Houston-based Dynegy Inc. announced a senior management shakeup Tuesday at the same time it said it has terminated an offer to be bought by a unit controlled by billionaire Carl Icahn, a major shareholder in the company. CEO Bruce Williamson and CFO Holli Nichols resigned, effective March 11, and five board members will not stand for reelection.

Independent director David Biegler will be interim CEO. Aside from Williamson, all of the directors said they will remain on the board through the Dynegy annual shareholders meeting later this year.

Williamson resigned his posts as board chairman and director immediately, Dynegy said. Patricia Hammick, previously lead director, is the new chairman. Nichols resigned, effective March 11, to move to another company; and Charles Cook, executive vice president for commercial operations and market analytics, will serve as interim CFO.

"We expect the new directors to take the lead in defining the future composition of the board and in selecting a new CEO," Hammick said.

Regarding the merger agreement with Icahn Enterprises LP, Dynegy said not enough shares were tendered by shareholders to complete the deal, so it automatically was terminated at the end of business Friday. Icahn's offer originally had a late January deadline and then one earlier this month, both of which were extended, ostensibly to await federal regulatory approvals (see Daily GPI, Feb. 11).

Recommended by the Dynegy board, the Icahn tender offer was for $5.50/share, or $665 million in aggregate, for Dynegy. Icahn earlier had announced that approximately 5.4 million shares (4.41%) of Dynegy's common stock had been tendered as of the end of the business day Feb. 9, the previous deadline for the tender offer. The offer had initially been scheduled to expire Jan. 25.

"Recognizing the desire of the stockholders to pursue a different path, Dynegy's five remaining directors do not intend to stand for reelection at the company's upcoming annual meeting, anticipated to be held in June," a company spokesperson said. The board has offered positions to both Icahn and Seneca Capital, another large holder of Dynegy shares that had made earlier tender offers to acquire the company.

Hammick said the latest actions were designed to reposition Dynegy for "a new management and board structure as soon as prudent," adding that the board is open to stockholder suggestions as to additional independent directors. "Dynegy will not expend any further resources in responding to the Seneca Capital consent solicitation," she said.

Hammick praised Williamson and Nichols for their roles in helping Dynegy whittle down a mountain of outstanding debt by more than $10 billion and implementing a program to curb emissions from the company's Midwest coal-fired generation fleet.

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