Dynegy again defends Blackstone deal

NEW YORK (BestGrowthStock) – U.S. power company Dynegy Inc (DYN.N: ) defended on Tuesday its proposed sale to private equity firm Blackstone Group LP (BX.N: ), which has come under fire from investor Carl Icahn.

Blackstone agreed to buy the struggling power company for $4.7 billion in August. But Icahn, who has built a 10 percent stake in Dynegy since the deal was announced, has argued that the $4.50-a-share bid is too low.

In a letter Dynegy mailed to shareholders, it argued that remaining a stand-alone company and selling various assets would not be permitted under its current credit facility. Such a strategy would also increase its negative cash flows, forcing the company to issue more equity, sell assets, or otherwise restructure its balance sheet, it said.

A sale of assets would not allow the company to pay a special dividend to its shareholders, Dynegy argued.

Dynegy also reiterated that it had gone through an exhaustive process to try to sell itself, and Blackstone’s bid was the best offer on the table.

Blackstone’s deal for Dynegy is unusually structured. It includes a $1.36 billion deal signed at the same time to sell four of Dynegy’s natural gas-fired power plants to NRG Energy Inc (NRG.N: ).

Most of the price of the deal is made up of debt, with $543 million equity.

Blackstone itself has indicated there was no higher offer coming and cautioned that Dynegy’s future as a public company looked bleak without a deal.

Dynegy shares were off 4 cents to $4.81 in early trade.

(Reporting by Michael Erman, editing by Gerald E. McCormick)

Dynegy again defends Blackstone deal