>>> Dynegy to acquire assets from Duke Energy (DUK) and Energy Capital Partners

Dynegy to acquire assets from Duke Energy (DUK) and Energy Capital Partners for total consideration of $6.25 bln; guides 2015 pro forma consolidated adjusted EBITDA of $1.2-$1.4 bln and fcf of $480-$680 mln

  • The co announced it will acquire 12,500 MW of coal and gas generation from Duke Energy (DUK) and Energy Capital Partners, almost doubling its existing portfolio to nearly 26,000 MW.
    • Purchase price of $2.8 bln for DUK assets and $3.45 bln for ECP assets.
    • The co's long-term financing plan to include: ~$5 bln of new unsecured notes. ~$1.25 bln in equity and equity linked securities including $200 mln in common stock issued to ECP. $950 mln in incremental revolving credit facilities bringing total Dynegy Inc. revolver capacity to $1.425 bln.
    • Synergy targets include cost reductions in excess of $40 mln per year, $200 mln in collateral efficiencies and nearly $500 mln in present value cash tax savings.
  • 2015 Pro Forma consolidated Adjusted EBITDA of $1.2-$1.4 bln and Free Cash Flow of $480-$680 mln, assuming both transactions close on December 31, 2014.
  • 2015 Adjusted EBITDA and Free Cash Flow accretion per share of ~125% and 220%.
  • As a result of this announcement, in the third quarter DUK will recognize an ~ $500 mln pre-tax reversal of the $1.4 bln impairment previously recognized in 2014. Use of the proceeds is being evaluated. The transaction is expected to be accretive to shareholders by 2016.