Dynegy plans to reduce debt by over 50%

By Carlise Newman

Chicago, April 29 - Dynegy Inc. said Tuesday it aims to reduce debt by more than 50% after posting a profit for the first time in over a year.

Dynegy has already cut its borrowings by $491 million compared to year-end 2002, said Bruce Williamson, president and chief executive officer, in a conference call Tuesday. Revolving credit facility exposure, including letters of credit and borrowings, was reduced by $350 million and the balance of debt was reduced by $141 million.

"We are over-leveraged," Williamson said.

During the call, he said the company's debt load, now at $7.7 billion, needs to be reduced by 50% "and a bit below that."

Williamson was also asked about the outcome of meetings with ratings agencies held on Monday.

"We continue to work with ratings agencies to build a dialogue so they understand us, the company and our restructuring," he said in response. He did not mention anticipation of a rating change.

Houston-based energy company Dynegy reported net income of $147 million for the first quarter 2003, compared to a net loss of $247 million for the same period last year.

As of April 21, Dynegy's liquidity was $1.8 billion, consisting of $1.15 billion in cash and $1.1 billion in revolving bank credit, with less than $450 million in letters of credit posted against the revolver.

Total collateral posted as of April 21, including cash and letters of credit, was $1 billion, consisting of $544 million in cash and $474 million in letters of credit.

"Over time, we expect to replace the collateral with letters of credit, increasing the usage of the revolver," said Williamson.

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