The transaction is valued at $2.3 billion. Ameren assumed about $1.8 billion in IP debt and preferred stock, placed $100 million in a six-year escrow account for contingent environmental liabilities, and it paid the balance in cash to Dynegy.

In addition to IP’s transmission and distribution system assets, the acquisition also included the purchase of Dynegy’s 20% interest in Electric Energy Inc. (EEI), which owns a 1,086 MW coal-fired power plant in Joppa, IL. Before the IP acquisition, Ameren owned 60% of EEI.

The transaction includes a new firm capacity power supply contract for the annual purchase by IP of 2,800 MW of electricity from a subsidiary of Dynegy. The contract for 2005 and 2006 is expected to supply approximately 70% of IP’s electric customer requirements. IP is currently soliciting bids to supply its remaining electric requirements. Because bundled retail electric rates are frozen at current levels in Illinois through 2006, the acquisition will not have an immediate impact on retail electric rates paid by AmerenIP’s customers.

“At the end of the day, we believe the regulatory authorities recognized, as we did, the significant benefits of this transaction, which, as a natural fit with Ameren’s existing business, will bring significant benefits to customers, communities, investors and employees of both companies,” said Ameren CEO Gary L. Rainwater. “Acquiring IP provides a long-term growth opportunity for our company, while enhancing our ability to continue to deliver high-quality service to the nearly two million electric and natural gas customers we now serve in the state of Illinois.”

The transaction was unanimously approved by both companies’ boards of directors and received all federal and state regulatory approvals. In addition, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired without a request by the Federal Trade Commission and the Antitrust Division of the Department of Justice for additional information or documents.

The headquarters of AmerenIP will remain in Decatur for at least five years under the sales agreement. Workforce reductions are not expected to exceed 25 employees over a four-year period, except if they occur through attrition or voluntary separation. AmerenIP employees, retirees and surviving dependents will remain in their current IP benefits program, and “AmerenIP will honor all existing labor agreements.” Ameren also has committed between $275-325 million in energy infrastructure investments over the first two years of ownership.

Shawn Schukar, 42, was named the top operating officer for AmerenIP on Friday, with the title of vice president, Energy Delivery Operations. Schukar will report to Scott A. Cisel, vice president, Illinois Operations, Ameren Service Co. Cisel also was named a vice president of AmerenIP. Rainwater will serve as chairman and president of AmerenIP.

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