rate of
0.6% and letters of credit availability accrue fees at an annual
rate of 7.25%.
There are currently no amounts outstanding under the facility.
(ii) $1.25 Billion Intercompany Promissory Note
On September 1, 2011, Dynegy Holdings issued a $1.25 billion
promissory note to its non-debtor subsidiary, Dynegy Gas
Investments, LLC, in exchange for DGIN transferring to Dynegy
Holdings its rights in an undertaking in the same amount. The
Promissory Note bears annual interest at a rate of 4.24%, payable
upon the maturity date, September 1, 2027.
(iii) Cash Collateralized Letter of Credit Facility
On August 5, 2011, Dynegy Holdings and Credit Suisse AG, Cayman
Islands Branch, entered into a Letter of Credit Reimbursement and
Collateral Agreement for a $26,217,318 cash collateralized Letter
of Credit Facility under which Credit Suisse Cayman would maintain
five then-existing letters of credit, one of which expired on
October 28, 2011. The letters of credit under the LC Facility are
issued (i) to various New York state regulatory agencies for
certain environmental liabilities related to Dynegy Danskammer and
(ii) to backstop certain obligations under the Debtors' workers
compensation insurance programs, as well as various surety bonds
posted in connection with litigation matters. The LC Facility is
collateralized by an account maintained by Bank of New York Mellon
holding the sum of $27,003,837, which amount may be withdrawn only
in accordance with the LC Agreement.
(iv) Credit Agreement
On April 2, 2007, Dynegy Holdings, Dynegy Inc. as guarantor, and
certain of their direct and indirect subsidiaries entered into a
Fifth Amended and Restated Credit Agreement. Under the Credit
Agreement, Dynegy Holdings had access to a $1.15 billion revolving
credit facility, an $850 million term letter of credit facility,
and a $70 million senior secured term loan facility. The
obligations under the Credit Agreement were secured by
substantially all of the assets of Dynegy Holdings. The
obligations under the Credit Agreement were guaranteed by Dynegy
Inc. and by certain of their direct and indirect subsidiaries, and
secured by substantially all of the assets of the guarantors.
Dynegy Holdings repaid all obligations under the Credit Agreement
in August 2011.
(v) Danskammer and Roseton Leases
In May 2001, in connection with the acquisition of the Roseton and
Danskammer power generation facilities, Dynegy Danskammer and
Dynegy Roseton each entered into a sale-leaseback transaction
pertaining to, Danskammer power-generating Units 3 and 4 and
Roseton power-generating Units 1 and 2.
Owner Lessors purchased the Danskammer Facility and the Roseton
Facility, and in each case an interest in the related common
facilities. The Owner Lessors are subsidiaries of Resource
Capital Management Corporation, an unrelated third party investor
and a wholly-owned subsidiary of PSEG Resources Inc.
The purchase price with respect to the Danskammer Leased Facility
was approximately $300 million. The purchase price with respect
to the Roseton Leased Facility was approximately $620 million. To
fund their purchases of the Leased Facilities, the Owner Lessors
used $138 million in equity funding from certain of the other PSEG
Entities, and financed the remaining $800 million of the purchase
price and the related transaction expenses through a private
offering of pass-through trust certificates, which were sold to
qualified institutional buyers.
Each of the Owner Lessors simultaneously leased its Leased
Facility to Dynegy Danskammer and Dynegy Roseton pursuant to a
facility lease. The Danskammer Lease expires May 8, 2031 and the
Roseton Lease expires on February 8, 2035.
