Top Dynegy shareholder exploring other deals

NEW YORK (BestGrowthStock) – Hedge fund Seneca Capital, one of Dynegy Inc’s (DYN.N: ) largest shareholders and an opponent of the company’s takeover by the Blackstone Group (BX.N: ), said on Tuesday that it was exploring the potential for alternative deals for the struggling power company.

Seneca, which owns 9.3 percent of Dynegy’s outstanding shares, also said in a filing with the U.S. Securities and Exchange Commission that it was considering a proposal to replace two of the company’s board members as well as other shareholder resolutions meant to improve value.

Blackstone agreed to buy Dynegy in August for about $543 million, or $4.7 billion including debt.

The $4.50-a-share bid is structured unusually. It includes a $1.36 billion deal by Blackstone to sell four of Dynegy’s natural gas-fired power plants to NRG Energy Inc (NRG.N: ).

Seneca Capital and billionaire investor Carl Icahn, who owns nearly 10 percent of Dynegy’s shares, have argued that Blackstone is paying too little, threatening to upset the deal.

Dynegy has argued that should shareholders vote down its deal with Blackstone, the company would face severe financial hardships. It says conditions have deteriorated since Blackstone’s offer due to low and declining commodity prices, continued economic weakness and a challenging financial position.

“The risks of continuing to operate as a stand-alone public company significantly outweigh the potential upside of doing so,” the power company has said, forecasting $1.1 billion of negative cash flow through 2014.

(Reporting by Michael Erman; Editing by Lisa Von Ahn)

Top Dynegy shareholder exploring other deals