Dynegy to Buy Stake in Joint Venture
June 15 2016 - 9:00AM
Dow Jones News
Dynegy Inc. agreed to acquire Energy Capital Partners' interest
in their joint venture formed in February to buy French power
utility Engie's U.S. fossil portfolio.
Houston-based Dynegy said it would assume Energy Capital's 35%
share of the upfront equity funding at closing, then pay a revised
discounted floor price of $375 million post-closing. The company
valued the transaction at $750 million.
In February, Dynegy said it would buy Engie's U.S. fossil
portfolio for $3.3 billion through the joint venture, named Atlas
Power, with the private-equity firm. Energy Partners also agreed to
invest an additional $150 million in Dynegy, boosting its stake to
15%.
When forming the joint venture, Energy Partners gave Dynegy the
ability to buy its interest for a minimum floor price of 2.25 times
its net investment in the venture for an estimated minimum buyout
price of $934 million. The companies reduced the upfront capital
requirement and the minimum buyout multiple, cutting the cost of
the buyout by $184 million and speeding up the integration of the
Engie portfolio into Dynegy's existing business.
"As we indicated in February, Dynegy's intent has consistently
been to fully own the Engie U.S. fossil portfolio," said Dynegy
Chief Executive Robert Flexon. "The significant improvement in the
financial markets since announcing the transaction in February
provided an excellent opportunity for us to approach ECP about an
earlier timetable."
It is the latest deal of many for Dynegy since it emerged from
bankruptcy protection in late 2012. In August 2014, the company
nearly doubled its power-generating capacity when it bought 21
plants for $6.25 billion from Duke Energy Corp. and Energy Capital
Partners.
"This transaction accelerates our company's transformation,
enabling us to increase our presence further in the most desirable
markets with high quality assets," said Mr. Flexon.
The deal for Engie's fossil portfolio is on track to close
during the fourth quarter.
Shares of Dynegy were inactive premarket.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
June 15, 2016 08:45 ET (12:45 GMT)
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