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Banking Dynegy to spend $6.25B on power plant acquisitions

Dynegy to spend $6.25B on power plant acquisitions

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Robert Francis
Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

The Associated Press

Dynegy plans to spend more than $6 billion to buy several coal and gas power generation plants from Duke Energy and Energy Capital Partners.

Shares of the Houston power producer soared Friday before markets opened and after it announced the deals.

The company plans to spend $2.8 billion on Duke’s retail business and ownership interest in several plants and $3.45 billion for assets of Energy Capital Partners, or ECP. The deal will add about 12,500 megawatts of coal and gas generation and expand Dynegy’s retail business into Ohio, Pennsylvania and Michigan.

Dynegy said that the deals will boost its presence in the Midwest and New England, including three new markets: Ohio, Pennsylvania and Michigan. The company expects to nearly double its existing portfolio to almost 26,000 megawatts of generating capacity nationally.

Dynegy expects both deals to close by the end of next year’s first quarter and said the acquisitions will complement its existing business and add fuel diversification. Most of the plant acquisitions involve either modern combined cycle natural gas plants or environmentally compliant coal generation plants.

It plans to finance the purchase with $5 billion in new bonds and $1.25 billion in equity and equity-linked securities.

Duke Energy, based in Charlotte, N.C., said the sale will add to its earnings by 2016, and it is evaluating how to use proceeds from the transaction.

Shares of Dynegy were up 16 percent, or $4.75, to $34.47 in premarket trading. The stock had already climbed 38 percent so far this year, as of Thursday’s close.

 

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