Dynegy said it sold 25 million shares of Class A common stock at $20.75 per share in an underwritten public offering related to the capital restructuring program announced on Monday (see Daily GPI, Dec. 18). Net proceeds from the sale totaled $494 million and will be used to reduce debt. Lehman Brothers acted as sole underwriter and retains a 10% over-allotment option for 30 days.

Dynegy CEO Chuck Watson also said that, separate from the equity offering, members of Dynegy’s leadership team, including himself and President and COO Steve Bergstrom, will purchase more than 1.2 million shares of equity at the same price, less underwriter fees, directly from the company.

This issuance “is an important next step in the execution of our strategy to strengthen Dynegy’s financial position in light of the changing financial standards in the energy merchant industry,” said Watson. “The rapid execution of this equity offering demonstrates Dynegy’s strong commitment to the capital restructuring program we outlined this past Monday.”

However, because the shares issued will be outstanding for the full year, the company had to adjust its 2002 guidance to $2.30 from $2.30-35. The company said its previous earnings per share guidance contemplated a mid-year stock issuance. Dynegy shares were down 3.8% to $23.10 by mid day Thursday in reaction to the news.

ChevronTexaco, which currently owns 26.5% of Dynegy’s outstanding common shares, has the right to retain its proportionate ownership interest in Dynegy’s common stock.

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