Two Public Service Enterprise Group Inc. (PEG) units filed a
lawsuit against Dynegy Inc. (DYN) in an effort to block that
company's transfer of some of its natural-gas-fired and coal-fired
generating facilities to new subsidiaries.
Dynegy shares were down 3.4% at $5.70 in premarket trading.
Dynegy has been refinancing its credit facilities and
reorganizing its natural-gas-fired and coal-fired generating
facilities into two subsidiaries in an effort to avoid a bankruptcy
filing after its shareholders rejected two buyout offers in recent
months.
The two PSEG units filing the suit are owner-lessors of the
Roseton OL and Danskammer OL generating facilities. Dynegy is
planning to transfer the lessee interests to an ordinary Dynegy
subsidiary, as opposed to the new structure. The PSEG units contend
the move is in violation of Dynegy's guaranty and is seeking a
temporary restraining order and a permanent injunction to block the
move.
The PSEG entities reported a gross equity investment at risk in
the Roseton and Danskammer leases of $270 million.
Dynegy has been hurt by falling prices for electricity and
natural gas amid reduced consumer demand for power stemming from
the recession. For months, the company warned shareholders it could
face problems continuing to operate unless a buyout was
approved.
PSEG shares closed Thursday at $32.62 and were inactive
premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com