Dynegy Inc.

In Morro Bay, three smokestacks from a power plant share the scenery with a mountain of volcanic rock, and will probably not be going anywhere soon.

Dynegy’s deals look sensible, says Christopher Swann of Reuters Breakingviews, but the lesson from their bankruptcy is to avoid getting carried away.

The power producer is buying ownership stakes in coal and natural gas plants from Duke Energy and the private equity firm Energy Capital Partners.

Caesars Entertainment has sliced and diced its assets in a way that will save something for shareholders, but it still has a lot of debt, writes Stephen J. Lubben, the In Debt columnist.

While the revised bankruptcy plan will give shareholders 1 percent of Dynegy, some shareholders (along with the United States government) are objecting to provisions that would release management, directors and shareholders from legal liability.

Dynegy files for Chapter 11 bankruptcy protection, the latest step to restructure the ailing energy company and settle with creditors who hold more than $2.5 billion in claims over one of its subsidiaries.

The settlement will allow a subsidiary, Dynegy Holdings, to proceed with its bankruptcy process.

After a bankruptcy examiner’s report accused Dynegy’s parent company of a fraudulent purchase of assets shortly before a subsidiary filed for Chapter 11, the company defended its actions and questioned the legitimacy of the report.

The finding of a fraudulent conveyance by the court-appointed examiner means that Dynegy Holdings can sue its non-bankrupt parent company to undo the transfer.

The Dynegy case is certain to test whether Chapter 11 bankruptcy proceedings can hold up to hard-ball modern finance.

The energy company’s corporate structure means the parent company could benefit from the bankruptcy of its own subsidiary.

Dynegy said that Lazard and the law firm White & Case would advise on possible solutions to lessen its $4.8 billion debt burden.

The energy producer, which has warned for months about its financial troubles, says bankruptcy could be the next step if it cannot reach an agreement with its creditors.

A defensive deal born out of desperation to “save” a company or otherwise fight off an activist investor can wind up putting the company’s board and management on the defensive.

As shareholder activism mounts, boards appear likely to come under even more pressure this year.

Dynegy’s top leaders, including its chief executive, plan to resign after the company failed in its second attempt to sell itself.

Carl C. Icahn has extended his offer to for Dynegy to Friday, without raising his $665 million bid for the energy company.

The Dynegy board committee supervising the company’s sale process wrote a letter to shareholders urging them to accept a $5.50-a-share bid by Carl C. Icahn.

After Carl Icahn extended his $5.50 a share bid for Dynegy, Seneca Capital, the energy company’s second largest shareholder, said it would reject a $6 a share offer for the energy company — should such a bid materialize.

Carl C. Icahn has extended his offer to buy Dynegy by two weeks after finding little support for his $5.50-a-share bid among the company’s shareholders.

A “go shop” period ends, while Carl Icahn’s $5.50-a-share tender offer is set to expire at midnight.

Highlights from the DealBook newsletter.

The hedge fund that helped defeat Dynegy’s previous plan to sell itself accused the company of recklessly jumping into a marginally better deal with Carl Icahn.

Novartis’s acquisition of Alcon and Carl C. Icahn’s bid for Dynegy each provide their own distinct lessons for deal makers.

After criticizing Blackstone’s $5-a-share bid for Dynegy, Carl C. Icahn agrees to buy it for $5.50 a share in cash.

Investors appear to be warming to recent deals, including the offer for J. Crew.

Dynegy said it would begin an alternative sales process after it became clear that Blackstone’s $5-a-share takeover offer did not have enough shareholder support.

Dynegy’s decision on Wednesday to recess its meeting was a smart legal move. It should allow shareholders who opposed a bid by Blackstone to reassess the firm’s higher offer.

The Deal Professor examines the public fight over the energy producer, saying it has made it harder for shareholders to decide whether a proposed buyout will actually help the company.

The Blackstone Group raised its offer for Dynegy, amid stiff opposition from two of the energy company's biggest shareholders.

Blackstone made a new $5-a-share bid on the eve of a shareholder vote on a Dynegy buyout and one day after declaring that it would not raise its offer.

