* Deals to nearly double co's national generating capacity
* Expects deals to triple company's 2015 adjusted EBITDA
* Shares rise as much as 22.5 pct
(Adds breakingviews link, details, updates shares)
By Anannya Pramanick
Aug 22 Power company Dynegy Inc said on
Friday that it would buy coal and gas power plants for $6.25
billion to increase its presence in two less regulated eastern
U.S. markets, sending its shares up as much as 22.5 percent.
The deals for select assets of Duke Energy Corp and
Energy Capital Partners will nearly double Dynegy's national
generating capacity and allow the company to retail electricity
in Illinois, Ohio, Pennsylvania and Michigan, increasing its
exposure to the PJM and New England markets.
The acquisitions are the latest in a series of deals aimed
at minimizing exposure to the volatile wholesale power market,
and analysts expect consolidation to continue.
Earlier this year, Wisconsin Energy Corp said it
would buy Integrys Energy Group Inc for $5.71 billion
about two months after Exelon Corp agreed to buy Pepco
Holdings Inc for $6.83 billion to cut exposure to the
wholesale power market.
"The structure of the PJM (Pennsylvania, New Jersey,
Maryland) marketplace is more transparent and probably, in the
long term, more beneficial to (power) generators," ISI Group
analyst Jon Cohen said.
Dynegy emerged from bankruptcy in 2012, less than a year
after its unit filed for protection from creditors, burdened by
costly power plant leases. (reut.rs/1oYwc5q)
The company said it intends to issue about $5 billion in new
unsecured bonds and $1.25 billion in equity and equity-linked
securities to fund the deals.
At the end of June, Dynegy had long-term debt of about $1.97
Chief Executive Robert Flexon expects the deals to triple
the company's 2015 adjusted EBITDA and add to free cash flow per
share in 2015 and beyond.
The company expects the deals to result in nearly $500
million in tax savings, $200 million in related efficiencies and
cost savings of over $40 million per year.
Dynegy will buy Duke Energy's non-regulated Midwest
commercial generation business for $2.8 billion in cash.
The business includes ownership interests in 11 power plants
and Duke Energy Retail Sales, Duke Energy said.
Dynegy will also buy some Energy Capital Partners power
plants for $3.45 billion.
Energy Capital Partners is a private equity firm that
invests in North American utilities, oil and gas, and other
Both deals are expected to close by the end of the first
quarter of 2015.
Lazard and Credit Suisse acted as Dynegy's financial
advisers on both deals. Morgan Stanley was lead financial
adviser to Dynegy on the Energy Capital Partners transaction and
Goldman Sachs acted as financial adviser on the Duke Energy
Dynegy shares were up 6.5 percent at $31.64 at 1300 ET on
the New York Stock Exchange.
(Reporting by Anannya Pramanick in Bangalore; Editing by Simon