February 14, 2011 / 11:51 AM / 7 years ago

Icahn extends Dynegy offer

BANGALORE (Reuters) - Billionaire investor Carl Icahn extended his tender offer to buy Dynegy Inc (DYN.N) for the third time as not enough shares have been tendered, but refused to raise his $665 million bid despite protests from Seneca Capital, the power firm’s No. 2 shareholder.

Icahn said the number of shares tendered to his offer has fallen to represent 1.4 percent of outstanding Dynegy shares, as on Friday, from 4.4 percent early last week.

For the deal to go through, at least 35 percent of Dynegy shares need to be tendered to Icahn, who already owns about 15 percent of the Houston-based firm’s outstanding shares.

Dynegy, which sells electricity at competitive rates into the open market, is trying to sell itself in the face of weak natural gas prices, which often dictate power prices.

The $5.50-per-share deal with Icahn has come under fire from hedge fund Seneca -- owner of about 9.29 percent Dynegy shares -- which had successfully blocked the company’s earlier deal to sell itself to Blackstone Group LP (BX.N).

Dynegy shares have mostly traded above the offer price since the deal was agreed to in December. The stock fell 0.5 percent to $5.64 in early trade on Monday.

“If the tender offer is not successful, then Icahn Enterprises LP IEP.N and its affiliates will consider their alternatives regarding their investment in Dynegy and may seek to discuss with Dynegy the potential for debt or equity financing,” Icahn Enterprises said in a statement.

Dynegy will be obligated to pay $5 million to Icahn if the deal is terminated. In certain circumstances, the fee may go up to $16.3 million, Dynegy said in a regulatory filing.

Reporting by Krishna N Das in Bangalore; Editing by Joyjeet Das

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