Dynegy Files New Plan That Could Be Better For Junior Creditors
January 20 2012 - 2:49PM
Dow Jones News
Power provider Dynegy Holdings LLC has filed a new
reorganization plan that could give greater recovery to junior
bondholders than a prior plan and that takes into account a recent
settlement with Public Enterprise Group Inc. (PEG) allowing Dynegy
to break leases at two New York state power plants.
In a Thursday filing with the U.S. Bankruptcy Court in
Poughkeepsie, N.Y., Dynegy said unsecured noteholders owed about $4
billion will share $400 million in cash and $2.1 billion in new
convertible preferred stock. Dynegy's new plan increases by $15
million the amount in new senior notes they will receive, to $1.015
billion.
The holders of the subordinated notes, owed about $216 million,
also have the option of collecting 35 cents on the dollar for their
notes, up from 25 cents in a plan filed last December.
A spokeswoman for Dynegy said the company hopes to emerge from
bankruptcy protection this summer.
Dynegy's new plan, which a judge will consider sending for a
creditor vote next month, takes into account a PSE&G settlement
that allows the utility company a $110 million claim and $7.5
million in cash in exchange for ending a legal fight against
Dynegy.
The proposal also addresses one of the more pressing issues in
Dynegy's bankruptcy case, the bondholders whose leases were secured
by the power plants. The rejection of the leases could sharply
reduce the amount of money owed to those bondholders, who are suing
Dynegy in state court over a refinancing done by Dynegy before it
filed for bankruptcy.
Dynegy's proposal says that if the bondholders are eventually
allowed to claim more than $300 million, every dollar above that
$300 million will be added to the amount of the new senior notes
that are issued to all unsecured creditors. Every dollar below $300
million, if the claim is for less than that, will be subtracted
from the amount of the new senior notes. The plan Dynegy filed in
December had similar wording.
The bondholders' state court suit against Dynegy alleges that an
asset shift last year was designed to shield shareholders --
including a fund controlled by Carl Icahn -- from a bankruptcy at
the expense of bondholders.
The September asset transfers capped a series of transactions
that reshuffled the structure and location of Dynegy's assets, two
months before the company and four subsidiaries filed for
bankruptcy.
The holders of the bonds secured by the leases last month won a
bid to get an examiner appointed in the case. The examiner, Quinn
Emanuel Urquhart & Sullivan LLP's Susheel Kirpalani, earlier
this week said he wants to subpoena both Dynegy and its advisers as
part of his investigation into the asset transfers.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-By Joseph Checkler; Dow Jones Newswires; 212-416-2152;
joseph.checkler@dowjones.com
Public Service Enterprise (NYSE:PEG)
Historical Stock Chart
From May 2024 to Jun 2024
Public Service Enterprise (NYSE:PEG)
Historical Stock Chart
From Jun 2023 to Jun 2024