The Lessees must make periodic rent payments on May 8 and November
8 of each year, Dynegy Danskammer through 2030 and Dynegy Roseton
through 2034. Any payments by the Lessees or the Guarantor are
applied pro rata to the Facility Leases, and neither Facility
Lease may be preferred over the other. The next three rent
payments due for each Leased Facility, as well as the total rent
payments remaining until the end of the Lease terms, are:
11/08/11
through end
Facility 11/08/11 05/08/12 11/08/12 of term
-------- -------- -------- -------- -----------
Danskammer $3,888,713 $3,888,713 $78,574,842 $102,991,141
Roseton $78,594,126 $51,629,366 $44,623,745 $691,030,741
----------- ----------- ----------- ------------
Total $82,482,840 $55,518,080 $123,198,587 $794,021,882
Under the sale-leaseback arrangements, the rent payments paid by
the Lessees are assigned to the Indenture Trustee for the
respective Facility. The Indenture Trustee then pays a portion of
that payment to each of two pass-through trusts, the Series A
Pass-Through Trust and the Series B Pass Through Trust. The Pass-
Through Trusts pay these amounts to the Pass-Through Certificate
Holders. Amounts paid in excess of the amounts due to the Pass-
Through Certificate Holders are paid by the Indenture Trustee to
the Owner Lessor Entity for the respective Leased Facility.
The Series A Trust certificates, representing a total obligation
of $250 million, bore interest at 7.27%, and had a final
distribution on November 8, 2010 and have been defeased. The
Series B Trust certificates, representing a total obligation of
$550.4 million, bear interest at 7.67%, and have a final
distribution on November 8, 2016. The current total outstanding
principal of the Series B Trust certificates as of Nov. 7 is
$550.4 million.
ROAD TO BANKRUPTCY
Dynegy Holdings has faced a number of issues, including (i)
decreasing liquidity due to declining revenues resulting from
sustained low power prices over the past two years, (ii) an over-
leveraged balance sheet, and (iii) economically unfavorable leases
for the Leased Facilities.
According to Kent R. Stephenson, executive vice president of DHI,
sustained low power prices over the past two years have had a
significant adverse impact on the Companies' business and continue
to negatively impact their projected future liquidity.
Specifically, Dynegy Holdings' annual consolidated revenue peaked
in the year ending December 31, 2008 (FY08) at $3.324 billion, and
has since declined to $2.468 billion in FY09 and $2.323 billion in
FY10. As further illustration of the steep decline in revenue,
for the six-month period ending June 30, 2010, Dynegy Holdings
reported consolidated revenues of $1.097 billion, and for the six-
month period ending June 30, 2011, Dynegy Holdings reported
consolidated revenues of $831 million.
In August 2010, Dynegy Inc. struck a deal to be acquired by an
affiliate of The Blackstone Group at $4.50 a share or roughly $4.7
billion. That offer was raised to $5.00 a share in November.
Through Carl Icahn and investment fund Seneca's efforts,
shareholders thumbed down both offers.
In December 2010, an affiliate of Icahn commenced a tender offer
to purchase all of the outstanding shares of Dynegy common stock
for $5.50 per share in cash, or roughly $665 million in the
aggregate. In February 2011, Icahn Enterprises L.P. terminated
the proposed merger agreement with the Company after it failed to
garner the required number of shareholder votes. The Companies
also eliminated approximately 135 positions across all functional
and geographic areas, resulting in an expected annual savings of
approximately $50 million, Mr. Stephenson related.
Goldman, Sachs & Co. and Greenhill & Co., LLC, served as financial
advisors and Sullivan & Cromwell LLP served as legal counsel to
Dynegy on the sale efforts. Houlihan Lokey, according to a report
by the Journal, is advising Dynegy creditors.
In the past months, a finance and restructuring committee was
created to undertake a comprehensive review of Dynegy's various
restructuring alternatives, including, without limitation, if
appropriate, reviewing and evaluating (i) possible changes to the
capital structure of Dynegy, including the issuance, repurchase or
prepayment of indebtedness or equity securities and (ii) possible
sales of Dynegy's assets.
The committee is chaired by Vincent J. Intrieri. Other directors
on the committee are Thomas W. Elward, E. Hunter Harrison and
Samuel Merksamer.
August 2011 Reorganization
On August 4, 2011, Dynegy Inc., Dynegy Holdings, and certain of
their direct and indirect subsidiaries underwent a reorganization
and restructuring to, among other things, facilitate certain
credit facilities and maximize their flexibility to address
leverage and liquidity issues and to preserve the value of their
assets.