Blackstone has opened up on its bid for Dynegy, saying it won’t raise its offer and questioning the motives of the deal’s two main opponents.

Carl C. Icahn’s announcement ratchets up the increasingly ugly dispute between Dynegy and big shareholders who oppose Blackstone’s bid.

Dynegy said Institutional Shareholder Service recommended approval of its buyout by the Blackstone Group.

The Deal Professor examines some of the interesting deals that made news during the week.

Hedge fund filings show that investors like Carl C. Icahn and Douglas A. Hirsch are betting on Blackstone upping its $4.7 billion bid for Dynegy, and may put up a fight if it resists.

A Blackstone Group executive tamped down expectations of a higher bid for Dynegy, telling Reuters that its $4.7 billion bid for the power producer was a “full and fair” price, not to mention a steep premium.

Blackstone Group predicted that a $10 billion leveraged buyout isn’t far off for the industry, given how much debt markets have recovered.

Acquisitions in the United States power industry surged more than 20-fold by value in the first eight months of the year. Advisers say expect more deals as buyers such as Blackstone Group bet electricity prices will rise with economic recovery, Bloomberg News reported.

Blackstone is expected to announce Wednesday that it will buy a large minority stake in Indian power developer Moser Baer Projects Private.

The Deal Professor examines the Blackstone Group’s deal for Dynegy and considers how much the terms of transactions have changed since the financial crisis.

The purchase is the largest leveraged buyout in the world so far this year.

Dynegy, an energy company, said Friday that it has agreed to sell itself to the Blackstone Group for $4.7 billion, including debt, in one of the largest leveraged buyouts of the year.

Attorney General Andrew M. Cuomo is investigating whether plans by five large energy firms to build coal-fired power plants pose undisclosed financial risks.

Dynegy agrees to buy LS Power Group's electricity plants for $2.3 billion; move will extend Dynegy's reach to 15 states from nine and expand its generating capacity by 69 percent, to 20,000 megawatts (M)

Dynegy agreed to buy the LS Power Group’s electricity plants in a deal made four years after the company was pushed close to bankruptcy.

Federal appeals court orders Judge Sim Lake to revise 24-year sentence he imposed on former Dynegy executive Jamie Olis for helping devise secret project in 2001 to disguise $300 million loan as cash flow (M)

The Targa Resources unit of Warburg Pincus said yesterday that it had agreed to acquire Dynegy's natural-gas processing business for $2.35 billion, and Total of France said that it would buy Deer Creek Energy in Canada for about $1.11 billion as high energy prices spur efforts to acquire assets. The acquisition of the natural-gas business is the largest to date for Targa, an energy company based in Houston. The deal adds to Targa operations in West Texas and southwestern Louisiana that include five plants and 2,000 miles of pipelines.

Bruce A. Williamson joined Dynegy as president and chief executive in 2002 at the worst possible time. The previous year, Dynegy, which is based in Houston, had scrapped plans to buy Enron, shortly before Enron sought bankruptcy protection. Mr. Williamson was brought in from Duke Energy to overhaul Dynegy, sell unprofitable assets and settle shareholder suits as well as government investigations. Dynegy recently hired Credit Suisse First Boston to find a buyer for its $3 billion natural gas transmission business.

Dynegy Corp agrees to pay $468 million to settle class-action lawsuit filed by shareholders in 2002; Dynegy will pay $250 million in cash and issue $68 million in stock to class of plaintiffs; additional $150 million will be paid by director and officer insurance policies; company also agrees to elect two new directors from list of not less than five candidates submitted by lead plaintiff in case, University of California; chief executive Bruce A Williamson comments (M)i

Exelon Corp reportedly is in advanced talks to acquire PSE&G, New Jersey's largest utility, for about $12 billion; deal would allow Exelon chief executive John Rowe to expand business in northeast and create largest utility holding company in US, with annual revenue of more than $26 billion and 25,000 employees (M)

