Reuters: Bankruptcy News: UPDATE 1-Dynegy sees Chapter 11 exit as creditors OK plan

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UPDATE 1-Dynegy sees Chapter 11 exit as creditors OK plan Aug 27th 2012, 14:19 Mon Aug 27, 2012 10:19am EDT * Creditors overwhelmingly approve bankruptcy reorganization * Dynegy, Dynegy Holdings to combine * Sept. 5 hearing to approve Chapter 11 plan By Jonathan Stempel Aug 27 (Reuters) - Creditors of power producer Dynegy Inc and its Dynegy Holdings LLC unit voted overwhelmingly in favor of their joint bankruptcy reorganization plan, and the companies expect to emerge from Chapter 11 shortly after the plan wins court approval. Dynegy said U.S. Bankruptcy Judge Cecelia Morris in Poughkeepsie, New York, had scheduled a Sept. 5 hearing to confirm the plan, which won backing from creditors holding about $3.5 billion of claims, more than 99 percent of the value that voted. The reorganization calls for Dynegy and Dynegy Holdings to merge, with creditors taking a 99 percent stake in the combined company and Dynegy Inc getting the remainder. Unsecured creditors would recover 59 cents to 89 cents on the dollar, and existing shareholders would recover nothing, court papers show. Dynegy Holdings filed for protection from creditors last November amid a dispute over whether the parent acted properly in taking some coal-powered plant assets it held. Bondholders complained that this unfairly benefited shareholders including Carl Icahn and a Franklin Resources Inc unit at their expense, and a court-appointed examiner later agreed that it constituted a "fraudulent transfer." The dispute was settled in April, and Dynegy itself filed for Chapter 11 in July as part of the joint reorganization. The company said it had $11.35 billion of assets and $5.13 billion of debts as of May 31. Dynegy said that upon emerging from Chapter 11, it would have a seven-person board that includes Chief Executive Officer Robert Flexon. The chairman would be Pat Wood III, who is a principal of energy infrastructure company Wood3 Resources and who chaired the Federal Energy Regulatory Commission from 2001 to 2005. Dynegy is the same company that in 2001 canceled plans to buy Enron Corp as its larger rival hurtled toward collapse. Shares of Dynegy fell 2 cents to 41 cents in morning trading on the pink sheets. The cases are In re: Dynegy Holdings LLC, U.S. Bankruptcy Court, Southern District of New York, No. 11-38111; and In re: Dynegy Inc in the same court, No. 12-36728. Link this Share this Digg this Email Reprints

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