As part of the reorganization, Dynegy Holdings and its
subsidiaries effected transactions to cause:
-- substantially all of the coal-fired power generation
facilities to be held by Dynegy Midwest Generation, LLC, an
indirect subsidiary of Dynegy Holdings;
-- substantially all of the gas-fired power generation
facilities to be held by Dynegy Power, LLC, an indirect
subsidiary of Dynegy Holdings; and
-- 100% of the ownership interests of Dynegy Northeast
Generation, the entity that indirectly holds the equity
interest in the subsidiaries that operate the Roseton and
Danskammer power generation facilities, to be held directly
by DHI.
As a result of the reorganization, GasCo owns a portfolio of eight
primarily natural gas-fired intermediate (combined cycle) and
peaking (combustion and steam turbines) power generation
facilities diversified across the West, Midwest and Northeast
regions of the United States, totaling 6,771 MW of generating
capacity. CoalCo owns a portfolio of six primarily coal-fired
baseload power generation facilities located in the Midwest,
totaling 3,132 MW of generating capacity.
GasCo and CoalCo are indirect wholly owned subsidiaries of DHI and
were designed to be separately financeable. The Company said
GasCo and CoalCo are bankruptcy remote in order to accommodate the
financings reflected by the credit facilities and to provide the
Company with greater flexibility in its efforts to address
leverage and liquidity issues and to realize value of its assets.
On September 1, 2011, Dynegy Inc. and DGIN, a direct wholly-owned
subsidiary of Dynegy Holdings, entered into a Membership Interest
Purchase Agreement whereby DGIN sold 100% of the outstanding
membership interests of Dynegy Coal HoldCo, LLC, a Delaware
limited liability company and wholly-owned subsidiary of DGIN, to
Dynegy Inc. Coal HoldCo indirectly owns CoalCo.
In exchange for DGIN's membership interests in Coal HoldCo, Dynegy
Inc. issued an undertaking to DGIN pursuant to which Dynegy Inc.
agreed to make certain specified payments over time which coincide
in timing and amount to the payments of principal and interest
that Dynegy Holdings is obligated to make under a portion of its
Old Notes.
DGIN assigned its right to receive payments under the Undertaking
Agreement to Dynegy Holdings in exchange for a promissory note in
the amount of $1.25 billion that matures in 2027. The Note bears
annual interest at a rate of 4.24%, which will be payable upon
maturity. As a condition to Dynegy Inc.'s consent to the
assignment of the Undertaking Agreement, the agreement was amended
and restated to be between Dynegy Holdings and Dynegy Inc. and to
provide for the reduction of Dynegy Inc.'s obligations if the
outstanding principal amount of any of Dynegy Holdings' $3.5
billion of outstanding notes and debentures is decreased as a
result of any exchange offer, tender offer or other purchase or
repayment by Dynegy Inc. or its subsidiaries.
Mr. Stephenson said that by undertaking the corporate and
financial restructuring steps in 2011, Dynegy Holdings and its
affiliated entities were able to avoid defaults under their then-
current financing arrangements, obtain additional liquidity and
flexibility and refinance the obligations outstanding under the
Credit Agreement.
Exchange Offer
In September, Dynegy Inc. offered to pay a combination of cash and
its own new 10% Senior Secured Notes due 2018 in exchange for the
tender of up to $1.25 billion of Old Notes. Total consideration
would range from $400 to $720 per $1,000 principal amount of Old
Notes, and the exact combination of cash and New
Notes would vary, depending on the series of Old Notes being
exchanged and the date of tender. The Exchange Offer, after being
extended several times, was terminated on November 3, 2011.
Holders of an insufficient amount of Old Notes tendered their
notes, and the exchange offer was not consummated.
