Seneca rejects Icahn bid for Dynegy

NEW YORK (BestGrowthStock) – Hedge fund Seneca Capital rejected a planned takeover of Dynegy Inc (DYN.N: ) by billionaire investor Carl Icahn, accusing the Dynegy board of “reckless disregard” of its duty to shareholders.

Seneca, which is the second-largest shareholder of Dynegy with 9.3 percent of the company’s voting common stock, urged shareholders of the Houston-based power company to reject the $5.50-per-share offer from Icahn Enterprises LP (IEP.N: ), the company’s largest shareholder.

Seneca, which is moving to have two directors, including Chief Executive Officer Bruce Williamson, removed from the Dynegy board, said Dynegy had abandoned its recent pledge to review its restructuring alternatives and had rushed ahead into the agreement with Icahn, which valued the company at $665 million.

Neither Dynegy nor Icahn was immediately available to comment on the Seneca statement.

Dynegy has struggled amid soft power prices and high debt, which stands at about $3.95 billion, and has long been considered to be a merger candidate.

The company, which owns about 12,100 megawatts of power capacity on the East Coast, Illinois and the West Coast, was once a rival to Enron Corp and even sought to buy the disgraced energy company shortly before its demise.

Seneca said it believed Dynegy shares were currently worth between $6 and $7, and could rise to $16 to $18 if the power markets recovered.

Dynegy had earlier failed to win shareholder approval of a takeover by private equity firm Blackstone Group LP (BX.N: ).

Dynegy’s shares were up 0.7 percent at $5.67 in trading on the New York Stock Exchange.

(Reporting by Matt Daily, editing by Maureen Bavdek, Dave Zimmerman)

Seneca rejects Icahn bid for Dynegy