Dynegy to redeem $400 million series C convertible preferreds at par

By Jennifer Chiou

New York, May 22 - Dynegy Inc. said it entered into an agreement with Chevron U.S.A. Inc. to redeem all of Dynegy's $400 million series C convertible preferred stock at par plus accrued dividends.

The preferred shares will be redeemed on May 26.

The Houston-based electricity provider said the preferreds are convertible into 69.2 million Dynegy shares.

"We are now taking the next step of addressing the series C preferred, the sole remaining security that bears a coupon and also participates in equity upside," Dynegy chairman and chief executive officer Bruce A. Williamson said in a news release.

"This transaction will result in the significant reduction of our diluted shares outstanding and the elimination of a long-term call on cash in the form of $22 million in annual preferred dividends."

Dynegy said it intends to use about $250 million of cash on hand with the proceeds of an offering of class A common stock to fund the offer. It added that it expects to generate about $195 million in cash from the sale of the Rockingham Power Generation Facility.

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