In light of the failed Exchange Offer, Dynegy Holdings is facing a
liquidity crisis with approximately $43.8 million of unpaid
interest payments due and approximately $278.1 million of interest
payments coming due in the next twelve months. In addition,
approximately $82.48 million in payments are coming due under the
Danskammer and Roseton Facility Leases on November 8, 2011.
To address the issue of Dynegy Holdings' over-leveraged balance
sheet, the Debtors engaged in discussions with holders of its
public bond debt. After extensive negotiations, Dynegy Holdings
was able to reach an agreement with holders of approximately $1.4
billion of Dynegy Holdings' outstanding public bond debt on the
principal terms of a restructuring effectuated through a Chapter
11 plan of reorganization.
As early as March, Dynegy warned shareholders it might be forced
into bankruptcy if it is unable to renegotiate the terms of its
existing debt.
An Unusual Bankruptcy
DHI and four subsidiaries delivered separate voluntary petitions
for bankruptcy under Chapter 11 of the Bankruptcy Code on Nov. 7,
2011, to the U.S. Bankruptcy Court for the Southern District of
New York.
Mike Spector of The Wall Street Journal called DHI's bankruptcy
"unusual" in a way that could cause losses for bondholders without
harming parent-company shareholders that include Carl Icahn and
hedge fund Seneca Capital.
Dynegy's plan to eliminate billions of dollars owed to bondholders
while sparing parent company shareholders flips usual bankruptcy
rules on their head, Mr. Spector pointed out. Creditors are
usually paid first during bankruptcy proceedings and shareholders
often are left with nothing, he noted.
But Dynegy has reorganized its corporate structure in a way that
protects shareholders from a bankruptcy filing, he added.
The Journal noted that the August restructuring left the holding
company without a claim on the coal-powered plants and just
holding Dynegy's bond debt.
The Journal reported on July 29 that Dynegy's restructuring
proposal was pushed by Mr. Icahn. The planned reorganization
would give Dynegy a better chance "to obtain prospective financing
and investment," a Dynegy official told the Journal at that time
in an e-mail.
The Journal noted in that July report that while shareholders of
strong companies, like Liberty Media Corp., have used weak
covenants to sell assets out from under bondholders, no one has
tried the same tactic with a company as distressed as Dynegy for
fear of inviting fraud litigation if it goes bankrupt.
"If you buy bonds without protection, sooner or later the piper
has to get paid," the Journal said, citing Chris Taylor an energy
strategist at FBR Capital.
As an architect of the leveraged-buyout craze in the 1980s, and as
an activist shareholder in more recent decades, Mr. Icahn has
shown himself uniquely willing to play the bond markets in
aggressive ways, the Journal noted. In 2009, for instance, he
played bondholders of CIT Group against each other in an effort to
force a liquidation, even as the $71 billion lender with 5,000
employees struggled to save itself, the report noted.
Mr. Icahn is seeking to salvage his investment in Dynegy after he
blocked a $4.50-per-share buyout bid by Blackstone Group last
year, then had his own $5.50 a share offer rejected.
In July, certain holders of obligations with potential recourse
rights to DHI initiated legal proceedings seeking to enjoin the
parent's restructuring efforts. Plaintiffs in that lawsuit seek
to enjoin the proposed reorganization based on purported breaches
of guarantees issued by DHI in connection with two sale lease back
transactions in which DHI's subsidiaries, Dynegy Roseton, L.L.C.
and Dynegy Danskammer, L.L.C., leased certain power-generating
facilities located in Newburgh, New York.
Restructuring Support Agreement
Mr. Stephenson related that the Debtors filed the Chapter 11 Cases
to implement the Restructuring Support Agreement and the Term
Sheet and address the burdensome lease obligations at Danskammer
and Roseton. He said the RSA, together with the Term Sheet, lays
a solid foundation for a consensual plan of reorganization to be
filed by the Debtors in the Chapter 11 Cases and should
significantly facilitate the proceedings and the Debtors'
objective of preserving and enhancing value for the benefit of
their stakeholders.
