Dynegy Triples Trading Net; Joins S&P 500
Building on a tripling of the financial contribution of its
Dynegy Marketing and Trade division, Dynegy Inc. announced its
third-quarter recurring earnings per share of $0.55 will top
analysts' estimates of $0.50 per share.
Dynegy made two other separate announcements last week: (1) it
has completed the previously announced $188 million purchase of
Extant, Inc., a privately held, Colorado-based communications
solutions provider, tapped to lead the growing conglomerate into
the world of broadband; and (2) will be selling 10 million newly
issued shares of Dynegy Class A common stock, pursuant to its
appearance on the Standard & Poor 500 Index today.
The company said this year's third-quarter results to be
reported Oct. 17, will show an 80% increase in net income to $175
million over the $96.5 million pro forma total of Dynegy and
Illinova in 3Q 1999. The companies merged this past February.
Dynegy Marketing & Trade's financial contribution includes
operating margin plus equity earnings, which totaled $101 million
in the third quarter last year. Tripling would put that number at
around $300 million in the latest quarter.
"Successful execution of Dynegy's core energy convergence
business strategy - the merchant leverage effect - enabled the
company to trade around its assets and extract value from the
marketplace as regional inefficiencies occurred." This was in spite
of record mild temperatures in the
Midwest and Northeast U.S. throughout the peak summer months,
Dynegy noted. It cited the "nationwide volatility in both power
and gas, coupled with strong marketing, structured origination
activity and term sales. Dynegy's generation asset portfolio,
including the assets acquired in the Illinova merger, is expected
to perform solidly, particularly in the West where weather
conditions significantly impacted demand." The company credited its
geographically diverse asset base for helping to offset an
off-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 shares
will be sold through Goldman, Sachs & Co., Banc of America
Securities LLC and Lehman Brothers as agents for Dynegy at a price
per share equal to yesterday's closing price ($53.25) less a
discount of $0.125 per share, excluding commissions.
The new stock will meet a portion of the demand for Dynegy
shares from S&P 500 index funds. The company had been on the
S&P MidCap 400 index.
The 10 million new shares will be added to the 310 million
Dynegy shares outstanding.
The Extant acquisition "gives Dynegy an entry into the
communications marketplace through the addition of management
expertise, market intelligence, network access and control and
sophisticated operating and connectivity software systems," said
Chuck Watson, Dynegy chairman. The new venture will go by the name
of Dynegy Connect and will be 80% owned by Dynegy and 20% owned by
Telstra Corp. Ltd., an Australian telecommunications and
information services company.