Dynegy, examiner finds constructive fraudulent transfer

In a somewhat expected move, the independent examiner for the NY bankruptcy court, Susheel Kripalani, opined that the sale of the coal plants (CoalCo) for $1.25 bln was equivalent to the transfer of hundreds of millions of dollars away from creditors at DHI to shareholders at Dynegy Inc. My first read of the filing indicates its positive for unsecured bonds, negative for the equity and neutral for the Roseton & Danskammer leaseholders.  Please email me if you are interested in discussing the ramifications.

Homer City power plant handed over to owner lessors, Homer City bonds, EIX equity up on the news

In a somewhat expected move, Edison International has handed over control of the Homer City power plant to the owner lessor’s and taken an impairment charge of $1.032 bln. The Homer City senior secured bonds (8.137% of 2019 and 8.734% of 2026) are up 5-7 points on the news and more than 10 points since the start of the year.

I believe this is a positive event for EIX equity holders and Homer City senior secured bond holders, however it is bad for the rest of the EME capital structure. Please email me for details.

My price targets and recommendations remain unchanged.

I recommend that all investors read the disclosures provided in the Homer City, EME and EIX 8k’s.