The pre-arranged plan calls for, among other things, the exchange
of all unsecured obligations of Dynegy Holdings, including all of
the Old Notes (except for the SKIS), for (a) a $400 million cash
payment; (b) $1 billion aggregate principal amount of senior
secured notes to be issued by Dynegy Inc. or an additional cash
payment of $1 billion, if Dynegy Inc. determines it can obtain the
financing elsewhere on more favorable terms; and (c) $2.1 billion
of convertible PIK notes to be issued by Dynegy Inc.
The RSA contemplates these milestones:
December 7, 2011 Negotiation of definitive documents
March 15, 2012 Approval of Disclosure Statement
explaining a Chapter 11 Plan
June 15, 2012 Confirmation of a Chapter 11 Plan
August 1, 2012 Plan effective date
The parties may terminate the agreement if the definitive
documents are not agreed to or if certain milestones to
consummation are not achieved, Mr. Stephenson said.
A full-text copy of the RSA, dated Nov. 7, 2011, is available for
free at http://bankrupt.com/misc/dynegyrsa.pdf
The bondholders that consented to the restructuring are:
* AEGON USA Investment Management LLC
230 West Monroe, Suite 1450
Chicago, IL 60606
Fax: 800-454-2664
Attn: Jim Schaeffer
E-mail: jschaeffer@aegonusa.com
* Avenue Investments L.P.
Avenue Special Situations Fund VI (Master), LP
Avenue International Master LP
Avenue CDP-Global Opportunities Fund L.P.
c/o Avenue Capital Group
399 Park Avenue, 6th Floor
New York, NY 10022
Fax: 212-850-7506
Attn: Stephen Burnazian
Matthew Kimble
E-mail: sburnazian@avenuecapital.com
mkimble@avenuecapital.com
* Marjner LDC
* Caspian Capital Partners L.P.
Caspian Select Credit Master Fund, Ltd.
Caspian Alpha Long Credit Fund, L.P.
Caspian Solitude Master Fund, L.P.
c/o Caspian Capital L.P.
767 Fifth Avenue, 45th Floor
New York, NY 10153
Fax: 212-826-6980
Attn: Adam S. Cohen
Greg Saiontz
E-mail: adam@caspianlp.com
greg@caspianlp.com
* Franklin Advisers Inc.
One Franklin Templeton Investments
Fax: 916-463-1902
Attn: Ed Perks
E-mail: perksed@frk.com
* Venor Capital Master Fund Ltd.
Times Square Tower
7 Times Square, Suite 3505
New York, NY 10036
Fax: 212-703-2111
Attn: Harlan Cherniak
Michael J. Wartell
John Roth
E-mail: hcherniak@venorcapital.com
mwartell@venorcapital.com
jroth@venorcapital.com
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[00002] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING
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* DYNEGY INC. ANNOUNCES RESTRUCTURING AGREEMENT WITH HOLDERS
OF OVER $1.4 BILLION OF DYNEGY HOLDINGS, LLC SENIOR NOTES
* Dynegy Holdings LLC and Four Subsidiaries File for Relief
under Chapter 11
* Business continues as usual for Dynegy and All of its
Other Subsidiaries
HOUSTON, Texas -- Nov. 7, 2011 -- Dynegy Inc. (Dynegy)
(NYSE:DYN) announced that it has reached an agreement with a group
of investors holding over $1.4 billion of senior notes issued by
Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, LLC
(DH), regarding a framework for the consensual restructuring of
over $4.0 billion of obligations owed by DH. If this
restructuring support agreement is successfully implemented, it
will significantly reduce the amount of debt on the Company's
consolidated balance sheet. DH and four of its wholly owned
subsidiaries -- Dynegy Northeast Generation, Inc., Hudson Power,
L.L.C., Dynegy Danskammer, L.L.C. (Danskammer) and Dynegy Roseton,
L.L.C. (Roseton) (collectively, the Debtor Entities) --filed
voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York, Poughkeepsie Division in order to
implement the agreement and to address the burdensome lease
obligations at Roseton and Danskammer.
