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3-April-2007--Dynegy Inc. has completed its previously announced combination of operating assets and development of a joint venture with LS Power Group, a privately held power sector investor, developer and manager. The transaction, which was announced on September 15, 2006 and approved by Dynegy's shareholders on March 29, 2007, increases the size of Dynegy's operating power generation portfolio by approximately 8,000 MW and positions the company for future organic growth through the ownership of a 50 percent interest in a development joint venture with LS Power.
"The LS Power transaction establishes Dynegy as a leader in the independent power producer sector and serves as a launching point for the pursuit of future growth initiatives," said Bruce A. Williamson, Dynegy Inc.'s chairman and CEO. "With scale and scope in our key regions of the Midwest, the West and the Northeast, we believe our expanded portfolio positions us to deliver short-term, medium-term and long-term value to investors. In 2007, the combination is expected to be accretive to free cash flow. Over the medium term, benefits include greater diversity in terms of our geographic presence, our dispatch capabilities and the fuels we utilize to generate electricity.
"The company's enhanced financial profile, combined with our ability to operate more MWs with minimal increases in costs, position us to actively pursue value creation initiatives for our investors," Williamson added. "These initiatives could include future mergers and acquisitions or organic growth through our development joint venture with LS Power."
Mike Segal, LS Power Group's chairman and CEO and a new member of Dynegy Inc.'s Board of Directors, said, "LS Power and Dynegy share the view that the electricity sector will continue to consolidate, and that power markets will strengthen as reserve margins tighten and spark spreads expand. This transaction creates a company uniquely positioned to capitalize on these important power sector trends. LS Power's significant ownership stake in Dynegy is a major commitment to and investment in a company with outstanding performance and a management team that has consistently delivered."
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