Dynegy Inc.’s power subsidiary plans to raise $325 million by Tuesday (July 23) through two mortgage bond offerings, as part of the energy merchant’s strategic plan to build liquidity and restore investor confidence, which Friday was at an all-time low. With the close of the public offering, Dynegy will have raised more than $1 billion of its $2 billion goal, and has already eliminated two credit ratings triggers and slashed capital expenses. Illinois Power Co., headquartered in Decatur, IL, priced $100 million worth of bonds due in 2007, and $225 million due in 2012; both carry a 10.625% rate.

In June, Dynegy unveiled a plan to raise $2 billion to improve its financial picture and restore investor confidence, that included raising cash by securing a partner for its 16,000-mile-long Northern Natural Pipeline Co., and eliminating financial triggers (see Daily GPI, June 25). The restructuring plan also cut the dividend 50%, as well as spinning off a master limited partnership (MLP), Dynegy Energy Partners LP. Dynegy plans to raise additional capital by selling $250 million of gas midstream assets to the MLP, which will be involved in fractionation, storage, terminalling, transportation, distribution and marketing natural gas liquids in North America. The MLP’s initial public offering is expected to be approved by the Securities and Exchange Commission by the third quarter.

The Illinois Power mortgage bond offering is being underwritten by Merrill Lynch & Co. as sole lead manager and by Credit Lyonnais Securities, Deutsche Bank Securities, SG Cowen and TD Securities as co-managers.

Dynegy’s announcement was overshadowed Friday by that of Nicor Inc., which downgraded earnings and set up a special committee to investigate gas transactions (see related story). Dynegy, which is a 50% venture partner with Nicor in the retail services company Nicor Energy LLC, saw its already low stock price drop nearly 12% more on Friday, to $3.97. Investors blamed the Nicor news for Dynegy’s fall; Nicor, meanwhile, lost 40% since the beginning of trading Friday to close at $22.75.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.