HOUSTON - Dynegy has signed two separate definitive sets of agreements to acquire the ownership interests in certain Midwest generation assets from Duke Energy and EquiPower Resources Corp and Brayton Point Holdings, from ECP. According to an Associated Press release, The company plans to spend $2.8 billion for Duke's assets and $3.45 billion for those of Energy Capital Partners. The Duke portfolio includes its retail business and ownership interests in the following plants: Killen, Stuart, Conesville, Miami Fort, Zimmer, Hanging Rock, Washington, Fayette, Lee and Dicks Creek. The ECP assets include these generating facilities: Milford, Lake Road, Dighton, Masspower, Liberty, Elwood, Richland, Stryker, Kincaid and Brayton Point. Upon closing both transactions, Dynegy will own nearly 26,000 megawatts (MW) of generating capacity nationally and provide retail electricity to residents and businesses in Illinois, Ohio, Pennsylvania and Michigan.

The addition of the ECP assets and the Duke generation portfolio and retail marketing business complements Dynegy's existing assets and retail business by adding significant scale and fuel diversification in markets the Company currently participates in but otherwise lacks scale. Of the 12,500 MW being acquired, 5,053 MW are modern combined cycle natural gas plants and 3,793 MW are environmentally compliant coal generation plants.

PJM and ISO-NE capacity payments will represent 25 percent of the combined company's gross margin compared to 11% today as a result of quadrupling the size of the PJM fleet and increasing the size of the New England fleet seven-fold. Adjusted EBITDA and Free Cash Flow accretion per share in 2015 is forecast at approximately 125 percent and 220 percent, respectively.

Dynegy's $3.2 billion net operating loss position will be available to offset taxable income of the combined company, providing nearly $500 million in present value cash tax savings.

In addition to the $40 million in targeted annual cost savings, Dynegy's existing infrastructure and general and administrative costs will be leveraged across a much larger asset base, reducing the general and administrative cost per MWh from $1.67 to $1.10. As part of the integration, Dynegy will expand its highly successful PRIDE (Producing Results through Innovation by Dynegy Employees) program to both businesses to generate balance sheet and operational efficiencies beyond those identified to date.

Duke Energy Retail will expand Dynegy's retail business into three new competitive retail markets (Ohio, Pennsylvania and Michigan). The EquiPower and Duke Ohio generation assets will provide load following generation to support the retail businesses.

Dynegy has committed financing in place for both the liquidity facilities and the transaction purchase prices and expects to access the capital markets in advance of closing to raise the permanent financing for the transactions.

Dynegy Inc. intends to issue approximately $5 billion in new unsecured bonds and $1.25 billion in equity and equity-linked securities. Included in the equity figure is $200 million of Dynegy common stock that will be issued to ECP as part of the transaction consideration at closing. To support the collateral and liquidity needs of the combined enterprise, the Company has secured two incremental corporate-level revolving credit facilities totaling $950 million, bringing total revolver capacity at Dynegy Inc. to $1.425 billion. Additionally, approximately $300 million in working capital and cash collateral postings will be transferred to Dynegy with the acquired portfolios at closing.

Both transactions are expected to close by the end of the first quarter 2015. The transactions are subject to customary closing conditions, including approval from the Federal Energy Regulatory Commission and expiration of Hart-Scott-Rodino waiting periods.

Source: http://phx.corporate-ir.net/phoenix.zhtml?c=147906&p=irol-newsArticle_Print&ID=1960327&highlight=
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