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Dynegy Jumps Puddle Into Euro Broadband, Predicts Strong Growth

Dynegy Jumps Puddle Into Euro Broadband, Predicts Strong Growth

Just three months after Houston-based Dynegy announced it would enter the North American wholesale broadband communications business, it now is storming into Europe with a deal to buy London-based iaxis Ltd., a cash poor fiber optic network operator.

But Dynegy's growth won't be stopping at the water's edge. In an all-day analysts' conference last week, Dynegy senior executives laid out their strategies for future growth, saying they expect earnings to grow 20% to 25% per year over the next three years spurred by an asset-based growth plan.

Announcing its target range for 2001 recurring earnings forecast, the company expects earnings per diluted share of $1.65 to $1.75, an increase of 25% to 30% from forecasts for 2000. The company also said that its recurring EPS growth rate through 2003 would average 20% to 25%. Energy convergence is expected to grow by 30% to 40% a year, and liquids is expected to move upward 10% to 12%. Dynegy's transmission/distribution also is slated to grow by 5% to 10%.

The iaxis deal calls for Dynegy to pay a nominal amount for shares of the company and then provide $40 million in payments to iaxis creditors who will receive 40% of their claims against the company. Dynegy also will invest another $160 million to extend iaxis' network. The London company is owned by iaxis NV, a Dutch venture capital holding company that owns and operates an 8,750-mile (14,000-kilometer), 10-gigabit fiber optic network throughout Europe. The network has 40 hub sites.

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