With time running out on billionaire Carl Icahn's tender offer of $5.50/share, or $665 million in aggregate, for Dynegy Inc., Seneca Capital on Wednesday again urged Dynegy shareholders to reject the offer.
"It is the wrong price at the wrong time for the wrong reasons," according to Seneca, which also preemptively rejected an offer of $6/share, "should [Icahn affiliate IEH Merger Sub LLC] increase its offer."
The tender offer from IEH for all outstanding shares of Dynegy common stock was due to expire at 5 p.m. EST Wednesday. The offer had been scheduled to expire Jan. 25 but was extended two weeks by IEH.
Seneca renewed its request to the Dynegy board "for an immediate waiver to its poison pill to permit Seneca Capital to work in concert with others for the purpose of acquiring additional Dynegy common stock, including potentially IEH's affiliated ownership position, at a price greater than $5.50 per share." Dynegy rejected a similar request from Seneca last month.
Last year Dynegy shareholders rejected a $5/share offer by a unit of the Blackstone Group LP (see Power Market Today, Nov. 24, 2010). Dynegy announced Dec. 16 that its board approved an offer to be acquired by Icahn's company that was 10% higher than the one from Blackstone (see Power Market Today, Dec. 16, 2010). Part of the deal was for an auction to proceed in which Dynegy would consider superior offers through Jan. 24. Seneca was highly critical of the board for embracing the deal from the company's largest individual shareholder (see Power Market Today, Dec. 23, 2010). Seneca is the second largest Dynegy shareholder.
Dynegy has said it faces $1.6 billion in negative free cash flow during the next five years (see Daily GPI, Nov. 17, 2010).
J. Kevin Blodgett, Dynegy general counsel and executive vice president, administration, left his position effective Feb. 4, the company said in a filing with the Securities and Exchange Commission (SEC) this week. Kent R. Stephenson, the company's senior vice president and deputy general counsel, has been appointed senior vice president and general counsel, effective Feb. 7, according to the filing.
Prior to taking the position in 2005, Blodgett had served as Dynegy's senior vice president of Human Resources (see Power Market Today, Nov. 30, 2005). No reason was given for Blodgett's departure.
Blodgett will receive the benefits and payments to which he is entitled under Dynegy's executive severance pay plan and short-term incentive plan for the 2010 performance year, but "has agreed that he will not be eligible for any benefits or payments under the Dynegy Inc. executive change in control severance pay plan," according to the SEC filing. That could cost him an estimated $3.6 million, according to Dynegy's proxy statement.
Last month Dynegy founder Chuck Watson became chairman of Twin Eagle Resources Management LLC, a new Houston-based gas and power marketer (see Daily GPI, Jan. 7).
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