Fuente: Platts
Troubled energy trader
Dynegy is to embark on a wide-ranging $2- bil plan to improve its financial
health, it said Monday. But the plan was not well received by either Wall
Street, where
Dynegy shares fell Monday,
or by the Fitch credit ratings agency, which downgraded the credit of Dynegy to
junk status.
Both reactions sent shock waves
through European power and gas markets. Dynegy said it would increase liquidity
by the end of the year through measures including the partial sale of Dynegy's
ownership interest in UK gas business Dynegy Stor-age, or a joint venture
transaction for the Dynegy Storage busi-ness.
Talks about a sale of part
of Dynegy Storage were first revealed in early May. The company hopes to find a
partner for,
or sell, the 16,600-mile
Northern Natural Gas pipeline that links the Permian Basin in Texas to the
upper US Midwest, which it bought as part of its failed merger with Enron, by
the end of
2002. But Enron has until
Jun 30 to exercise an option to repur-chase the line. The company also said it
would sell an additional $200-mil in assets this year and cut its 2002 capital
bud-get
by another $100- mil. It
wants to sell $300-mil to $400-mil in Illinois Power mortgage bonds to repay
outstanding debt at IP, and to reduce the common stock dividend by 50%
beginning in
the third quarter of this
year. It also plans an initial public offering of Dynegy Energy Partners, a
newly formed master limited partnership that will own and operate a portion of
the com-pany's
downstream liquids business.
Dynegy also said it would try to improve its financial reporting transparency. De-spite
its efforts, the announcement
was met with skepticism. The Dynegy share price was down about 10% at in early
trade
Monday. Dynegy was trading
at $6.90/share at 10:30EDT (1430GMT), down 62 cents from Friday's $7.52/share
close.
Fitch Ratings then
downgraded Dynegy's credit rating to junk status. Fitch also downgraded Dynegy
indicative senior unse-cured debt to BB+ from BBB-. The rating agency lowered
the short-term ratings for Dynegy Holdings and Dynegy to B from F3. The ratings
for the two companies remain on Rating Watch Negative where they were
originally placed Nov 9, 2001.