Report: Dynegy Planning for Chapter 11
Dynegy, Inc.’s (NYSE:DYN) holding company will likely seek Chapter 11 bankruptcy protection, according to reports on Monday afternoon.
The company, which produces and sells electricity, said it could put its holding company, Dynegy Holdings, into bankruptcy as soon as Monday evening, the Wall Street Journal reported, quoting “people familiar with the matter.”
A bankruptcy filing of the holding company would likely cause bondholders to take a loss, while sparing its parent-company shareholders like Carl Icahn and Seneca Capital, from incurring losses, the paper said.
The company remains in talks with bondholders regarding a possible reorganization plan, according to the Journal, as the Houston-based power company looks to reduce its debt load of more than $5 billion.
The paper reported that bondholders, which include Franklin Templeton Investments, Avenue Capital Group, Oaktree Capital Management and Caspian Capital Partners, have sued Dynegy for already taking steps to restructure the company that would benefit shareholders rather than creditors.
Shares of Dynegy Inc. fell 35 cents or 10.61% in Monday’s session, closing the day at $2.95 a share. The stock was down another 4 cents in after-hours trading. Shares have fallen more than 47%, year-to-date.