Dynegy and all of its subsidiaries -- other than the Debtor
Entities -- including those that own and operate the Company's
coal-fired and gas-fired businesses that were separately financed
earlier this year and those that provide ancillary services have
not filed for Chapter 11. All such entities continue to operate
their businesses in the ordinary course without any impact from
the limited Chapter 11 filings of DH and its subsidiaries that are
involved with the Roseton and Danskammer facilities.
Robert C. Flexon, President and Chief Executive Officer of
both Dynegy and DH, said, "This marks an important next step in
the Company's ongoing effort to restructure its consolidated
balance sheet and to position its assets in a fashion that will
maximize our operational flexibility. We look forward to working
with our stakeholders to complete and implement this restructuring
support agreement as quickly and efficiently as possible."
Under the restructuring support agreement entered into
between Dynegy, DH and holders of over $1.4 billion of DH's senior
notes, all unsecured obligations of DH, including $3.4 billion of
senior notes, $200 million of subordinated notes, approximately
$130 million of accrued interest, and the payments associated with
the Roseton and Danskammer leases, will be exchanged for:
-- a $400 million cash payment;
-- $1.0 billion of new 7-year 11% secured notes to be issued
by Dynegy and secured by the equity in the Company's
separate coal and gas-fueled generating businesses (or an
additional cash payment of $1.0 billion, if the Company
determines it can obtain the financing elsewhere on more
favorable terms); and
-- $2.1 billion of Dynegy's new convertible PIK notes
maturing on December 31, 2015. Dynegy will have the
right to redeem the notes at varying discounts through
the end of 2013, and can make open market purchases of
the notes with excess cash from operations. At maturity,
the notes would mandatorily convert into 97% of the
common equity of Dynegy to the extent not previously
redeemed or retired. The equity in the Company's
separate coal and gas-fueled generating businesses will
remain direct or indirect subsidiaries of Dynegy.
The holders of DH's Series B 8.316% Subordinated Capital
Income Securities due 2027 would participate in the restructuring
as an unsecured note holder, but their recovery would be subject
to enforcement of their contractual subordination to the senior
unsecured notes. Alternatively, the subordinated note holders
will be offered the opportunity to participate, without
subordination, in the restructuring as an unsecured note holder at
$0.25 for every dollar of claims.
The restructuring support agreement contemplates the
negotiation of definitive documents by December 7, 2011, and that
the transaction will be implemented pursuant to a Chapter 11 plan
for DH that must become effective by August 1, 2012. Interest will
accrue under the new 11% secured notes and the new convertible PIK
notes from the Chapter 11 petition date through the effective
date. The parties may terminate the restructuring support
agreement if the definitive documents are not agreed-to or if
certain other milestones to consummation are not achieved.
The Debtor Entities' only operations consist of those at the
Roseton and Danskammer facilities, which are the subject of leases
that the Debtor Entities are seeking to immediately reject
pursuant to a motion filed in the Bankruptcy Court. The agreement
is also conditioned on the claims against DH arising from the
Roseton and Danskammer leases being fixed by the Bankruptcy Court
at an amount not to exceed $300 million. The Debtor Entities are
prepared to surrender the Roseton and Danskammer facilities upon
entry of an order authorizing the rejection of the leases.
However, applicable federal and state regulatory requirements may
prevent the Debtors from doing so immediately. Therefore, the
Debtor Entities intend to operate the facilities in accordance
with prudent operating standards and to the extent necessary to
comply with applicable federal and state regulatory requirements
until the owners of the leased facilities, which are affiliates of
Public Service Enterprise Group, Inc., are authorized to take
operational control.
The Debtor Entities have also sought customary first-day
relief designed to ensure their smooth transition into Chapter 11
administration. Among other things, this relief, if granted by
the Bankruptcy Court, will ensure that the Debtor Entities have
sufficient cash and liquidity to fund their continuing operations
and all administrative obligations incurred during the Chapter 11
process.
