Dynegy DYN announced today that it has reached an
agreement in principle with creditors holding over $2.5 billion of claims
against Dynegy's subsidiary, Dynegy Holdings, LLC. The agreement in
principle contemplates the resolution of all disputes, claims and causes of
action between DH and Dynegy. The terms of the agreement in principle will be
implemented through a settlement agreement to be filed in DH's Chapter 11
case, and in amendments to DH's Chapter 11 plan, which would be subject to a
formal creditor vote and confirmation by the bankruptcy court.
Under the
agreement in principle, DH's unsecured creditors would receive common
equity in the reorganized company in lieu of the new senior secured notes and
preferred stock contemplated by the current plan; the cash to be
distributed to creditors under the revised plan would be reduced to $200
million; and all disputes relating to the Roseton and Danskammer leases
would be resolved by awarding US Bank, as trustee for the trust certificates
issued in connection with the leases (the Lease Notes), a fixed allowed
unsecured claim. Parties to the proposed agreement include an ad hoc group of
holders of DH's senior notes, PSEG, US Bank and certain holders of the Lease
Notes. The agreement in principle does not include any holders of DH's $200
million of subordinated capital income securities due 2027 (the Subordinated
Notes).
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