Just hours after its tender offer of $5.50/share, or $665 million in aggregate, for Dynegy Inc. was due to expire, Icahn Enterprises subsidiary IEH Merger Sub LLC extended the deadline until 5 p.m. EST Monday “to allow additional time for FERC approval,” the company said.
“The tender offer is being extended because certain conditions to the tender offer have not been satisfied as of the previously scheduled expiration date, including receipt of the approval of the Federal Energy Regulatory Commission [FERC] under Section 203 of the Federal Power Act, as amended,” according to IEH.
Approximately 5.4 million shares (4.41%) of Dynegy’s common stock had been tendered by 5 p.m. EST Wednesday, the previous deadline for the tender offer, IEH said. The offer had initially been scheduled to expire Jan. 25 but was extended two weeks by IEH.
Seneca Capital, one of the company’s biggest shareholders, on Wednesday urged Dynegy shareholders to reject the Icahn firm’s $5.50 offer and preemptively rejected an offer for $6/share, should IEH increase its offer.
“It is the wrong price at the wrong time for the wrong reasons,” according to Seneca.
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 NGI, Nov. 29, 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. 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.
Dynegy has said it faces $1.6 billion in negative free cash flow during the next five years.
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) last 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. 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.
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