Federal prosecutors charge former traders for El Paso Corp, Dynegy Inc and Reliant Energy Corp with conspiracy, wire fraud and false reporting, accusing them of providing bogus pricing data to industry newsletters that calculate indexes used as basis for future natural gas supply contracts; charges are part of larger probe into possible manipulation of natural gas markets that began with collapse of Enron in 2001 and its role in California energy market; named in indictment are former traders Michelle Marie Valencia of Dynegy, Donald E Burwell, James P Phillips and Greg Singleton of El Paso and Jerry A Futch Jr of Reliant; lawyer for Valencia and Burwell dispute charges; photos (M)

Justice Department is investigating whether Linda Lay, wife of Enron's former chairman Kenneth L Lay, engaged in insider trading in sale of company stock shortly before it collapsed into bankruptcy; sale by Lay's wife involved 500,000 shares of Enron stock and was done through family foundation; proceeds, totaling $1.2 million, did not go to Lays, but were distributed to charitable organizations, which have already received pledges of contributions from foundation (M)

Dynegy will restate results for 2003 and first two quarters of 2004 (S)

Dominion Resources acquires electric generating plant in Chesapeake, Va, from NRG Energy Inc and Dynegy Inc and another plant in Hurt, Va, from Multitrade of Pittsylvania County; will pay $49 million for two plants and assume $148 million in debt; will terminate 25-year contracts it has been using to buy power since 1990's; transaction will not increase rates (S)

Texas Judge Bruce Oakley grants Dynegy Inc's motion to set aside $3.2 million jury award to Apache Corp in contract dispute over gas Apache says it delivered for processing; Apache to appeal (S)

Federal Judge Sim Lake sentences former Dynegy Inc mid-level executive Jamie Olis to more than 24 years in prison for his role in secretive project to disguise company's financial difficulties; Olis breaks into tears after hearing sentence; plan in 2001 called Project Alpha disguised $300 million loan to Dynegy; two associates involved in scheme--Olis's former boss Gene S Foster, who was vice president for taxation, and Helen C Sharkey, former Dynegy risk-assessment official--pleaded guilty last year and are expected to receive sentences of less than five years; Olis's lawyer David Gerger appears stunned after Lake refuses to accept any of his arguments for more lenient sentence; Olis is fined $25,000; photo (M)

Former Dynegy Inc exeutive Jamie Olis is to be sentenced March 25 for his role in accounting scandal; could receive 24 to 30 years in prison, which would be far long than sentences in other recent white-collar criminal cases; Olis and two former Dynegy associates were found guilty last year of devising secret project to disguise $300 million loan as cash flow; chart; photos (M)

Dynegy, power producer that is giving up energy trading, pays $34 million to end contract that had obligated it to buy electricity in Mississippi from unit of Dominion Resources through 2010; termination eliminates $63 million that Dynegy would have had to pay (S)

ChevronTexaco Corp will record charge in fourth quarter to reflect its share of loss from sale of Dynegy's Illinois Power utility; Dynegy agreed to sell Illinois Power to Exelon Corp (S)

Dynegy Inc plans to sell $300 million in notes in private placement to help pay off term loan and lease obligation (S)

Federal Energy Regulatory Commission approves plan for liquefied natural gas import terminal in Hackberry, La, making it first such project in US in more than 20 years; Sempra Energy, which acquired project in May from Dynegy, will build terminal (S)

Dynegy lowers its earnings forecast for 2003 because of costs associated with refinancing its debt (S)

Former Dynegy Inc employees Gene S Foster and Helen C Sharkey plead guilty to conspiracy to commit securities fraud for their role in helping company inflate revenue by disguising loans as cash flow, federal court (S)

Former Dynegy Inc employees Gene S Foster and Helen C Sharkey, accused of helping company disguise loans as cash flow, will be re-arraigned, federal court (S)

Dynegy Inc reports second-quarter loss of $290 million, compared with loss of $561 million year earlier (S)

Federal Energy Regulatory Commission approves $110 million payment by Kroger Co, supermarket chain, to Dynegy Inc to terminate two power-supply contracts agreed to during California's energy crisis in early 2001 and restructure two others; Dynegy, under accord, will supply Kroger stores in California with 50 megawatts of power through 2006 (S)

Dynegy Inc announces unspecified loss for second quarter and warns that 2003 earnings will not meet earlier expectations (S)

