Building on a tripling of the financial contribution of itsDynegy Marketing and Trade division, Dynegy Inc. announced itsthird-quarter recurring earnings per share of $0.55 will topanalysts’ estimates of $0.50 per share.

Dynegy made two other separate announcements last week: (1) ithas completed the previously announced $188 million purchase ofExtant, Inc., a privately held, Colorado-based communicationssolutions provider, tapped to lead the growing conglomerate intothe world of broadband; and (2) will be selling 10 million newlyissued shares of Dynegy Class A common stock, pursuant to itsappearance on the Standard & Poor 500 Index today.

The company said this year’s third-quarter results to bereported Oct. 17, will show an 80% increase in net income to $175million over the $96.5 million pro forma total of Dynegy andIllinova in 3Q 1999. The companies merged this past February.

Dynegy Marketing & Trade’s financial contribution includesoperating margin plus equity earnings, which totaled $101 millionin the third quarter last year. Tripling would put that number ataround $300 million in the latest quarter.

“Successful execution of Dynegy’s core energy convergencebusiness strategy – the merchant leverage effect – enabled thecompany to trade around its assets and extract value from themarketplace as regional inefficiencies occurred.” This was in spiteof record mild temperatures in the

Midwest and Northeast U.S. throughout the peak summer months,Dynegy noted. It cited the “nationwide volatility in both powerand gas, coupled with strong marketing, structured originationactivity and term sales. Dynegy’s generation asset portfolio,including the assets acquired in the Illinova merger, is expectedto perform solidly, particularly in the West where weatherconditions significantly impacted demand.” The company credited itsgeographically diverse asset base for helping to offset anoff-season for the Midwest and Northeast.

The company said it has agreed to sell the new shares of stock,subject to its inclusion in the S&P 500 Stock Index. The shareswill be sold through Goldman, Sachs & Co., Banc of AmericaSecurities LLC and Lehman Brothers as agents for Dynegy at a priceper share equal to yesterday’s closing price ($53.25) less adiscount of $0.125 per share, excluding commissions.

The new stock will meet a portion of the demand for Dynegyshares from S&P 500 index funds. The company had been on theS&P MidCap 400 index.

The 10 million new shares will be added to the 310 millionDynegy shares outstanding.

The Extant acquisition “gives Dynegy an entry into thecommunications marketplace through the addition of managementexpertise, market intelligence, network access and control andsophisticated operating and connectivity software systems,” saidChuck Watson, Dynegy chairman. The new venture will go by the nameof Dynegy Connect and will be 80% owned by Dynegy and 20% owned byTelstra Corp. Ltd., an Australian telecommunications andinformation services company.

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