|Dynegy to Replace CEO, Board After $665 Million Icahn Bid Fails|
By Jim Polson and Zachary R. Mider - Feb 21, 2011 11:01 PM CT
Dynegy Inc., the third-largest U.S. independent power producer, said it will replace its chief executive officer and all its board after shareholders rejected a $665 million offer for the power company from Icahn Enterprises LP.
Bruce Williamson, 51, has resigned as chairman and will step down as CEO effective March 11, Dynegy said yesterday in a statement. Patricia A. Hammick, 64, who headed a board of independent directors reviewing the Icahn bid, succeeds Williamson as chairman, the company said. Board member David Biegler, 64, will become interim CEO. Chief Financial Officer Holli Nichols, 40, also will resign as of March 11.
Dynegy, based in Houston, said that none of its five remaining directors will stand for re-election at the company’s annual meeting planned for June. Dynegy’s board offered Icahn and Seneca Capital, its two largest shareholders, one appointment each to the new board of directors, who would then select candidates for the rest of the slots.
The moves recognize “the desire of the stockholders to pursue a different path,” Dynegy said in its statement.
Icahn’s $5.50 a share bid, valuing Dynegy at $4.73 billion including debt, was the second takeover spurned by shareholders since November, when Blackstone Group LP failed to win sufficient support for a bid of $5 per share. The Dynegy board supported both offers, urging shareholders to sell or risk a plunge in the share price.
Seneca, Dynegy’s second-largest shareholder, had opposed the Icahn bid as too low. It called instead for the removal of Williamson and Biegler by shareholders, to be replaced by two of its own board nominees. Seneca then wanted Dynegy to sell some assets and buy back debt, betting that economic recovery will revive demand and prices for Dynegy’s power.
Scot Hoffman, a spokesman for New York-based Seneca, wasn’t immediately available for comment when called after business hours.
“This is a win for Seneca,” Charles Fishman, a Falls Church, Virginia-based analyst for Pritchard Capital Partners, said in an interview yesterday. “Because the new board members will help pick the new board, Seneca should be able to choose at least two board members. They’ll be able to do with the company what they wanted.”
A new board probably will sell plants selectively to raise cash and buy back Dynegy’s debt at a discount, extending maturities, he said.
Dynegy on Feb. 18 extended the deadline for board nominations by shareholders to March 4 from Feb. 20.
The current board also amended a shareholder-rights plan to allow ownership of up to 20 percent of shares before it is triggered, doubling the previous 10 percent limit, the statement said. Dynegy owns plants capable of generating 11,800 megawatts, enough for 9.4 million average U.S. homes.
NRG Energy Inc. is the largest U.S. independent power producer by revenue and Calpine Corp. is the second-largest. Independent power producers generate electricity without a utility unit, which has its rates set by local regulators.
Dynegy’s market value peaked near $20 billion before it tried to swallow energy-trader Enron Corp. in 2001, and it remained solvent after independent power producers including NRG Energy Inc. and Calpine Corp. followed Enron into bankruptcy.
“Bruce Williamson saved Dynegy from bankruptcy,” said Fishman, who rates the shares a “buy” and owns none.