Bloomberg News

Dynegy Says Stock Drop May Make Company Attractive

November 06, 2008

Dynegy Inc. (DYN:US) Chief Executive Officer Bruce Williamson said the 62 percent drop in the company's stock price this year may make the owner of power plants in 11 U.S. states attractive to potential buyers.

``I'm sure it probably could but, you know, we trade where we trade,'' Williamson said today in a telephone interview. ``I think it's just incumbent on us to run the company and push out the fundamentals.''

Dynegy, based in Houston, said today that its liquidity was $2.02 billion as of Nov. 3, including $855 million in cash on hand. The company said it has no major bond maturities until 2011, meaning it can focus on running its business. The stock's drop occurred as hedge funds looked to sell, Williamson said.

``It's really not a distress situation over here at all like it was six years ago when the stock was in a cyclical downturn,'' Williamson said. ``Here it's driven more by sell pressure from the equity side of things.''

Dynegy fell 33 cents, or 11 percent, to $2.72 in New York Stock Exchange composite trading. The stock dropped below $1 a share in 2002 on speculation the company might not survive attempts to refinance debt.

Williamson made his comments today after Dynegy said third- quarter profit more than doubled to $605 million on gains from energy contracts. The company lowered a forecast for 2008 earnings after mild weather cut demand.

Dynegy's market capitalization is about $2.3 billion, according to Bloomberg data. It has the capacity to produce almost 18,000 megawatts of electricity. That's enough for more than 14 million average U.S. homes, based on an estimate by the Energy Department in Washington.

`Precious Asset'

The company has said it may use excess cash for acquisitions, share buybacks or the resumption of dividends. Williamson said Dynegy's proactive approach means it's in a better position than some other power companies.

``We're not going to rush out and do anything rash with the cash or the liquidity,'' he said. ``That's a very precious asset right now in this market.''

Warren Buffett's MidAmerican Energy Holdings Co. plans to purchase Constellation Energy Group Inc., which Williamson said was a deal that happened because of distress. He said Exelon Corp.'s takeover bid for NRG Energy Inc. reflects a view that NRG's assets are attractively priced.

``If you're a company that's got the balance sheet and the capability, it's probably a good time to be taking a look at the sector,'' Williamson said.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net.

To contact the editor responsible for this story: Tony Cox at acox3@bloomberg.net.


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Companies Mentioned

  • DYN
    (Dynegy Inc)
    • $30.15 USD
    • 0.36
    • 1.19%
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