By Angela McDaniels
Tacoma, Wash., Oct. 14 - Dynegy Inc. extended its exchange offers for up to $1.25 billion of Dynegy Holdings, LLC's notes, debentures and capital income securities to midnight ET on Oct. 20 from midnight ET on Oct. 13, according to a company news release.
The withdrawal deadline was extended to 5 p.m. ET on Oct. 18 from Sept. 28.
As previously reported, Dynegy is offering new 10% senior secured notes due 2018 and cash in exchange for the Dynegy Holdings securities.
The eligible securities, the amount of securities tendered as of 5 p.m. ET on Oct. 13 and the payments on offer are listed in the tables below.
Holders who tendered by 5 p.m. ET on Sept. 28 will receive the early tender payment. Holders who tender after that time but prior to the offer expiration will receive the exchange payment. In each case, the early tender payment is $50 more than the exchange payment.
The company will also pay accrued interest.
If holders tender more than $1.25 billion of securities, the company said it will accept notes in order of their acceptance priority level.
The exchange offers are conditioned on the satisfaction or waiver of a number of conditions.
The company first announced plans for the exchange offers on Sept. 2.
Low participation
So far, holders have tendered $100.5 million, or 2.8%, of the $3.57 billion of outstanding securities.
As previously reported, an informal group of Dynegy Holdings' bondholders filed a complaint on Sept. 21 in the Supreme Court of the State of New York, County of New York to challenge the recent transfer of Dynegy Coal Holdco, LLC to Dynegy by Dynegy Gas Investments, LLC.
"Simply put, despite the parent company's repeated and unambiguous calls of distress and gloomy outlooks, the company has pilfered one of the most valuable assets of the operating subsidiary that issued the notes, and removed it from the reach of creditors, for no reason other than to benefit the parent's equity holders, prominent among them Carl C. Icahn," the bondholders said in their complaint.
Dynegy concluded that the fair value of the acquired equity stake in Dynegy Coal is about $1.25 billion. To provide this value to Dynegy Gas Investments, Dynegy issued an "undertaking" in which it agreed to make payments in the amounts and at the times when Dynegy Holdings is obligated to make principal and interest payments on its 2019 notes and 2026 notes.
Dynegy Gas then assigned the undertaking to Dynegy Holdings in exchange for a $1.25 billion intercompany note due 2027. Dynegy's obligations will be reduced if it acquires or retires any of Dynegy Holdings' notes. So if Dynegy acquires enough notes in the exchange offer, its obligations can be reduced to zero.
The bondholder group said this would mean the holding company will have sold Dynegy Coal for no cash and instead received in return only a reduction in its debt that was already trading at highly distressed prices.
Credit Suisse Securities (USA) LLC is the lead dealer manager (800 820-1653 or 212 538-2147), and Barclays Capital Inc., Deutsche Bank Securities Inc., Jefferies & Co., Inc. and Lazard Capital Markets LLC are the co-dealer managers. The exchange agent and information agent is D.F. King & Co., Inc. (212 269-5550 for brokers and banks, others call 800 697-6975).
Dynegy is a Houston-based producer and seller of electric energy, capacity and ancillary services.
Dynegy exchange offers
| Notes | Outstanding amount | Tendered as of early deadline | Priority Level
|
| 7 | 5/8% senior debentures due 2026 | $175 million | $1.1 million | 1
|
| 7¾% senior notes due 2019 | $1.1 billion | $6.9 million | 2
|
| 7 | 1/8% senior debentures due 2018 | $175 million | $2.7 million | 2
|
| 8 | 3/8% senior notes due 2016 | $1,046,800,000 | $1.8 million | 3
|
| 7½% senior notes due 2015 | $785 million | $3.7 million | 3
|
| 8¾% senior notes due 2012 | $88.5 million | $200,000 | 4
|
| 8.316% series B subordinated | $200 million | $84.1 million | 5
|
| capital income securities due 2027
|
| Total | $3,570,300,000 | $100.5 million
|
|
|
| Payment per $1,000 principal amount tendered
|
| Notes | Early tender payment | Exchange payment
|
| 7 | 5/8% senior debentures due 2026 | $120 cash and $480 of notes | $550 of notes
|
| 7¾% senior notes due 2019 | $120 cash and $565 of notes | $635 of notes
|
| 7 | 1/8% senior debentures due 2018 | $120 cash and $560 of notes | $630 of notes
|
| 8 | 3/8% senior notes due 2016 | $120 cash and $580 of notes | $650 of notes
|
| 7½% senior notes due 2015 | $120 cash and $600 of notes | $670 of notes
|
| 8¾% senior notes due 2012 | $120 cash and $600 of notes | $670 of notes
|
| 8.316% series B subordinated | $450 of notes | $400 of notes
|
| capital income securities due 2027
|
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