Main Street AC Inc., which is offering cash to purchase up to 4.9% of the shares in four financially distressed energy merchants, last week reportedly wired funds to complete a payment for some Dynegy Inc. shares tendered electronically between Aug. 28 and Sept. 9. The San Diego, CA-based company did not indicate how many of Dynegy’s shares were tendered, but it had offered the company’s stockholders $2.88 per share.

After making the tender offer two weeks ago, Dynegy and the three other energy merchants targeted, Mirant Corp., Reliant Resources Inc. and Aquila Inc., all warned shareholders to not sell any of their stock until they had reviewed all of the materials and had talked with financial advisers. They also warned that the offers, which are based on the companies’ closing prices Aug. 27, might not be as promising as they appeared.

Main Street offered Mirant shareholders $4.97 per share net; Reliant Resources, $7.32 per share net; and Aquila, $5.43 (amended to $5.45 per share of its common stock), all above their closing prices on Aug. 27. Still not disclosed by Main Street is whether it has received shares from any stockholders besides Dynegy.

Main Street’s cash is derived from equity funds of its from warrant holders, who exercised their warrants for Main the shell company’s shares. The offers all call for payment on a first-received and then first-tendered basis, in selecting tendered shares to be purchased. Main Street claimed it would never know the name of “any particular holder from whom it buys tendered shares, so the company cannot confirm the status of any one tendering shareholder.”

In stock sales completed before the Main Street offer, Chuck Watson, the former chairman and CEO of Dynegy, apparently has been selling off some of the substantial portfolio he holds in the company he once built. According to a series of filings with the Securities and Exchange Commission (SEC), Watson has sold more than 5 million shares in Dynegy stock since he resigned from the company in late May (see NGI, June 3).

The SEC filings revealed that several of Watson’s family trusts and partnerships indicated they would sell up to 6.5 million common shares of Dynegy on seven probable dates between the end of June and the end of July. A spokeswoman for Watson confirmed that the shares had been sold, but could not confirm which dates the sales were completed. How much Watson made from the sales also was not confirmed.

However, “Dynegy remains the largest holding within the Watson portfolio at this time,” she said last week. Until mid-June, Watson owned or controlled nearly 7.3 million shares of common stock and 4.2 million options to buy stock. If no other portfolio changes were made other than the holdings indicated in SEC filings, Watson’s Dynegy holdings have been cut in half. Since leaving Dynegy, Watson has not exercised any of his stock options, the spokeswoman said.

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