Dynegy Not Looking To Issue New Debt, No Near-Term M&A

Dynegy Inc. (DYN) isn't looking to raise new debt or add more power plants to its fleet following a recent deal with a one-time development partner, its chairman and chief executive said Thursday.

Earlier this month, the Houston-based power generator closed the sale of nine U.S. power plants to LS Power Associates LP in exchange for $1.03 billion in cash and 245 million Class B common shares. Dynegy then announced it would buy back $830 million of debt that matures in 2011 and 2012 with cash raised from the deal.

In a phone interview, Dynegy's CEO Bruce Williamson also said the company may "opportunistically" buy back additional debt as management focuses on internal operations as the economy recovers rather than external opportunities. Dynegy is a U.S. merchant generator with plants in the Northeast, Midwest and West, selling electricity at market prices rather than regulated rates.

"In the short run, we are focused internally on operating well ... It is less about looking out externally," Williamson said.

He said the company's deal with LS Power completed a process to strengthen its balance sheet and improve the diversity of its plants in terms of fuel, geography and how often they run. Although the industry has seen increased plans by companies to shutter coal-fire power plants, Williamson said Dynegy's plants are less at risk because the company is nearing the completion of the clean-up of their emission through scrubber equipment and the introduction of low-sulfur western coal. He added the switch to Powder River Basin coal also benefits Dynegy because of its lower costs, especially amid weak natural gas and power prices.

"Our units are in a little better position," Williamson said.

The deal with LS power simplified the company's capital, making it easier to participate in a merger in the future. Although Williamson still believes in industry consolidation, he said the company has been focused on completing the LS Power deal, and unlike some other generators, it isn't looking to add more plants to its fleet through acquisitions.

Shares of Dynegy were recently trading up 4 cents at $1.90.

-By Mark Peters , Dow Jones Newswires; 212-416-2457; mark.peters@dowjones.com

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