The Company expects to file an 8-K with the SEC prior to
market open on Tuesday, November 8, 2011. This filing will
include the restructuring support agreement and the associated
term sheet.
The Debtor Entities are represented in the Chapter 11
proceedings by Sidley Austin LLP as their reorganization counsel.
Dynegy and its other subsidiaries are represented by White & Case
LLP, who is also special counsel to the Debtor Entities with
respect to the Roseton and Danskammer lease rejection issues.
Dynegy was advised by Lazard Freres & Co. LLC and the Debtor
Entities' financial advisor is FTI Consulting.
ABOUT DYNEGY
Dynegy's subsidiaries produce and sell electric energy,
capacity and ancillary services in key U.S. markets. The Dynegy
Power, LLC power generation portfolio consists of approximately
6,771 megawatts of primarily natural gas-fired intermediate and
peaking power generation facilities. The Dynegy Midwest
Generation, LLC portfolio consists of approximately 3,132
megawatts of primarily coal-fired baseload power plants. The DNE
portfolio consists of approximately 1,693 megawatts from two power
plants which are primarily natural gas-fired peaking and baseload
coal generation facilities.
-----------------------------------------------------------------
[00003] COMPANY'S BALANCE SHEET AS OF JUNE 30, 2011
-----------------------------------------------------------------
Dynegy Inc.
(Unaudited) Condensed Consolidated Balance Sheets
(In millions)
As of June 30, 2011
ASSETS
Current Assets
Cash and cash equivalents $399
Restricted cash and investments 878
Short-term investments 106
Accounts receivable, net 169
Accounts receivable, affiliates -
Inventory 125
Assets from risk-management activities 989
Deferred income taxes 12
Broker margin account 202
Prepayments and other current assets 137
--------
Total Current Assets 3,017
Property, Plant and Equipment 8,700
Accumulated depreciation (2,499)
--------
Property, Plant and Equipment, net 6,201
Other Assets
Restricted cash and investments 9
Assets from risk-management activities 84
Intangible assets 116
Other long-term assets 436
--------
Total Assets $9,863
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $111
Accrued interest 51
Accrued liabilities and other current liabilities 86
Liabilities from risk-management activities 1,043
Notes payable and current portion of long-term debt 1,008
--------
Total Current Liabilities 2,299
Long-term debt 3,852
Long-term debt, affiliates 200
--------
Long-term Debt 4,052
Other Liabilities
Liabilities from risk-management activities 123
Deferred income taxes 509
Other long-term liabilities 321
--------
Total Liabilities 7,304
Commitments and Contingencies
Stockholders' Equity
Common stock 1
Additional paid-in capital 6,071
Subscriptions receivable (2)
Accumulated other comprehensive loss (51)
Accumulated deficit (3,389)
Treasury stock (71)
--------
Total Stockholders' Equity 2,559
--------
Total Liabilities and Stockholders' Equity $9,863
========
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[00004] DYNEGY HOLDINGS' CHAPTER 11 DATABASE
-----------------------------------------------------------------
Debtor: Dynegy Holdings, LLC
1000 Louisiana, Suite 5800
Houston, Texas 77002
Tel: 713-507-6400
http://www.dynegy.com/
Bankruptcy Case No.: 11-38111
Debtor-affiliates that filed separate Chapter 11 petitions:
Debtor Case No.
------ --------
Dynegy Roseton, L.L.C. 11-38107
Dynegy Danskammer, L.L.C. 11-38108
Hudson Power, L.L.C. 11-38109
Dynegy Northeast Generation, Inc. 11-38110
Chapter 11 Petition Date: Nov. 7, 2011
Bankruptcy Court: U.S. Bankruptcy Court
Southern District of New York
Debtors'
Counsel: Matthew A. Clemente, Esq.
Paul S. Caruso, Esq.
Brian J. Lohan, Esq.
