Transactions - OCTOBER 26, 2017

Vistra Energy reportedly to buy power producer Dynegy

by Andrea Waitrovich

Power producer Vistra Energy is in talks to buy Texas-based merchant generator Dynegy, according to media outlets.

The two companies’ combined enterprise value, a more comprehensive measure of total value than market capitalization, would value the merger at more than $20 billion, The Wall Street Journal reported. And the two companies could announce a deal as soon as next week.

Recently, Vistra announced plans to shut down three of its five coal-fired power plants in North and Central Texas. The plants include the1.8-megawatt Monticello Power Plant, the 1.1-gigwatt Sandow Power Plant and the 1.2-gigwatt Big Brown plant.

Vistra Energy said the coal plant closures are necessary because they are “economically challenged in the competitive ERCOT market.” Specifically, it said, “Sustained low wholesale power prices, an oversupplied renewable generation market, and low natural gas prices, along with other factors, have contributed to this decision.”

And earlier this year, Dynegy closed on a $3.3 billion deal with the French energy company Engie to acquire 17 power plants around the country, including six plants in Texas. Dynegy’s acquisition of Engie’s U.S. assets adds 17 power plants, most of them natural gas-fired, and more than 9,000 MW of generation to its portfolio. The additions made Dynegy one of the nation’s largest independent producers of electricity. At the time, a Texas bankruptcy judge gave approval to a subsidiary of Midwest utility Dynegy for a prepackaged Chapter 11 plan that allows the utility to swap out $825 million of bonds due in the next 15 years for cash, seven-year notes and shares.

However, Dynegy reported a $300 million loss in the second quarter 2017.

In July, Dynegy said it has agreed to sell its 625-megawatt Lee Energy Facility in Dixon, Ill., in the PJM ComEd region, to an affiliate of The Woodlands, Texas-based Rockland Capital, for $180 million. It also has agreed to sell two natural gas-fired plants totaling 310 megawatts in Dighton and Milford, Mass., in the Southeastern New England capacity zone in ISO-NE, to Starwood Energy Group Global of Greenwich, Conn., for about $119 million.

And Dynergy sold two other facilities to New York–based LS Power for $480 million, a transaction originally announced in February, a few weeks after the deal with Engie was completed. LS Power purchased Dynegy’s Armstrong Energy Facility in Shelocta, Pa., and the Troy Energy Facility in Luckey, Ohio.

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