Dynegy Inc., the U.S. power producer with a shareholder vote scheduled Nov. 17 on a $540 million takeover by Blackstone Group LP, rose after a Pritchard Capital Partners analyst said the private equity firm may increase its $4.50-a-share offer to win approval.
Dynegy, based in Houston, rose 6 cents, or 1.3 percent, to $4.69 a share at 4:15 p.m. in New York Stock Exchange composite trading. It had risen above the offer price yesterday after shareholder Seneca Capital, an opponent of the Blackstone offer, proposed replacing two members of Dynegy’s board.
Today, billionaire New York investor Carl Icahn said in a filing he is offering the company a $2 billion line of credit. That “appears to address liquidity concerns raised by Dynegy management and others” who support Blackstone’s takeover, Charles Fishman, an analyst for Pritchard based in Falls Church, Virginia, wrote today in a note to clients. He rates the stock “neutral” and owns none.
Icahn’s goal “is to try to get shareholders to vote this thing down,” Fishman said today in an interview. Fishman has advised shareholders to reject the Blackstone offer, saying Dynegy’s assets are worth at least $8 a share.
“Adding more debt is not a step that results in greater stockholder value,” David Byford, a Dynegy spokesman, said in an e-mailed statement. More borrowing would be “pushing out the time when stockholders can receive any real value,” he said.
‘Open Process’ Sought
In a separate filing later in the day, Icahn wrote in a letter to Dynegy that the line of credit he’s offering will allow Dynegy to sell up to $1.5 billion of assets without requiring a prepayment. He also said he will waive fees if Dynegy engages in a “prompt, even handed, open marketing process for the entire company” if the Blackstone offer is voted down by shareholders.
“While we have not determined to do so, we reserve the right to be a bidder in this process,” Icahn wrote in a letter dated today and addressed to Bruce Williamson, chief executive officer of Dynegy.
Blackstone’s offer was accepted by Dynegy’s board in August. Icahn and Seneca are Dynegy’s two largest shareholders. Icahn controls 13 percent of Dynegy shares, he said in today’s filing. Seneca has 9.3 percent.
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