SIDLEY AUSTIN LLP
One South Dearborn Street
Chicago, IL 60603
Tel: (312) 853-7000
Fax: (312) 853-7036
E-mail: mclemente@sidley.com
pcaruso@sidley.com
blohan@sidley.com
Debtors'
Special
Litigation
Counsel: WHITE & CASE LLP
Debtors'
Financial
Advisor: FTI CONSULTING
Debtors'
Claims and
Noticing
Agent: EPIQ BANKRUPTCY SOLUTIONS
Dynegy Inc.'s
Counsel: Thomas E. Lauria, Esq.
WHITE & CASE LLP
Southeast Financial Center
200 South Biscayne Boulevard
Miami, FL 33131
Fax: (305) 358-5744
E-mail: tlauria@whitecase.com
Counsel to
Noteholders
that signed
the RSA: Andrew N. Rosenberg, Esq.
Alice Belisle Eaton, Esq.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019
E-mail: arosenberg@paulweiss.com
aeaton@paulweiss.com
Total Assets: $13.765 billion as of Sept. 30, 2011
Total Debts: $6.181 billion as of Sept. 30, 2011
The Debtor did not file a list of its largest unsecured creditors
together with its petition.
The petition was signed by Catherine B. Callaway, executive vice
president and general counsel.
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[00005] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES
-----------------------------------------------------------------
Dynegy Holdings, LLC, and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to enter an
order directing the joint administration of their Chapter 11 cases
for procedural purposes.
Joint administration of the bankruptcy cases is warranted, Sophia
P. Mullen, Esq., at Sidley Austin LLP, in New York, asserts.
Joint administration, she says, will avoid the preparation,
replication, service, and filing, as applicable, of duplicative
notices, applications, and orders, thereby saving the Debtors
considerable expenses and resources.
Ms. Mullen assures the Court that the relief requested will not
adversely affect creditors' rights, as the Motion requests only
the administrative, not the substantive, consolidation of the
estates. In fact, she points out, the reduced costs that will
result from the joint administration of these cases will inure to
the benefit of all creditors. She adds that the relief requested
will relieve the Court of the burden of entering duplicative
orders and maintaining duplicative files, as well as simplify
supervision of the administrative aspects of the Chapter 11 cases
by the Office of the United States Trustee.
-----------------------------------------------------------------
[00006] DEBTORS' MOTION TO EXTEND TIME TO FILE SCHEDULES
-----------------------------------------------------------------
The Debtors ask the Court to extend the time within which they may
file their schedules of assets and liabilities, schedules of
current income and expenditures, schedules of executory contracts
and unexpired leases, and statements of financial affairs.
Pursuant to Section 521 of the Bankruptcy Code and Rule 1007 of
the Federal Rules of Bankruptcy Procedure, the Debtors are
required to file, within 14 days after the Petition Date, their
(i) schedules of assets and liabilities, (ii) schedules of
executory contracts and unexpired leases, (iii) schedules of
current income and expenditures, and (iv) statements of financial
affairs.
The Debtors ask that the 14-day period be extended by an
additional 31 days, or until Dec. 22, to give the Debtors a total
of 45 days from the Petition Date to file their Schedules and
Statements.
Sophia P. Mullen, Esq., at Sidley Austin LLP, in New York, asserts
that cause exists to extend the deadline for the filing of the
Schedules and Statements, based on the size and complexity of the
Debtors' businesses, the number of the Debtors and the number of
potential creditors of the Debtors, and the numerous burdens
imposed by the Debtors' reorganization efforts, particularly in
the early days of the Chapter 11 cases. The Debtors' management
and employees, together with their outside legal and financial
advisors, have been working diligently to compile the information
necessary for the Schedules and Statements, Ms. Mullen tells the
Court. The magnitude of that task, when taken together with the
considerable effort involved in preparing for the filing of the
Chapter 11 cases, the anticipated burdens of preparing the
Debtors' transition into Chapter 11, and the ongoing burdens of
operating the Debtors' businesses day-to-day, supports an
extension of the deadline set forth in the Bankruptcy Rules for
filing the Schedules and Statements, she maintains.
*** End of Issue No. 1 ***
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