Dynegy Inc will sell $1.5 billion in bonds to refinance debt; ChevronTexaco, Dynegy's largest shareholder, agrees to restructure $1.5 billion payment due in November (S)

Federal prosecutors charge former Dynegy employees Jamie Olis, Gene Shannon Foster and Helen Christine Sharkey with securities fraud and conspiracy in connection with their role in secretive project, which was code-named Project Alpha, aimed at disguising $300 million loan as cash flow; Dynegy says it has been and remain committed to complete cooperation with US Attorney's Office in Houston and other government agencies; Securities and Exchange Commission says it is filing civil suit against three former employees to impose fines and to seek return of their bonuses and trading profits received during period when they planned put into motion secretive transaction; photo (M)

Dynegy Inc agrees to pay $155 million to Southern Co to nullify three wholesale electricity contracts; agreement will cancel $1.7 billion in payments Dynegy would have had to make to Southern over next 30 years; Dynegy will get back $96 million in collateral (S)/

Mirant, Dynegy, Reliant Resources and other power sellers win dismissals of California cases accusing them of overcharging for energy; Mirant and Reliant must still face antitrust suits; Federal Judge Vaughn R Walker says state cases contending that power companies double-billed California are pre-empted by federal laws governing rate-setting; ruling means California will have to bring charges up before Federal Energy Regulatory Commission, which is investigating similar state accusations (S)

Nicor Inc, holding company for northern Illinois utility, says it will restate earnings for second time since August, reducing net income by as much as $35 million, and pay refunds to customers who were overcharged for natural gas; will correct financial statements since 1999 and pay as much as $15 million in refunds; will also quit joint venture with Dynegy that is under investigation for booking more revenue than it collected (S)

Dynegy Inc, which is abandoning its energy trading business, will lay off about 780 workers, or 14 percent of its work force, including estimated 600 at its Houston headquarters; cuts are expected to save more than $100 million per year (S)

Dynegy Inc fires six energy traders and will discipline seven other employees for feeding false natural gas prices to trade journals (S)

Dynegy says it will close its energy trading operation and revamp its business as part of effort to cope with declining prices, junk credit rating and stock price that has fallen more than 98 percent over last year; also announces its president-chief operating officer Steven Bergstrom, who was candidate to become chief executive, will resign; announcement warns of layoffs in coming months but does not provide details; photo (M)

Mirant Corp and rival energy traders are reviewing accuracy of prices used to set energy contracts after Dynegy and American Electric Power Co disclose they provided false data to trade journals; Mirant says it is verifying gas and electricity prices that it provided trade publications; Duke Energy Corp and Reliant Resources are checking gas price reports (S)

Dynegy agrees to pay $3 million to settle accusations that company used series of off-balance-sheet partnerships to doctor its financial statements and mislead investors; Securities and Exchange Commission, which settled civil case, also says Dynegy engaged in so-called round-trip, or phony, trades and that company repeatedly sought to mislead investors about success of its trading operations; SEC says Dynegy's former chief financial officer Robert D Doty continues to make misleading public statements about transactions even after questions about them came to light in April (M)

California's Public Utilities Commisson reports that widespread power failures during state's energy crisis of 2000 and 2001 could have been avoided if five independent energy companies had not withheld electricity they were capable of producing; does not directly accuse companies--Duke, Dynegy, Mirant, Reliant and AES/Williams--of deliberately trying to drive up prices, but says investigations are continuing into possible price manipulation and collusion among companies; photo (M)

ChevronTexaco is getting some financial help from rise in oil price to nearly $30 per barrel; ChevronTexaco's stock price has dropped nearly 15 percent since Jan 23; company's problems have been attributed in large part to its involvement with Dynegy; ChevronTexaco owns 26.5 percent of Dynegy; ChevronTexaco's second-quarter earnings declined 81 percent because of slump in energy prices and $531 milion write-off that it took on its Dynegy investment; some analysts say that confidence in ChevronTexaco has been eroded more by problems in its core business rather than by Dynegy's troubles; ChevronTexaco's chief financial officer John Watson comments; graph; photo (Market Place column) (M)